Tennessee Valley Authority Fiscal Responsibility and Accountability Act of 1986

Tennessee Valley Authority Fiscal Responsibility and Accountability Act of 1986 - Amends the Tennessee Valley Authority Act of 1933 to limit members of the board of directors of the Tennessee Valley Authority (the Corporation) to two three-year terms.

Reduces the Corporation's bond ceiling from $30 billion to $10 billion.

Prohibits the Federal Financing Bank from purchasing obligations issued or guaranteed by the Corporation after enactment of this Act.

Requires the Corporation to pay the principal and interest on bonds on a timely basis.

Amends the Inspector General Act of 1978 to establish a permanent Office of Inspector General for the Corporation.

Amends the Tennessee Valley Authority Act of 1933 to make the Corporation subject to State regulation as if it were a private utility, except that such State may not interfere with the obligations of the Corporation imposed by law.

Repeals the permanent authorization of appropriations for the Corporation.