Tennessee Valley Authority

There have been no material changes to the key initiatives and challenges described in Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations— Key Initiatives and Challenges of the Annual Report, except as described below.

Cost Reduction Initiatives

TVA’s demand continues to grow, driving the need for significant future capital investment. TVA must continue to drive efficiencies and cost savings across the enterprise to provide affordable, reliable electricity, while funding the capital investment needed to meet growing demand. TVA has undertaken a cost optimization initiative designed to reduce planned cost increases by approximately $950 million during the three-year period from 2024 to 2026. See Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations — Key Initiatives and Challenges—Optimum Energy Portfolio in the Annual Report.

This effort has evolved into an Enterprise Transformation Program ("ETP") designed to enable TVA to deliver at least $500 million of sustainable reductions to planned cost increases in 2026 and beyond to support future fleet investments needed to meet growing demand. TVA's ETP is focused on improving financial health, enhancing asset performance, automating processes, optimizing third-party spend through supply chain, and making the workforce more efficient. As part of these efforts, certain employees will be eligible for severance payments. As of March 31, 2025, TVA had accrued $38 million related to estimated future severance payments. The ETP is ongoing, and any potential future severances costs are uncertain at this time.

Optimum Energy Portfolio

Additional load growth for the foreseeable future is expected, and new capacity will be needed to support this load growth and replace retiring and expiring capacity. In April of 2025, TVA released a request for proposals for up to 2,250 MW of new build energy resources for potential PPAs. Energy resources that may participate in this RFP are utility-scale natural gas, battery energy storage systems ("BESS"), solar plus BESS, and solar generation that must demonstrate ability to be commercially operable by 2031.

Natural Gas-Fired Units. As TVA continues to evaluate the impact of retiring its coal-fired fleet by 2035 and works to

accelerate the growth of renewables, it also continues to evaluate adding flexible lower carbon-emitting gas plants as a strategy

to maintain reliability. Pre-commercial plant operations began on Johnsonville Aeroderivative CT Units 25-28 in the first quarter of 2025 and began on Units 21-24 and 29-30 in the second quarter of 2025.

TVA is replacing generation for one unit at Cumberland Fossil Plant with a 1,450 MW combined cycle plant that is expected to be operational by the end of CY 2026. As of March 31, 2025, TVA had spent $1.5 billion on this project. See Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations —Key Initiatives and Challenges —Natural Gas-Fired Units in the Annual Report.

To operate the Cumberland Combined Cycle Plant, TVA has contracted for the transportation of gas from a gas pipeline that will need to be constructed. To construct the pipeline, the pipeline company, Tennessee Gas Pipeline Company, L.L.C. (“Tennessee Gas”), obtained permits from various state and federal agencies and a certificate of public convenience and necessity from the Federal Energy Regulatory Commission (“FERC”). Challenges to two permits were brought in the United States Court of Appeals for the Sixth Circuit ("Sixth Circuit"), and on October 11, 2024, the Sixth Circuit issued orders staying the permits until the court could review the merits of these cases. On April 4, 2025, the Sixth Circuit denied the petitions for review in both cases, and on April 15, 2025, the Sixth Circuit lifted the temporary stay. A challenge to the FERC certificate is pending before the United States Court of Appeals for the District of Columbia Circuit (“D.C. Circuit”). The D.C. Circuit heard oral arguments on the merits on March 4, 2025, but has not yet issued a ruling. See Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations — Key Initiatives and Challenges—Optimum Energy Portfolio —Natural Gas-Fired Units in the Annual Report and Note 21 —Contingencies and Legal Proceedings —Legal Proceedings— Challenge to Certificate for Cumberland Pipeline in this Quarterly Report.

TVA is constructing 1,500 MW of natural gas generation at TVA's Kingston site that is expected to be operational by the end of CY 2027. As of March 31, 2025, TVA had spent $1.3 billion on this project. In addition, in March 2025, TVA issued a request for proposal for battery storage related to the Kingston energy complex. See Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations —Key Initiatives and Challenges —Natural Gas-Fired Units in the Annual Report for additional information regarding this project and Note 21 —Contingencies and Legal Proceedings —Legal Proceedings— Challenge to Kingston Construction Permitin this Quarterly Report for information about a challenge to the Kingston construction permit.

In 2024, TVA made available to the public a draft environmental impact statement ("EIS") to assess the impacts associated with the construction and operation of a 500 MW simple cycle CT at New Caledonia on TVA land. The final EIS was published in January 2025, and TVA documented its final decision with the Record of Decision on February 13, 2025. TVA is also exploring a 200 MW aeroderivative CT project at TVA's Allen site, and the draft EIS was made available for public comment in March 2025. See Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations — Key Initiatives and Challenges—Optimum Energy Portfolio —Natural Gas-Fired Units in the Annual Report.

Renewable Power Purchase Agreements. TVA issued a carbon-free RFP in 2022, and in the second quarter of 2025, TVA signed one power purchase agreement for 150 MW of solar generation. In total, TVA signed seven power purchase agreements totaling 1,141 MW of solar generation and 220 MW of battery storage capacity from the carbon-free RFP which are expected to come online by the end of CY 2028. See Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations— Key Initiatives and Challenges — Renewable Power Purchase Agreementsin the Annual Report.

Self-Directed Solar. TVA has elected to pursue a competitive selection process with third parties for the development of a photovoltaic solar facility and plans to enter into a long-term PPA to purchase the energy generated by the facility. A draft EIS was made available for public comment in January 2025. See Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations — Key Initiatives and Challenges—Optimum Energy Portfolio — Self-Directed Solar in the Annual Report.

Small Modular Reactors. In January 2025, TVA and a consortium of co-applicants applied for a U.S. Department of Energy ("DOE") grant to support the potential development and future deployment of a small modular reactor (“SMR”) at TVA’s Clinch River site. The potential development and any future deployment of an SMR at the Clinch River site are subject to TVA Board approval. TVA is following a structured planning process that advances the Clinch River project in phases at which the TVA Board will evaluate and consider approving any next steps. This funding could support not only the deployment of this first-of-a-kind technology, but also help establish the supply chain for advanced nuclear and support future deployment of the reactor across the United States. In April 2025, TVA and the consortium of co-applicants submitted a revised application to address new DOE guidance regarding the grant.

In January 2025, TVA also requested public comment on a draft Supplemental Environmental Impact Statement that addresses the potential environmental effects associated with site preparation, construction, operation, and decommissioning of one SMR, the GE Hitachi Nuclear Energy BWRX-300, at the Clinch River site. In April 2025, TVA submitted a Notification of Intent to the Nuclear Regulatory Commission regarding a construction permit application at the Clinch River site. See Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations — Key Initiatives and Challenges—Optimum Energy Portfolio — Small Modular Reactors in the Annual Report.

Automated Energy Exchange Platform. In July 2023, the D.C. Circuit remanded FERC’s approval of the Southeast Energy Exchange Market (“SEEM”), sending the matter back to FERC for additional proceedings. On March 14, 2025, after further review of the record, FERC affirmed its approval of SEEM. See Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations — Key Initiatives and Challenges—Optimum Energy Portfolio — Automated Energy Exchange Platform in the Annual Report.

Sequoyah Nuclear Plant Unit 2

Sequoyah Unit 2 tripped on July 30, 2024, due to failure of the main generator. As a result, the project to restack and rewind the main generator was pulled forward in the Nuclear Life Extension plan. As of March 31, 2025, TVA had spent $107 million related to this project and expects to spend an additional $7 million. See Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations —Key Initiatives and Challenges —Sequoyah Nuclear Plant Unit 2 in the Annual Report.

Hurricane Helene

In late September 2024, Hurricane Helene caused significant damage in communities in East Tennessee and Western

North Carolina. TVA completed inspections at numerous dams, finding no substantial impacts. TVA is working on debris management at Douglas Reservoir to aid major disaster declarations with the Federal Emergency Management Agency ("FEMA"). TVA is receiving reimbursement from FEMA for this work. See Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations —Key Initiatives and Challenges —Hurricane Helene in the Annual Report.

Coal Combustion Residuals

TVA is pursuing a programmatic approach to address environmental impacts related to the previous storage and disposal of its CCR in accordance with applicable law (“CCR Program”). Under the CCR Program, TVA performed stability remediation of all at-risk facilities, completed the conversion of all operational coal-fired plants to dry CCR storage, and ceased operation of wet CCR storage facilities.

As of March 31, 2025, TVA had spent approximately $3.3 billion on its CCR Program. See Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations —Key Initiatives and Challenges —Coal Combustion Residuals in the Annual Report.

Real Property Portfolio

TVA engages in ongoing Tennessee Valley-wide real property portfolio evaluations of buildings, structures, and land as

part of the strategic real estate program, which focuses on reducing cost, right-sizing the portfolio, and aligning real estate

holdings with TVA's strategic direction. In February 2025, the TVA Board voted to surplus the Missionary Ridge and Blue Ridge buildings at the Chattanooga Office Complex, subject to CEO determination of disposal. Subject to such further CEO determination, these buildings will remain in operation until the system operations center becomes fully operational, which is expected in CY 2026. See Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations —Key Initiatives and Challenges —Real Property Portfolio in the Annual Report.

Corporate Governance

Board. The terms of Beth H. Harwell and Brian E. Noland as members of the TVA Board ended January 3, 2025, with the adjournment of the most recent session of Congress. Although their terms of office expired May 18, 2024, the TVA Act permitted them to continue to serve as Directors until the end of this session of Congress.

L. Michelle Moore's and Joe H. Ritch's appointments as members of the TVA Board ended March 27, 2025, and April 1, 2025, respectively, at the direction of the President of the United States. With the departure of Mr. Ritch, Director William J. Renick assumed the role of Board Chair pursuant to the TVA Board's decision on February 13, 2025, nominating Mr. Renick as chair-elect of the TVA Board.

The TVA Board now has four members and, thus, is without a quorum. The TVA Board continues to have all authorities as described in Section 1.6 of the TVA Bylaws to "continue to exercise those powers of the Board which are necessary to assure continuity of operations of [TVA] along the lines established while [TVA] was guided by a quorum of the Board, but shall not have the authority to direct [TVA] into new areas of activity, to embark on new programs, or to change [TVA's] existing direction."

Management. On January 13, 2025, TVA announced that Thomas C. Rice had been appointed as TVA’s new Senior Vice President and Chief Financial Officer, effective January 27, 2025. In his new position, Mr. Rice is responsible for directing all of TVA’s financial functions, including treasury, risk management, accounting, financial operations and performance, financial planning, and investor relations. He succeeded John M. Thomas, III, who, on December 2, 2024, announced his retirement from TVA effective March 7, 2025. Until his retirement, Mr. Thomas served as Executive Vice President and Advisor to the Chief Executive Officer ("CEO") and assisted with the transition of his responsibilities.

On January 29, 2025, Jeffrey J. Lyash, TVA's President and CEO, notified his executive leadership team, and the TVA Board, of his intention to retire no later than October 2, 2025. On March 31, 2025, TVA announced that Donald A. Moul had been appointed as TVA’s new President and CEO, effective April 9, 2025. Mr. Lyash will continue to serve until April 30, 2025, to support the transition.

In his new position, Mr. Moul will be entitled to the compensation set forth in his offer letter, which is attached to this Quarterly Report as Exhibit 10.7, and the most significant elements of his compensation are described below.

•Mr. Moul’s salary will increase from $844,052 to $1,200,000.

•Mr. Moul will continue to be a participant in TVA’s Executive Annual Incentive Plan (“EAIP”), and his target annual incentive opportunity will increase from 80 percent to 110 percent of his annual salary. For the year ending September 30, 2025, Mr. Moul’s EAIP award will be prorated based on time spent in his two roles. The EAIP award is contingent upon continued employment through September 30, 2025, and is subject to achievement of performance goals.

•Mr. Moul will continue to be a participant in TVA’s Long-Term Incentive Plan (“LTIP”).

–Under the long-term performance (“LTP”) component of the LTIP, Mr. Moul’s target grant opportunity for the performance cycle ending on September 30, 2025, will remain $1,425,000, and his target grant opportunity for the performance cycle ending on September 30, 2026 will be $2,450,000. LTP awards will vest upon the completion of the three-year performance cycles, contingent upon continued employment through the vesting dates and subject to achievement of performance goals.

–Under the long-term retention component of the LTIP, Mr. Moul’s aggregate grant opportunity for the year ending on September 30, 2025, will be $961,667, and his aggregate grant opportunity for the year ending on September 30, 2026 will be $1,050,000. Mr. Moul will receive these amounts if he remains employed by TVA through the end of the retention periods.

Effective April 2, 2025, David B. Fountain’s tenure as TVA’s Executive Vice President, General Counsel and Corporate Secretary ended. Mr. Fountain’s no-fault separation from TVA was finalized on April 7, 2025.

Executive Actions

On January 20, 2025, President Trump issued an executive order (“EO”) that revoked a number of EOs, including several EOs relating to environmental matters. See Environmental Matters —General below. See also Environmental Matters —Clean Air Act Programs and Regulations —Mercury and Air Toxics Standards for Electric Utility Units for a discussion of a proclamation issued on April 8, 2025. On January 20, 2025, President Trump also issued EO 14154, “Unleashing American Energy,” which in part instructed agencies to pause the disbursement of funds appropriated under the IRA and BIL. On January 21, 2025, the Office of Management and Budget issued Memorandum M-25-11, which clarified that EO 14154 requires agencies to pause disbursement of funds appropriated under the IRA or the BILonly for programs that are inconsistent with the policy of section 2 of EO 14154, related to the Green New Deal, including consumer mandates on electric vehicles and appliances. While the IRA and BIL funding freeze under EO 14154 likely does not apply to funding that TVA is seeking, other governmental actions and funding restrictions may delay any award of grants for which TVA has applied under these acts. Furthermore, President Trump and the Administration have taken a number of other actions that may impact TVA, and multiple court decisions may affect the implementation of these actions. TVA is currently reviewing these actions and related court decisions to evaluate the impact to TVA and is updating its policies and programs as appropriate.