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      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">UNITED
STATES</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">SECURITIES
AND EXCHANGE COMMISSION</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Washington,
D.C. 20549</font></div>
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      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">FORM
8-K</font></div>
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      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">CURRENT
REPORT</font></div>
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      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pursuant
to Section 13, 15(d), or 37 of the Securities Exchange Act of 1934</font></div>
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      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Date of
Report (Date of earliest event reported):&#160;&#160;July 30, 2008</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: center"><img src="tva-logo.jpg" alt=""></div>
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VALLEY AUTHORITY</font></div>
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name of registrant as specified in its charter)</font></div>
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      Employer Identification No.)</font></div>
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      W. Summit Hill Drive</font></div>
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telephone number, including area code)</font></div>
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name or former address, if changed since last report)</font></div>
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      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:</font></div>
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      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">[&#160;&#160;&#160;]&#160;&#160;Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)</font></div>
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material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)</font></div>
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      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">[&#160;&#160;&#160;]&#160;&#160;Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))</font></div>
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communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))</font></div>
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</font></div>
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      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Item
4.02 Non-Reliance on Previously Issued Financial Statements or a Related Audit
Report or Completed Interim Review.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.35; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On July 30, 2008,
management of the Tennessee Valley Authority (&#8220;TVA&#8221;) and the Audit, Governance,
and Ethics Committee of the Board of Directors agreed that TVA&#8217;s financial
statements for the fiscal years ended September 30, 2006 and 2007, and the
quarterly periods ended December 31, 2006, March 31, 2007, June 30, 2007,
December 31, 2007, and March 31, 2008, should not be relied upon due to errors
in the estimates of unbilled revenue.&#160;&#160;TVA will be restating its
financial statements for these periods by amending the relevant periodic
reports.</font></font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.35">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.35; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">TVA is primarily a
wholesale provider of power to distributor customers (&#8220;customers&#8221;) that resell
the power to end users at retail rates.&#160;&#160;Under TVA&#8217;s end-use billing
arrangements with its customers, TVA relies on the customers to report their
end-use sales.&#160;&#160;Because of the delay between the wholesale delivery of
power to the customer and the report of end-use sales to TVA, TVA must estimate
the unbilled revenue at the end of each financial reporting
period.&#160;&#160;In September 2006, TVA implemented a change in methodology
for estimating unbilled revenue for electricity sales.&#160;&#160;As noted in
TVA&#8217;s Annual Report on Form 10-K/A for the year ended September 30, 2006, this
change resulted in an increase of $232 million in unbilled revenue for fiscal
year 2006.&#160;&#160;The estimation process&#160;implemented in September 2006
utilized the customers&#8217; average rates and an estimate of the number of days of
revenue outstanding that reflects the delay in reporting the end-use sales to
TVA (&#8220;days outstanding&#8221;).&#160;&#160;The number of days outstanding was derived
by regression analysis.&#160;&#160;TVA has determined that this method
overestimated the days outstanding.&#160;&#160;TVA is further changing its
estimation process to use TVA meter data and individual distributor wholesale
bill dates.</font></font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.35">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.35; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">TVA is currently
evaluating the impact of these errors.&#160;&#160;TVA estimates that the impact
from the errors was an overstatement of net income for the fiscal year ended
September 30, 2006, and understatements of net income for the fiscal year ended
September 30, 2007, and the six months ended March 31, 2008.&#160;&#160;TVA
estimates that the changes to the financial statements as of or for the
respective periods will primarily involve total assets and retained earnings on
the balance sheets, and revenues and net income on the statements of
income.&#160;&#160;The errors and restatements have no impact on net cash
provided by operating activities.</font></font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.35">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.35; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">These estimations are
preliminary and are subject to change during the restatement
process.&#160;&#160;Additional adjustments to TVA&#8217;s financial statements may be
determined to be necessary during the restatement process.</font></font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.35">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.35; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">TVA has
determined that the errors resulted from a material weakness related to the
processes, procedures, and controls surrounding the calculation of unbilled
revenue; accordingly, the discussion of management&#8217;s evaluation of TVA&#8217;s
disclosure controls and procedures in the periodic reports mentioned above will
be revised as appropriate.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div><br>
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</font></div>
        </div>
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          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#8211;2&#8211;</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;
</font></div>
        </div>
      </div><br>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; LINE-HEIGHT: 1.35; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In order
to remediate this material weakness, TVA is taking the following steps: (i)
performing additional analysis on TVA&#8217;s unbilled revenue estimates; (ii)
expanding the management review of the assumptions in the calculation; and (iii)
further documenting the procedures to manage changes in the process of
estimating unbilled revenue.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.35">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 28pt; LINE-HEIGHT: 1.35; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">TVA
management and the Audit, Governance, and Ethics Committee have discussed the
matters disclosed in this Current Report on Form 8-K with Ernst and Young LLP,
TVA&#8217;s current registered independent public accounting firm.&#160;&#160;In
addition, TVA management has discussed these matters with PricewaterhouseCoopers
LLP, TVA&#8217;s registered independent public accounting firm for the fiscal years
ended September 30, 2006 and 2007.&#160;&#160; </font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">SIGNATURES</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
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      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>Pursuant to the requirements of the
Securities Exchange Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned hereunto duly
authorized.</font></div>
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      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
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        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div align="left">
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                </td>
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                  <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      Tennessee Valley Authority</font></div>
                </td>
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              <tr>
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tva8-k.htm
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13, 15(d), or 37 of the Securities Exchange Act of 1934
Date of
Report (Date of earliest event reported):  July 30, 2008
TENNESSEE
VALLEY AUTHORITY
(Exact
name of registrant as specified in its charter)
A
      corporate agency of the United States created by an act of
      Congress
(State
      or other jurisdiction of incorporation or organization)
000-52313
(Commission
      file number)
62-0474417
(IRS
      Employer Identification No.)
400
      W. Summit Hill Drive
Knoxville,
      Tennessee
(Address
      of principal executive offices)
37902
(Zip
      Code)
(865) 632-2101
(Registrant's
telephone number, including area code)
None
(Former
name or former address, if changed since last report)
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
[   ]  Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
[   ]  Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[   ]  Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
[   ]   Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
–1–
Item
4.02 Non-Reliance on Previously Issued Financial Statements or a Related Audit
Report or Completed Interim Review.
On July 30, 2008,
management of the Tennessee Valley Authority ("TVA") and the Audit, Governance,
and Ethics Committee of the Board of Directors agreed that TVA's financial
statements for the fiscal years ended September 30, 2006 and 2007, and the
quarterly periods ended December 31, 2006, March 31, 2007, June 30, 2007,
December 31, 2007, and March 31, 2008, should not be relied upon due to errors
in the estimates of unbilled revenue.  TVA will be restating its
financial statements for these periods by amending the relevant periodic
reports.
TVA is primarily a
wholesale provider of power to distributor customers ("customers") that resell
the power to end users at retail rates.  Under TVA's end-use billing
arrangements with its customers, TVA relies on the customers to report their
end-use sales.  Because of the delay between the wholesale delivery of
power to the customer and the report of end-use sales to TVA, TVA must estimate
the unbilled revenue at the end of each financial reporting
period.  In September 2006, TVA implemented a change in methodology
for estimating unbilled revenue for electricity sales.  As noted in
TVA's Annual Report on Form 10-K/A for the year ended September 30, 2006, this
change resulted in an increase of $232 million in unbilled revenue for fiscal
year 2006.  The estimation process implemented in September 2006
utilized the customers' average rates and an estimate of the number of days of
revenue outstanding that reflects the delay in reporting the end-use sales to
TVA ("days outstanding").  The number of days outstanding was derived
by regression analysis.  TVA has determined that this method
overestimated the days outstanding.  TVA is further changing its
estimation process to use TVA meter data and individual distributor wholesale
bill dates.
TVA is currently
evaluating the impact of these errors.  TVA estimates that the impact
from the errors was an overstatement of net income for the fiscal year ended
September 30, 2006, and understatements of net income for the fiscal year ended
September 30, 2007, and the six months ended March 31, 2008.  TVA
estimates that the changes to the financial statements as of or for the
respective periods will primarily involve total assets and retained earnings on
the balance sheets, and revenues and net income on the statements of
income.  The errors and restatements have no impact on net cash
provided by operating activities.
These estimations are
preliminary and are subject to change during the restatement
process.  Additional adjustments to TVA's financial statements may be
determined to be necessary during the restatement process.
TVA has
determined that the errors resulted from a material weakness related to the
processes, procedures, and controls surrounding the calculation of unbilled
revenue; accordingly, the discussion of management's evaluation of TVA's
disclosure controls and procedures in the periodic reports mentioned above will
be revised as appropriate.
–2–
In order
to remediate this material weakness, TVA is taking the following steps: (i)
performing additional analysis on TVA's unbilled revenue estimates; (ii)
expanding the management review of the assumptions in the calculation; and (iii)
further documenting the procedures to manage changes in the process of
estimating unbilled revenue.
TVA
management and the Audit, Governance, and Ethics Committee have discussed the
matters disclosed in this Current Report on Form 8-K with Ernst and Young LLP,
TVA's current registered independent public accounting firm.  In
addition, TVA management has discussed these matters with PricewaterhouseCoopers
LLP, TVA's registered independent public accounting firm for the fiscal years
ended September 30, 2006 and 2007.
SIGNATURES
Pursuant to the requirements of the
Securities Exchange Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned hereunto duly
authorized.
Tennessee Valley Authority
(Registrant)
Date:
      August 5, 2008
/s/
      Kimberly S. Greene
Kimberly
      S. Greene
Chief
      Financial Officer and Executive Vice President,
Financial
      Services
–3–