1. TVA Distributor Assurance Update Central District Power Accountants Association Meeting Presented by: Autumn Burns March 19, 2015 TVA Restricted Information - Deliberative and Pre-Decisional Privileged

2. DARS Monthly Report Updates Monthly Report – Page 3 Customer DataCreditsGreen Power Revenue 2 Residential675 Gen. Power - 50 kW & under 680 Gen. Power - Over 50 kW685 Street and athletic - Codes 72, 73 & 74 690 Outdoor Lighting - Code 78693 Total694 Special Outdoor Lighting - Code 75 696 Outdoor Lighting - Code 77697 Gen Partners- Res 800 Gen Partners-GP < 50kW 801 Gen Partners-GP > 50kW 802 SMC803 EGC804 VCP805 VII806 Green Power- Res 807 Green Power- GP < 50kW 808 Green Power- GP > 50kW 809

3. Rate & Credit Check Enhancements (Billing) Contract kW-The analyst will review customers with a contract demand of less than 1,000 kW, but a billing, measured, or metered demand over 1,000, indicating that the customer may need to have a retail contract. Determination of Demand-The RCC model will test and may identify a customer who is potentially not being billed correctly for “Determination of Demand” per the GSA rate schedule. Customers with the Billing Demand < than anticipated based on the determination of demand calculation will be reviewed. Wholesale Invoice (EMBED_WI)-The analyst also reviews potential exceptions for customers who should be listed on the wholesale invoice based on contract demand. 3

4. Electric Sales Summary (ESS) Energy ProductRate Schedule Revenue (RSR) EGC/SMC/VCC/VIINoEconomic Incentive 5MR/60MR/TDHUD CreditYesPart of Rate Schedule Green Power SwitchNoRenewable Energy Generation Partners/Green Power ProvidersNoRenewable Energy Retail Side - Customer's Bill: DebitCredit Energy ProductProcessAccount # EGC/SMC/VCC/VIISystem generated JE to reflect reduction in revenue442142 5MR/60MR/TDHUD CreditProcessed as RSR reductions through ESS interface to the GLAuto feed from stats to GL Green Power Switch ChargeManually created JE to reflect increase in revenue142442 *Generation Partners/Green Power ProvidersManually created JE to reflect reduction of revenue and AR44X142 or*Generation Partners/Green Power ProvidersManually created JE to reflect increase in power cost (a wash to 555) and reduction of AR555142 *Reduction of revenue is preferred method for GP/GPP; however, in cases where revenue is skewed due to a large amount of GP / GPP activity, increase of purchased power is acceptable. Please consult your TVA representative(s). Wholesale Side - Power Bill: DebitCredit Energy ProductProcessAccount # EGC/SMC/VCC/VIICredits reflected on Wholesale Invoice - reduction in power cost232555 5MR/60MR/TDHUD CreditCredits reflected on Wholesale Invoice - reduction in power cost232555 Green Power Switch Charge (Admin Credit)Charges (credits) reflected on power invoice - increase (decrease) in power cost555 (232)232 (555) Generation Partners/Green Power ProvidersCredits reflected on Wholesale Invoice - reduction in power cost232555 Distributor Billing Option ReimbursementCredit account 903 Customer Records and Collection Expense to offset admin costs903 Accounting for Credits on Wholesale & Retail Invoices 4

5. Depreciation Rates Background: –Historically, TVA has recommended depreciation for the following five accounts: 364- Poles, Towers, and Fixtures 365-Overhead Conductors and Devices 368-Line Transformers 369-Services 370-Meters –TVA has not updated depreciation rates recently. –General plant rates are determined by the LPC according to their policies. For example, if trucks are replaced every 5 years, a depreciation rate of 20% may be used. –Many questions have arisen about what depreciation rates to use for AMI meters. 5

6. AMI Meter Depreciation TVA recommends that LPC’s check with their auditor and/or the meter manufacturer to determine the useful life of the meter. As a guideline, many LPC’s are using between 8-15 years. The depreciation rate for standard meters was between 20-39 years. Process for updating depreciation –Notify TVA that you wish to update your depreciation rate for Account 370. –TVA will not have an issue if the rate seems reasonable. –Footnote the new depreciation rate on your Annual Report. 6

7. GASB 68 (Pensions) 7 Overview: The accounting for defined benefit pensions for governmental entities will now be similar to that of “for profit” entities. In addition to the revised accounting method, it will require extensive footnotes and supplemental information be provided in the financials. Does this effect my LPC? –GASB 68 will apply to some of the TVA municipal LPC’s – Multi-employer plans (i.e. CERS in KY and similar plans in other states) External Auditors & Actuarial Study TVA Guidance

8. Questions?