(13) Bradley Lake Hydroelectric Project

Chugach is a participant in the Bradley Lake Hydroelectric Project (Bradley Lake). Bradley Lake was built and financed by the Alaska Energy Authority (AEA) through State of Alaska grants and $166.0 million of revenue bonds. Chugach and other participating utilities have entered into take‑or‑pay power sales agreements under which shares of the project capacity have been purchased and the participants have agreed to pay a like percentage of annual costs of the project (including ownership, operation and maintenance costs, debt service costs and amounts required to maintain established reserves). Under these take‑or‑pay power sales agreements, the participants have agreed to pay all project costs from the date of commercial operation even if no energy is produced. Chugach has a 30.4% share, or 27.4 megawatts (MW) as currently operated, of the project’s capacity. The share of Bradley Lake indebtedness for which we are responsible is approximately $16.3 million. Upon the default of a Bradley Lake participant, and subject to certain other conditions, AEA is entitled to increase each participant’s share of costs pro rata, to the extent necessary to compensate for the failure of another participant to pay its share, provided that no participant’s percentage share is increased by more than 25%. Upon default, Chugach could be faced with annual expenditures of approximately $6.0 million as a result of Chugach’s Bradley Lake take-or-pay obligations. Management believes that such expenditures, if any, would be recoverable through the fuel recovery process.

The Battle Creek Diversion Project (Project) is a project to increase water available for generation by constructing a diversion on the West Fork of Upper Battle Creek to divert flows to Bradley Lake, increasing annual energy output by an estimated 37,000 MWh. The Bradley Lake Project Management Committee (BPMC) approved the project October 13, 2017, as amended December 1, 2017, and December 6, 2017. The Project cost is estimated at $47.0 million and the BMPC approved financing in this amount on December 6, 2017. The project is estimated to begin in the Spring of 2018 with an estimated completion date of 2020. Not all Bradley Lake purchasers are participating in the development and resulting benefits of the Project at this time, although they have preserved their ability to participate in the Project at a later date. Chugach would be entitled to 39.38% of the additional energy produced if no additional participants elect to join.

The following represents information with respect to Bradley Lake at June 30, 2017 (the most recent date for which information is available). Chugach's share of expenses was $6,452,898 in 2017, $5,662,522 in 2016, and $5,663,304 in 2015 and is included in purchased power in the accompanying financial statements.



(In thousands)	Total		Proportionate Share
Plant in service	$	162,907	$	49,524
Long-term debt		43,940		13,358
Interest expense		2,652		806

Chugach's share of a Bradley Lake transmission line financed internally is included in Intangible Electric Plant.