TVA To Restate Financial Results

August 5, 2008

TVA announced today that it will revise its financial statements for the 2006 and 2007 fiscal years and for quarterly periods during the 2007 and 2008 fiscal years. TVA has determined that the method used to estimate unbilled revenues for these periods resulted in errors that should be corrected.

The restatements involve accounting estimates in the affected periods and will not impact TVA’s operations or net cash flow from operating activities. The revisions will affect financial statements for fiscal years that ended Sept. 30, 2006 and 2007 and the quarters ending Dec. 31, 2006; March 31, 2007; June 30, 2007; Dec. 31, 2007; and March 31, 2008.

“These revisions do not change our financial health,” said TVA Chief Financial Officer Kim Greene. “The restatements involve accounting estimates that have no impact on TVA’s cash position or its ability to meet obligations to creditors, customers, investors or other stakeholders.”

TVA provides wholesale power to distributors who resell the power to business, commercial and residential customers. TVA also sells power directly to about 60 large industrial customers.

Because of the delay between TVA’s delivery of power to distributors and when distributors report their subsequent sales, TVA must estimate unbilled revenue at the end of each financial reporting period. In September 2006 TVA implemented a new estimating procedure for unbilled revenue. This new procedure resulted in an increase of $232 million in unbilled revenue for fiscal year 2006. TVA has now determined that the procedure overestimated the number days of revenue outstanding and therefore the estimate of unbilled revenue.

TVA’s initial estimate is that the errors resulted in an overstatement of net income for the fiscal year ended Sept. 30, 2006, and understatements of net income for the fiscal year ended Sept. 30, 2007, and the six months ended March 31, 2008.

TVA will perform additional analysis on unbilled revenue estimates, expand management review of the assumptions that go into the estimates, and further document procedures for managing changes to the process for estimating unbilled revenue.

In the course of the restatement process, TVA will file amended reports with the Securities and Exchange Commission (SEC) for the impacted periods.

The public may read financial reports and other information that TVA files with the SEC from the SEC’s website at www.sec.gov, or from TVA’s website at www.tva.com/finance. Copies of any reports may be requested by calling TVA toll-free at (888) 882-4975, or (888) 882-4967 from outside the United States, or by sending an email to investor@tva.com.

TVA is the nation’s largest public power provider and is completely self-financing. TVA provides power to large industries and 159 power distributors that serve approximately 8.8 million consumers in seven southeastern states. TVA also manages the Tennessee River and its tributaries to provide multiple benefits, including flood damage reduction, navigation, water quality and recreation.

(This release and TVA reports filed with the SEC may contain forward-looking statements relating to future events and future performance. Although TVA believes that the assumptions underlying the forward-looking statements are reasonable, numerous factors could cause actual results to differ materially from those in the forward-looking statements. Some of these factors are discussed on pages 4 and 5 of TVA’s annual report on Form 10-K filed with the SEC.)

Media Contact

John Moulton, (865) 632-8048
TVA News Bureau, Knoxville, (865) 632-6000

Investor Contacts

TVA Investor Relations (toll-free), Knoxville, (888) 882-4975
TVA Investor Relations (toll-free International), (888) 882-4967

TVA Newsroom