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TENNESSEE VALLEY AUTHORITY - 10-Q - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Dollars in millions except where noted)

August 5, 2014

Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") explains the results of operations and general financial condition of the Tennessee Valley Authority ("TVA"). The MD&A should be read in conjunction with the accompanying unaudited consolidated financial statements and TVA's Annual Report on Form 10-K for the fiscal year ended September 30, 2013 (the "Annual Report"). Executive Overview TVA had a net loss of $81 million for the three-month period ended June 30, 2014, and net income of $147 million for the nine-month period ended June 30, 2014, as compared with net losses of $12 million and $203 million for the same periods of 2013. Sales of electricity were lower for the three-month period ended June 30, 2014, and nine-month period ended June 30, 2014, as compared to the same periods of 2013. Sales to local power company customers of TVA ("LPCs") increased slightly during the three-month and increased five percent during the nine-month period ended June 30, 2014, as compared to the same periods of 2013, due to a warmer spring and an extremely colder winter. However, these increases were more than offset by reductions in sales to industrial customers primarily driven by United States Enrichment Corporation ("USEC"), historically TVA's largest directly served customer, as USEC began ceasing operations in May 2013. Revenues from the sales of electricity were up slightly for the three-month and nine-month periods ended June 30, 2014, compared with the same periods of the prior year. The seven percent increase in revenues from LPCs during the three month period ended June 30, 2014, was due to increased fuel cost recovery during the quarter and increased base revenues resulting from changes in TVA's wholesale base rate approved by the TVA Board in August 2013. For the nine months ended June 30, 2014 as compared to the same periods of 2013 the increase in revenues was due to higher sales to LPCs and a higher wholesale base rate. The increases were offset primarily by a decrease in revenue from USEC. Operating and maintenance expenses increased slightly for the three-month period ended June 30, 2014 and decreased $182 million for the nine-month period ended June 30, 2014, as compared with the same periods of 2013. The decrease was primarily due to cost savings initiatives undertaken by management. TVA continues to make operational changes to its generating fleet and to pursue cost reduction initiatives across all business units with a goal of keeping its rates competitive.



During the nine months ended June 30, 2014, TVA made the strategic decision to use cash on hand and cash generated from operations to reduce long-term and short-term debt by $1.1 billion.

Recent inspections by the Nuclear Regulatory Commission ("NRC") determined that TVA has met all requirements in connection with the red finding for Browns Ferry Nuclear Plant ("Browns Ferry"), and the NRC has closed this finding. Additionally, Browns Ferry Unit 1's two performance indicators on safety systems returned to the normal band. The NRC has also closed the hydrology issues at Sequoyah Nuclear Plant ("Sequoyah") and Watts Bar Nuclear Plant ("Watts Bar"), and these plants have returned to routine and baseline NRC inspection schedules. Results of Operations Sales of Electricity



The following table compares TVA's energy sales for the three and nine months ended June 30, 2014, and 2013:

Sales of Electricity (millions of kWh) Three Months Ended June 30 Nine Months Ended June 30 2014 2013 Change Percent Change 2014 2013 Change Percent Change Local power companies 31,731 31,390 341 1.1 % 101,275 96,077 5,198 5.4 %



Industries

directly served 4,450 6,539 (2,089 ) (31.9 )% 13,026 21,541 (8,515 ) (39.5 )% Federal agencies and other 684 1,024 (340 ) (33.2 )% 2,263 2,746 (483 ) (17.6 )% Total sales of electricity 36,865 38,953 (2,088 ) (5.4 )% 116,564 120,364 (3,800 ) (3.2 )% TVA uses degree days to measure the impact of weather on its power operations since weather affects both demand and market prices for electricity. Degree days measure the extent to which average temperatures in the five largest cities in TVA's service area vary from 65 degrees Fahrenheit. 43



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Table of Contents Degree Days 2014 Percent 2013 Percent 2014 2013 Actual Normal(1) Variation Actual Normal(1) Variation Actual Actual Percent Change Heating Degree Days Three Months Ended June 30 199 228 (12.7 )% 261 228 14.5 % 199 261 (23.8 )% Nine Months Ended June 30 3,697 3,343 10.6 % 3,332 3,343 (0.3 )% 3,697 3,332 11.0 % Cooling Degree Days Three Months Ended June 30 651 586 11.1 % 598 586 2.0 % 651 598 8.9 % Nine Months Ended June 30 743 666 11.6 % 637 666 (4.4 )% 743 637 16.6 % Note



(1) This calculation is updated every five years in order to incorporate the then most recent 30 years. It was last updated in 2011.

Sales of electricity decreased 2.1 billion kilowatt hours ("kWh") for the three months ended June 30, 2014, compared to the three months ended June 30, 2013, primarily due to a decrease in demand from industries directly served. The reduced demand was largely the result of a decrease in demand by USEC, which began ceasing operations during the third quarter of 2013. Sales of electricity decreased 3.8 billion kWh for the nine months ended June 30, 2014, compared to the nine months ended June 30, 2013, primarily due to a decrease in demand from industries directly served. The reduced demand was largely the result of a decrease in demand by USEC, which began ceasing operations during the third quarter of 2013. Partially offsetting this decrease in sales to industries directly served was an increase in sales to LPCs due primarily to 11 percent more heating degree days and 17 percent more cooling degree days than the same period of the prior year.



Financial Results

The following table compares operating results for the three and nine months ended June 30, 2014, and 2013:

Summary Consolidated Statements of



Operations

Three Months Ended June 30



Nine Months Ended June 30

2014 2013 Percent Change 2014 2013 Percent Change Operating revenues $ 2,651$ 2,602 1.9 % $ 7,971$ 7,922 0.6 % Operating expenses 2,453 2,324 5.6 % 6,979 7,228 (3.4 )% Operating income 198 278 (28.8 )% 992 694 42.9 % Other income, net 10 10 - % 37 36 2.8 % Interest expense, net 289 300 (3.7 )% 882 933 (5.5 )%



Net income (loss) $ (81 )$ (12 ) (575.0 )% $

147 $ (203 ) 172.4 %

Operating Revenues. Operating revenues for the three and nine months ended June 30, 2014, and 2013, consisted of the following:

Operating Revenues Three Months Ended June 30 Nine Months Ended June 30 2014 2013 Percent Change 2014 2013 Percent Change Electricity sales Local power companies $ 2,383$ 2,227 7.0 % $ 7,217$ 6,766 6.7 % Industries directly served 197 302 (34.8 )% 539 946 (43.0 )% Federal agencies and other 38 43 (11.6 )% 113 118 (4.2 )% Electricity sales 2,618 2,572 1.8 % 7,869 7,830 0.5 % Other revenue 33 30 10.0 % 102 92 10.9 % Total operating revenues $ 2,651$ 2,602 1.9 % $ 7,971$ 7,922 0.6 % 44



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Operating revenues increased $49 million in the three and nine months ended June 30, 2014, compared to the three and nine months ended June 30, 2013, due to the following:

Three Month Change Nine Month Change

Fuel cost recovery $ 94 $ (127 ) Base revenue (41 ) 178 Other (4 ) (2 ) Total $ 49 $ 49 Operating revenues increased by $49 million for the three months ended June 30, 2014, compared to the three months ended June 30, 2013, primarily due to a $94 million increase in fuel cost recovery. The increase in fuel cost recovery was primarily attributable to higher fuel rates, which resulted from the use of more expensive generation resources during the previous quarter. Due to the design of the fuel cost recovery mechanism, these costs were recovered during the quarter ended June 30, 2014. This was partially offset by a $41 million decrease in base revenue, which was largely the result of the decrease in demand by USEC. Operating revenues increased $49 million for the nine months ended June 30, 2014, compared to the nine months ended June 30, 2013, primarily due to a $178 million increase in base revenue. The increase in base revenue was attributable to higher sales volume to LPCs and the non-fuel base rate increase that became effective October 1, 2013. This was partially offset by a $127 million decrease in fuel cost recovery which resulted from the use of less expensive nuclear generation resources and from the decrease in sales to industries directly served due to the reduction in demand by USEC. TVA's wholesale rate structure provides price signals intended to encourage LPCs and end-use customers to shift energy usage from high-cost generation periods to less expensive generation periods. Under the revised wholesale structure, weather can positively or negatively impact both volume and effective rates, while only volume was impacted under the former wholesale structure. This is because the wholesale structure includes two components: a demand charge and an energy charge. The demand charge is based on the customer's peak monthly usage and increases as the peak increases. The energy charge is based on the kWhs used by the customer. The rate structure also establishes a separate fuel rate that includes the costs of natural gas, fuel oil, purchased power, coal, emission allowances, nuclear fuel, and other fuel-related commodities; realized gains and losses on derivatives purchased to hedge the costs of such commodities; and tax equivalents associated with the fuel cost adjustments.



Operating Expenses. Operating expenses for the three and nine months ended June 30, 2014, and 2013, consisted of the following:

Operating Expenses Three Months Ended June 30



Nine Months Ended June 30

Percent Percent 2014 2013 Change 2014 2013 Change Fuel $ 698$ 652 7.1 % $ 1,904$ 2,118 (10.1 )% Purchased power 279 263 6.1 % 843 796 5.9 % Operating and maintenance 880 866 1.6 % 2,480 2,662 (6.8 )% Depreciation and amortization 463 412 12.4 % 1,357 1,248 8.7 % Tax equivalents 133 131 1.5 % 395 404 (2.2 )% Total operating expenses $ 2,453$ 2,324 5.6 % $ 6,979$ 7,228 (3.4 )% 45



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The following table summarizes TVA's net generation and purchased power in millions of kWh by generating source and the percentage of all electric power generated and purchased for the periods indicated:

Power Supply from TVA-Operated Generation



Facilities and Purchased Power

Three Months Ended June 30 Nine Months Ended June 30 2014 2013 2014 2013 Percent Percent Percent Percent of Total of Total of Total of Total kWh Power kWh Power kWh Power kWh Power (in millions) Supply (in millions) Supply (in millions) Supply (in millions) Supply Coal-fired 15,624 42 % 14,501 36 % 44,916 38 % 46,801 38 % Nuclear 12,451 33 % 13,755 35 % 39,669 33 % 37,495 31 % Hydroelectric 1,868 5 % 4,671 12 % 10,609 9 % 13,690 11 % Natural gas and/or oil-fired 3,198 9 % 2,234 6 % 8,961 8 % 9,916 8 % Renewable resources (non-hydro) 3 - % 1 - % 5 - % 5 - % Total TVA-operated generation facilities 33,144 89 % 35,162 89 % 104,160 88 % 107,907 88 % Purchased power 4,303 11 % 4,411 11 % 14,493 12 % 14,482 12 % Total power supply 37,447 100 % 39,573 100 % 118,653 100 % 122,389 100 % Fuel expense increased $46 million for the three months ended June 30, 2014, as compared to the same period of the prior year, primarily due the use of more expensive generation resources. Hydroelectric and nuclear generation, TVA's least expensive types of generation, were down 60 percent and nine percent, respectively, as compared to the same period of the prior year, while natural gas fired and coal-fired generation increased by 43 percent and eight percent, respectively, as compared to the same period of the prior year. The increased consumption of these more expensive types of generation resulted in a $62 million increase to fuel expense. Additionally, for the three months ended June 30, 2014, the fuel cost recovery mechanism increased fuel expense by $20 million, as compared to the same period of the prior year. The fuel cost recovery mechanism provides a means to regularly adjust rates in order to reflect changing fuel and purchased power costs, including realized gains and losses relating to fuel commodity hedging transactions under TVA's financial trading program ("FTP"). See Note 14 - Derivatives Not Receiving Hedge Accounting Treatment - Derivatives Under FTP. There is typically a lag between the occurrence of a change in fuel and purchased power costs and the reflection of the change in rates due to the operation of the fuel cost recovery mechanism. This difference is recorded as a regulatory asset or liability and represents over-collected revenues (regulatory liabilities) or under-collected revenues (regulatory assets). As a result of this treatment, eligible fuel expenses are correctly matched to the related revenue on the statements of operations. Offsetting the increases in fuel expense, a reduction in sales volume of five percent contributed to a $36 million decrease in fuel expense. Purchased power expense increased $16 million for the three months ended June 30, 2014, as compared to the same period of the prior year, primarily due to the timing fuel cost recovery mechanism. For the three months ended June 30, 2014, the fuel cost recovery mechanism increased purchased power expense by $13 million, as compared to the same period of the prior year. Additionally, higher market prices for natural gas increased purchased power expense by $9 million. As an indication of general market direction, the average Henry Hub natural gas spot price for the three months ended June 30, 2014 was approximately 14 percent higher than the same period of the prior year. Partially offsetting the increases in purchased power expense was a two percent decrease in the volume of power purchased for the three months ended June 30, 2014, as compared to the same period in the prior year. This change in volume decreased purchased power expense by $6 million. Operating and maintenance expense increased $14 million for the three months ended June 30, 2014, compared with the same period of the prior year. This increase is primarily driven by an increase of $25 million due to more outages during the period partially offset by a $12 million decrease in pension and post-retirement costs, due to an increase in the discount rate, and decreases in expenses due to cost savings initiatives undertaken by management and fewer projects performed during the period. Depreciation and amortization expense increased $51 million for the three months ended June 30, 2014, compared with the same period of the prior year, primarily due to an increase in the amount of accelerated depreciation recognized for certain coal-fired units to be idled. Tax equivalents expense increased $2 million during the three months ended June 30, 2014, compared to the same period of the prior year. This increase primarily reflects an increase in the accrued tax equivalent expense related to the fuel cost adjustment. The accrued tax equivalent expense is equal to five percent of the fuel cost adjustment revenues and increased for the three months ended June 30, 2014, as compared to the same period of the prior year. 46



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Fuel expense decreased $214 million for the nine months ended June 30, 2014, as compared to the same period of the prior year, primarily due to a reduction in sales volume and the timing of the fuel cost recovery mechanism. For the nine months ended June 30, 2014, the fuel cost recovery mechanism decreased fuel expense by $132 million as compared to the same period of the prior year. Additionally, a reduction in sales volume of three percent contributed to a $71 million decrease in fuel expense. A change in the generation mix contributed to the remaining $11 million decrease in fuel expense. Purchased power expense increased $47 million for the nine months ended June 30, 2014, as compared to the same period of the prior year, primarily due to higher market prices for natural gas, as TVA's primary source of purchased power is natural gas-fired generation. As an indication of general market direction, the average Henry Hub natural gas spot price for the nine months ended June 30, 2014 was $4.486 per mmBtu, which was 24 percent higher than the average price for the same period of the prior year. The higher prices contributed to a $95 million increase to purchased power expense. Offsetting the increase in purchased power expense was a $48 million decrease due to the timing of the fuel cost recovery mechanism. Operating and maintenance expense decreased $182 million for the nine months ended June 30, 2014, compared with the same period of the prior year. This decrease was primarily driven by a $120 million decrease in expenses related to cost savings initiatives undertaken by management. See Key Initiatives and Challenges - Cost Reduction Initiatives. In addition, there was a $62 million decrease due to fewer projects undertaken during the period, a $37 million decrease in pension and post-retirement costs due to an increase in the discount rate, and a decrease of $18 million due to fewer outages during the period. These decreases were offset by a $56 million increase in employee-related expenses due to restructuring activities. Depreciation and amortization expense increased $109 million for the nine months ended June 30, 2014, compared with the same period of the prior year, primarily due to an increase in the amount of accelerated depreciation recognized for certain coal-fired units to be idled. Tax equivalents expense decreased $9 million during the nine months ended June 30, 2014, compared to the same period of the prior year. This change primarily reflects a decrease in gross revenues from the sale of power (excluding sales or deliveries to other federal agencies and off-system sales with other utilities) during 2013 compared to 2012.



Interest Expense. Interest expense and interest rates for the three and nine months ended June 30, 2014, and 2013, were as follows:

Interest Expense Three Months Ended June 30 Nine Months Ended June 30 Percent Percent 2014 2013 Change 2014 2013 Change Interest Expense(1) Interest expense $ 334$ 343 (2.6 )% $ 1,009$ 1,057 (4.5 )% Allowance for funds used during construction and nuclear fuel expenditures (45 ) (43 ) 4.7 % (127 ) (124 ) 2.4 % Net interest expense $ 289$ 300 (3.7 )% $ 882$ 933 (5.5 )% Percent Percent 2014 2013 Change 2014 2013 Change Interest Rates (average) Long-term outstanding power bonds(2) 5.601 % 5.713 % (2.0 )% 5.594 % 5.750 % (2.7 )% Long-term debt of variable interest entities 4.602 % 4.875 % (5.6 )% 4.601 % 4.875 % (5.6 )% Membership interests subject to mandatory redemption 7.000 % - 100.0 % 7.022 % - 100.0 % Discount notes 0.047 % 0.082 % (42.7 )% 0.049 % 0.094 % (47.9 )% Blended 5.192 % 5.202 % (0.2 )% 5.144 % 5.370 % (4.2 )% Notes (1) Interest expense includes interest on long-term debt obligations, including amortization of debt discounts, issuance, and reacquisition costs, net. (2) The average interest rates on long-term debt obligations reflected in the table above are calculated using an average of long-term debt balances at the end of each month in the periods above and interest expense for those periods. Net interest expense decreased $11 million for the three months ended June 30, 2014, as compared to the same period of the prior year. This decrease was attributable to a decrease in both the average balance and average interest rate of TVA's outstanding debt. 47



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Net interest expense decreased $51 million for the nine months ended June 30, 2014, as compared to the same period of the prior year. This decrease was attributable to a decrease in both the average balance and average interest rate of TVA's outstanding debt.



Liquidity and Capital Resources

Sources of Liquidity

To meet cash needs and contingencies, TVA depends on various sources of liquidity. TVA's primary sources of liquidity are cash from operations and proceeds from the issuance of short-term and long-term debt. Current liabilities may exceed current assets from time to time in part because TVA uses short-term debt to fund short-term cash needs, as well as to pay scheduled maturities and other redemptions of long-term debt. The daily balance of cash and cash equivalents maintained is based on near-term expectations for cash expenditures and funding needs. In addition to cash from operations and proceeds from the issuance of short-term and long-term debt, TVA's sources of liquidity also include a $150 million credit facility with the United States ("U.S.") Treasury, three long-term revolving credit facilities totaling $2.5 billion, and proceeds from any other financing arrangements such as lease financings, call monetization transactions, sales of assets, and sales of receivables and loans. Management expects these sources, certain of which are described below, to provide adequate liquidity to TVA for the foreseeable future. The TVA Act authorizes TVA to issue Bonds in an amount not to exceed $30.0 billion outstanding at any time. At June 30, 2014, TVA had $23.8 billion of Bonds outstanding (not including noncash items of foreign currency exchange loss of $98 million and net discount on sale of the Bonds of $80 million). Due to this limit on Bonds, TVA may not be able to use Bonds to finance all of the capital investments planned over the next decade. However, TVA believes that other forms of financing not subject to the limitation, including lease financings, could provide supplementary funding if needed. See Lease Financings below and Note 8. Also, the impact of energy efficiency and demand response initiatives may reduce generation requirements and thereby reduce capital needs. TVA anticipates that capital spending needs can be met with a combination of Bonds, lease arrangements, energy prepayments, additional power revenues through rate increases, cost reductions, or other ways. Debt Securities. TVA's Bonds are not obligations of the United States, and the United States does not guarantee the payments of principal or interest on Bonds. TVA's Bonds consist of power bonds and discount notes. Power bonds have maturities of between one and 50 years. Discount notes have maturities of less than one year. Power bonds and discount notes have a first priority and equal claim of payment out of net power proceeds. Net power proceeds are defined as the remainder of TVA's gross power revenues after deducting the costs of operating, maintaining, and administering its power properties and payments to states and counties in lieu of taxes, but before deducting depreciation accruals or other charges representing the amortization of capital expenditures, plus the net proceeds from the sale or other disposition of any power facility or interest therein. In addition to power bonds and discount notes, TVA had outstanding at June 30, 2014, the long-term debt of two variable interest entities. See Lease Financings below, Note 8, and Note 12 - Debt Securities Activity for additional information. The following table provides additional information regarding TVA's short-term borrowings. Short-Term Borrowing Table At At June 30 Three Months Ended Nine Months



Ended June 30 Three Months Ended Nine Months Ended

2014 June 30 2014 June 30 2014 2013 June 30 2013 June 30 2013 Amount Outstanding (at End of Period) or Average Amount Outstanding (During Period) Discount Notes $ 1,759$ 1,631$ 1,827$ 2,395$ 2,181$ 1,553 Weighted Average Interest Rate Discount Notes 0.059 % 0.047 % 0.049 % 0.071 % 0.082 % 0.094 % Maximum Month-End Amount Outstanding (During Period) Discount Notes N/A $ 1,759$ 2,442 N/A $ 2,395$ 2,395 In October 2013, one credit rating agency placed the ratings on the United States sovereign debt on rating watch negative, and subsequently placed TVA's rating on rating watch negative. Rating watch is typically event driven, while the negative status indicates a heightened probability of a downgrade. In March 2014, the agency removed the rating watch negative on the ratings on United States sovereign debt and changed the outlook to stable, and subsequently removed the rating watch negative on TVA's rating and changed the outlook to stable. Credit Facility Agreements. TVA and the U.S. Treasury, pursuant to the TVA Act, have entered into a memorandum of understanding under which the U.S. Treasury provides TVA with a $150 million credit facility. This credit facility was renewed for 48



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2014 and has a maturity date of September 30, 2014. Access to this credit facility or other similar financing arrangements with the U.S. Treasury has been available to TVA since the 1960s. TVA plans to use the U.S. Treasury credit facility as a secondary source of liquidity. The interest rate on any borrowing under this facility is based on the average rate on outstanding marketable obligations of the United States with maturities from date of issue of one year or less. There were no outstanding borrowings under the facility at June 30, 2014. The availability of this credit facility may be impacted by how the U.S. government addresses the situation of approaching its debt limit. The following table provides additional information regarding TVA's funding available in the form of three long-term revolving credit facilities. The credit facilities accommodate the issuance of letters of credit. The interest rate on any borrowing under these facilities varies based on market factors and the rating of TVA's senior unsecured long-term non-credit enhanced debt. See Note 12 - Credit Facility Agreements and Note 14 - Other Derivative Instruments - Collateral. Summary of Long-Term Credit Facilities At June 30, 2014 (in billions) Facility Letters of Credit Maturity Date Limit Outstanding Cash Borrowings Availability June 2017 $ 1.0 $ 0.2 $ - $ 0.8 December 2017 1.0 0.2 - 0.8 April 2018 0.5 0.5 - - Total $ 2.5 $ 0.9 $ - $ 1.6



In April 2014, UBS AG, Stamford Branch, assigned all of its rights and obligations under the $1.0 billion credit facility that matures in December 2017 to Sumitomo Mitsui Banking Corporation.

Lease Financings. TVA has entered into certain leasing transactions with special purpose entities to obtain third-party financing for its facilities. These special purpose entities are sometimes identified as variable interest entities ("VIEs") of which TVA is determined to be the primary beneficiary. TVA is required to account for these VIEs on a consolidated basis. See Note 8. TVA may seek to enter into similar arrangements in the future, but has no immediate plans to do so.



Summary Cash Flows

A major source of TVA's liquidity is operating cash flows resulting from the generation and sales of electricity. A summary of cash flow components for the nine months ended June 30, 2014, and 2013, follows: Summary Cash Flows Nine Months Ended June 30 2014 2013 Cash provided by (used in): Operating activities $ 1,987$ 1,478 Investing activities (1,961 ) (1,745 ) Financing activities (1,123 ) 379



Net (decrease) increase in cash and cash equivalents $ (1,097 ) $

112 Operating Activities Net cash flow provided by operating activities increased by $509 million for the nine months ended June 30, 2014, compared to the same period in the prior year, due primarily to the increase in net income from operations as a result of TVA's continual efforts to improve cost management, working capital, and operational performance in addition to the recovery of $175 million in insurance proceeds related to the Kingston ash spill. These increases in operating activities were partially offset by $132 million in pension contributions.



Investing Activities

Net cash flows used in investing activities increased $216 million in the nine months ended June 30, 2014, compared to the same period in the prior year. The increase is primarily related to the ongoing work on Watts Bar Unit 2 and transmission and clean air projects for the nine months ended June 30, 2014. Changes in nuclear fuel expenditures are due primarily to the timing of nuclear outages as TVA purchases nuclear fuel in advance of these outages. 49



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Financing Activities

Net cash flows used in financing was over $1.1 billion for the nine months ended June 30, 2014, compared to $379 million of net cash flows provided by financing for the nine months ended June 30, 2013. The increase in cash flows used in financing is primarily due to net redemptions of debt of $1.1 billion during the nine months ended June 30, 2014, as compared to net issuance of debt of $544 million during the nine months ended June 30, 2013. This $1.6 billion change in net financing cash flows from net issuances and redemptions of debt is primarily due to TVA's strategic decision to use cash on hand to reduce debt and meet funding needs in the nine months ended June 30, 2014.


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