d77592_10-q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
	SECURITIES EXHANGE ACT OF 1934

For the quarterly period ended June 30, 2009

o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
	SECURITIES EXCHANGE ACT OF 1934

Commission file number 33-42125

CHUGACH ELECTRIC ASSOCIATION, INC.

(Exact name of registrant as specifies in its charter)

State of Alaska (State or other jurisdiction of incorporation or organization)	92-0014224 (I.R.S. Employer Identification Number)
5601 Electron Drive, Anchorage, AK (Address of principal executive offices)	99518 (Zip Code)
(907) 563-7494 (Registrant’s telephone number including area code) None (Former name, former address, and former fiscal year if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

xYes o No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). o Yes o No

Indicate by check mark whether the registrant is large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer o Accelerated filer o

Non-accelerated filer x Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). o Yes x No

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.NONE

CHUGACH ELECTRIC ASSOCIATION, INC. TABLE OF CONTENTS
Caution Regarding Forward-Looking Statements			2
Part I. Financial Information

	Item 1.	Financial Statements (unaudited)	2
		Balance Sheets - as of June 30, 2009 and December 31, 2008	3
		Statements of Operations - Three and six months ended June 30, 2009 and June 30, 2008	5
		Statements of Cash Flows - Six Months Ended June 30, 2009 and June 30, 2008	6
		Notes to Financial Statements	7
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	32
	Item 4.	Controls and Procedures	33

Part II. Other Information
	Item 1.	Legal Proceedings	34
	Item 1A.	Risk Factors	34
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	34
	Item 3.	Defaults Upon Senior Securities	34
	Item 4.	Submission of Matters to a Vote of Security Holders	35
	Item 5.	Other Information	35
	Item 6.	Exhibits	35
		Signatures	36
		Exhibits	37

Caution Regarding Forward-Looking Statements

Statements in this report that do not relate to historical facts, including statements relating to future plans, events or performance, are forward-looking statements that involve risks and uncertainties. Actual results, events or performance may differ materially. Readers are cautioned not to place undue reliance on these forward-looking statements that speak only as of the date of this report and the accuracy of which is subject to inherent uncertainty. It is suggested these statements are read in conjunction with our audited financial statements for the year ended December 31, 2008, filed as part of our annual report on Form 10-K. Chugach Electric Association, Inc. (Chugach) undertakes no obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances that may occur after the date of this report or the effect of those events or circumstances on any of the forward-looking statements contained in this report, except as required by law.

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

The unaudited financial statements and notes to the financial statements of Chugach as of and for the quarter ended June 30, 2009, follow.

Chugach Electric Association, Inc.

Balance Sheets

(Unaudited)

Assets	June 30, 2009			December 31, 2008

Utility Plant:
Electric Plant in service	$	831,051,838		$	821,462,475
Construction work in progress		25,573,192			25,151,072
Total utility plant		856,625,030			846,613,547
Less accumulated depreciation		(405,946,339	)		(389,002,139	)
Net utility plant		450,678,691			457,611,408

Other property and investments, at cost:
Nonutility property		24,461			24,461
Investments in associated organizations		12,177,447			12,177,769
Special Funds		271,203			264,427
Total other property and investments		12,473,111			12,466,657

Current assets:
Cash and cash equivalents		3,805,102			7,491,302
Special deposits		124,140			114,930
Fuel and purchased power cost under-recovery		0			11,788,078
Accounts receivable, net		28,798,576			33,019,372
Materials and supplies		31,038,745			28,806,641
Prepayments		1,169,211			1,544,025
Other current assets		193,251			272,357
Total current assets		65,129,025			83,036,705

Deferred charges, net		22,901,263			23,577,199

Total assets	$	551,182,090		$	576,691,969

See accompanying notes to financial statements.

Chugach Electric Association, Inc.

Balance Sheets (continued)

(Unaudited)

Liabilities, Equities and Margins	June 30, 2009		December 31, 2008

Equities and margins:
Memberships	$	1,409,053	$	1,390,413
Patronage capital		144,300,448		142,009,998
Other		10,283,646		10,366,588
Total equities and margins		155,993,147		153,766,999

Long-term obligations, excluding current installments:
Bonds payable		270,000,000		270,000,000
National Bank for Cooperatives		38,322,745		41,419,847
National Rural Utilities Cooperative Finance Corporation promissory notes payable		0		42,963,659
Total long-term obligations		308,322,745		354,383,506

Current liabilities:
Current installments of long-term obligations		4,576,912		4,403,653
Commercial Paper		33,505,000		0
Promissory notes payable		0		2,860,000
Short-term obligations		0		7,500,000
Accounts payable		6,297,332		6,999,140
Consumer deposits		2,420,729		2,410,980
Fuel and purchased power cost over-recovery		958,526		0
Accrued interest		6,079,160		6,158,927
Salaries, wages and benefits		5,405,916		5,481,621
Fuel		25,021,529		28,494,211
Other liabilities		1,054,545		1,666,521
Total current liabilities		85,319,649		65,975,053

Deferred compensation		271,203		264,427
Deferred liabilities		1,275,346		2,301,984

Total liabilities, equities and margins	$	551,182,090	$	576,691,969

See accompanying notes to financial statements.

Chugach Electric Association, Inc.

Statements of Operations

(Unaudited)

	Three months ended June 30						Six months ended June 30

	2009			2008			2009			2008

Operating revenues	$	69,239,153		$	62,483,023		$	152,656,223		$	134,354,311

Operating expenses:
Fuel		33,235,760			27,446,913			73,463,068			59,533,462
Production		3,651,950			4,677,243			8,038,831			8,446,566
Purchased power		9,757,529			8,016,659			20,943,056			15,617,983
Transmission		1,306,411			1,587,962			2,669,017			2,918,740
Distribution		3,444,131			3,171,829			6,257,354			5,939,732
Consumer accounts		1,362,797			1,339,072			2,585,506			2,692,190
Administrative, general and other		5,008,436			4,955,695			10,086,941			10,002,716
Depreciation and amortization		8,031,393			7,593,816			15,999,147			14,974,135
Total operating expenses		65,798,407			58,789,189			140,042,920			120,124,524

Interest on long-term debt		5,052,093			5,205,540			10,125,165			10,880,750
Other		248,897			280,722			603,267			352,344
Charged to construction		(136,502	)		(102,738	)		(257,914	)		(217,832	)
Net interest expenses		5,164,488			5,384,524			10,470,518			11,015,262
Net operating margins		(1,723,742	)		(1,690,690	)		2,142,785			3,214,525

Nonoperating margins:
Interest income		13,150			94,727			92,997			212,315
Capital credits, patronage dividends and other		48,358			26,964			80,212			60,968
Total nonoperating margins		61,508			121,691			173,209			273,283

Assignable margins	$	(1,662,234	)	$	(1,568,999	)	$	2,315,994		$	3,487,808

See accompanying notes to financial statements.

Chugach Electric Association, Inc.

Statements of Cash Flows

(Unaudited)

	Six months ended June 30
	2009			2008
Cash flows from operating activities:
Assignable margins	$	2,315,994		$	3,487,808

Adjustments to reconcile assignable margins to net cash provided by operating activities:
Depreciation and amortization		18,377,254			17,478,854
Capitalized interest		(336,841	)		(278,959	)
Other		0			162

Changes in assets and liabilities:
(Increase) decrease in assets:
Accounts receivable, net		4,220,796			8,931,829
Fuel and purchased power cost under-recovery		11,788,078			(4,573,046	)
Materials and supplies		(2,232,104	)		1,343,081
Prepayments		374,814			208,287
Other assets		70,218			91,521
Deferred charges, net		(1,189,017	)		(1,639,791	)
Accounts payable		(548,971	)		(397,987	)

Increase (decrease) in liabilities:
Consumer deposits		9,749			14,031
Fuel and purchased power cost over-recovery		958,526			(1,596,010	)
Accrued interest		(79,767	)		(136,837	)
Salaries, wages and benefits		(75,705	)		176
Fuel		(3,472,682	)		(55,502	)
Other liabilities		(506,579	)		(453,750	)
Deferred liabilities		(25,689	)		(7,572	)
Net cash provided by operating activities		29,648,074			22,416,295

Cash flows from investing activities:
Extension and replacement of plant		(10,444,800	)		(13,196,779	)
Net cash used for investing activities		(10,444,800	)		(13,196,779	)

Cash flows from financing activities:
Payments of notes payable		(2,860,000	)		0
Repayments of long-term obligations		(45,887,502	)		(38,264,865	)
Proceeds from short-term borrowing		45,503,000			29,713,659
Repayments of short-term borrowing		(19,498,000	)		0
Memberships and donations refunded		(64,302	)		(38,491	)
Retirement of patronage capital and estate payments		(130,941	)		(1,336,004	)
Net deposits (refunds) of consumer advances for construction		48,271			(88,267	)
Net cash used for financing activities		(22,889,474	)		(10,013,968	)

Net decrease in cash and cash equivalents		(3,686,200	)		(794,452	)

Cash and cash equivalents at beginning of period	$	7,491,302		$	6,209,936

Cash and cash equivalents at end of period	$	3,805,102		$	5,415,484

Supplemental disclosure of non-cash investing and financing activities
Retirement of plant	$	643,647		$	1,008,914
Extension and replacement of plant included in accounts payable	$	2,513,568		$	1,293,360
Supplemental disclosure of cash flow information - interest expense paid,
excluding amounts capitalized	$	9,756,057		$	11,152,099

See accompanying notes to financial statements.

Chugach Electric Association, Inc.

Notes to Financial Statements

June 30, 2009 and 2008

1.	PRESENTATION OF FINANCIAL INFORMATION

The accompanying unaudited interim financial statements include the accounts of Chugach Electric Association, Inc. (Chugach) and have been prepared in accordance with generally accepted accounting principles for interim financial information. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. They should be read in conjunction with our audited financial statements for the year ended December 31, 2008, filed as part of our annual report on Form 10-K. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. The results of operations for interim periods are not necessarily indicative of the results that may be expected for an entire year or any other period.

2.	DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

a.	Description of Business

Chugach is the largest electric utility in Alaska. Chugach is engaged in the generation, transmission and distribution of electricity to directly serve retail customers in the Anchorage and upper Kenai Peninsula areas. Through an interconnected regional electrical system, Chugach’s power flows throughout Alaska’s Railbelt, a 400-mile-long area stretching from the coastline of the southern Kenai Peninsula to the interior of the state, including Alaska’s largest cities, Anchorage and Fairbanks.

Chugach also supplies much of the power requirements for three of its wholesale customers, Matanuska Electric Association, Inc. (MEA), Homer Electric Association, Inc. (HEA), and the City of Seward (Seward). Retail members of Chugach and wholesale customers are the consumers of the electricity sold. Notification has been given by HEA and MEA that neither organization intends to be on the Chugach system under the current contractual arrangements post 2014. This will result in a loss of approximately 50% of Chugach’s power sales load and approximately 40% of the utility’s annual sales revenue.

Chugach operates on a not-for-profit basis and accordingly, seeks only to generate revenues sufficient to pay operating and maintenance costs, the cost of purchased power, capital expenditures, depreciation, and principal and interest on all indebtedness and to provide for reserves. Chugach is subject to the regulatory authority of the Regulatory Commission of Alaska (RCA).

b.	Management Estimates

In preparing the financial statements, management of Chugach is required to make estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the balance sheet and revenues and expenses for the reporting period. Estimates include allowance for doubtful accounts, deferred charges

Chugach Electric Association, Inc.

Notes to Financial Statements

June 30, 2009 and 2008

and credits, unbilled revenue and the estimated useful life of utility plant. Actual results could differ from those estimates.

c.	Regulation

The accounting records of Chugach conform to the Uniform System of Accounts as prescribed by the Federal Energy Regulatory Commission (FERC). Chugach meets the criteria, and accordingly, follows the accounting and reporting requirements of Statement of Financial Accounting Standards (SFAS) No. 71, “Accounting for the Effects of Certain Types of Regulation” (SFAS No.71).

SFAS No. 71 provides for the recognition of regulatory assets and liabilities as allowed by regulators for costs or credits that are reflected in current rates or are considered probable of being included in future rates. The regulatory assets or liabilities are then reduced as the cost or credit is reflected in rates.

d.	Income Taxes

Chugach is exempt from federal income taxes under the provisions of Section 501(c)(12) of the Internal Revenue Code and for the six month periods ended June 30, 2009 and 2008 was in compliance with that provision. In addition, Chugach collects sales tax and is assessed gross receipts and excise taxes which are presented on a net basis in accordance with Emerging Issues Task Force (EITF) No. 06-3 “How Taxes Collected from Customers and Remitted to Governmental Authorities Should Be Presented in the Income Statement.”

e. Subsequent Events

Chugach’s management evaluated all events from the date of our financial statements, June 30, 2009, through the date our financial statements were issued, August 14, 2009.

f. Presentation of Financial Information

During the six months ended June 30, 2009, the company recorded an immaterial adjustment to correctly present cash used in investing activities and cash used in financing activities for the six months ended June 30, 2008. The adjustment represents the amount of non refundable consumer advances previously included as a reduction of cash used in investing activities and now included as a reduction of cash used in financing activities. The impact of the adjustment was to increase cash used in investing activities by $519,282 and reduce cash used in financing activities by the same amount.

Chugach Electric Association, Inc.

Notes to Financial Statements

June 30, 2009 and 2008

3.	REGULATORY MATTERS

Natural Gas Contract Submittal

General Rate Case

On June 23, 2009, Chugach filed a general rate case to adjust base rates for both retail and wholesale customers. If approved by the RCA, base rate revenue would increase $4.2 million annually. Under Chugach’s proposal, Chugach’s retail members would pay approximately $2.7 million more in base rates, while bills for wholesale customers would increase approximately $1.5 million. Chugach estimates that Chugach retail end-users will see an increase of approximately 1.7% to their bills, on an overall average basis. On a similar basis, retail end-users of Chugach’s wholesale customers would see approximately an estimated 0.9% increase in their bills. Chugach had requested that the proposed rates go into effect on an interim basis on August 7, 2009. On August 7, 2009 the Regulatory Commission of Alaska suspended Chugach’s base rate filing into Docket U-09-80 and issued Order No. 1. The Commission named Chugach’s wholesale customers HEA, MEA and SES parties to the docket.

The Commission delayed making a decision on Chugach’s proposed 3.6 percent interim base rate increase pending Chugach’s response to the Commission order. A one month delay results, on average, in an approximate revenue impact of $350,000 per month.

In the order, the Commission ruled that Chugach is not permitted to include future known and measurable adjustments to its filed revenue requirement and may, as a result, elect to withdraw the filing without prejudice and re-file when additional known and measurable information becomes available. Chugach’s original filing stated that additional submittals would be built into the rate case, including Chugach’s review and update of depreciation rates. Chugach will submit a filing on or by August 14 indicating that it will continue with its proposed rate changes contained in the filing.

In addition, the Commission indicated that Chugach may submit comments in response to the wholesale customer comments filed with the Commission on July 31, 2009. Chugach will submit a response on or before August 21, 2009.

Chugach Electric Association, Inc.

Notes to Financial Statements

June 30, 2009 and 2008

The Commission has set a prehearing conference for the docket on September 9, 2009. The Commission has indicated that it will issue a final order in this case no later than September 16, 2010, consistent with Alaska Statute.

4.	LINES OF CREDIT

Chugach maintains a $7.5 million line of credit with CoBank, ACB (CoBank). On October 22, 2008, the Board of Directors approved a resolution to renew this line of credit. The line of credit was also renewed by CoBank, extending the expiration date to October 31, 2009, and is subject to annual renewal at the discretion of the parties. Chugach had activity on this line of credit in the first half of 2009, however, there was no outstanding balance at June 30, 2009. At December 31, 2008, the outstanding balance on this line of credit was $7.5 million.

The CoBank Master Loan Agreement requires Chugach to establish and collect electric rates reasonably expected to yield margins for interest equal to at least 1.10 times interest expense, to achieve a funded debt to operating cash flow ratio not greater than 8 to 1 and achieve an equity to total capitalization ratio greater than 22%. The borrowing rate is calculated using the CoBank Base Rate on the first business day of the week and can not exceed the CoBank Base Rate on that day plus 3%. The borrowing rate at June 30, 2009 and December 31, 2008 was 2.31% and 1.30%, respectively.

Chugach had maintained an annual line of credit of $50 million with NRUCFC until October 9, 2008, when Chugach reduced this line of credit to $45 million. On December 22, 2008, this line of credit was increased to $75 million, however, pursuant to the terms of the Amendment To Revolving Line of Credit Agreement with NRUCFC, this line of credit shall be permanently reduced to $50 million upon the earlier of January 1, 2010 or the date Chugach pays down this line of credit to an outstanding balance of not more than $50 million. In January of 2009 Chugach had additional line of credit activity and had a balance of $38 million on January 30, 2009, when we repaid $30 million on this line of credit by issuing commercial paper under our Commercial Paper program. Consequently, effective January 30, 2009, Chugach’s borrowing limit on its NRUCFC line of credit was permanently reduced to $50 million. In February of 2009 Chugach repaid the remaining balance on this line of credit by issuing commercial paper. There was no outstanding balance at June 30, 2009. At December 31, 2008, the outstanding balance on this line of credit was $43 million. The borrowing rate is calculated using the total rate per annum as may be fixed by NRUCFC and will not exceed the Prevailing Prime Rate, plus one percent per annum. At June 30, 2009 and December 31, 2008, the borrowing rate was 4.95% and 5.25%, respectively.

The NRUCFC Revolving Line Of Credit Agreement requires that Chugach, for each 12-month period, for a period of at least five consecutive days, pay down the entire outstanding principal balance. The NRUCFC line of credit expires October 14, 2012.

The CoBank and NRUCFC lines of credit are immediately available for unconditional borrowing.

Chugach Electric Association, Inc.

Notes to Financial Statements

June 30, 2009 and 2008

5.	NOTES PAYABLE

In December of 2008, Chugach acquired property near its Anchorage headquarters for, among other purposes, construction of an additional electrical generation facility. The total purchase price of the property was $4,860,000 which included a $75,000 non refundable earnest money payment, a $1,925,000 down payment and a $2,860,000 promissory note bearing interest at six percent per annum payable in two installments. A payment of $1,000,000 was made in March of 2009 and the final payment of $1,860,000 plus accrued interest was made on June 12, 2009. Chugach had the right to prepay any amount of the note in full at any time without penalty. The promissory note was secured by a deed of trust on the property.

FINANCING

Over the next five years Chugach anticipates incurring significant capital expenditures due to the construction of a natural gas fired generation unit, on-going capital needs and the refinancing of $150 million of 2001 Series A Bonds that are due March 15, 2011, and $120 million of 2002 Series A Bonds due February 1, 2012. In March 2008 Chugach issued a Request For Proposal (RFP) for a three to five year interim finance facility. Commercial paper will be issued under this facility and will act as a bridge until Chugach converts Commercial Paper balances to long term debt and to refinance the 2011 and 2012 Series A bonds. The commercial paper program is backed by a $300 million Unsecured Credit Agreement between NRUCFC, KeyBank, CoBank and US Bank. At closing, the Credit Agreement was priced with an all-in drawn spread of London Interbank Offered Rate (LIBOR) plus 60 basis points, along with a 17.5 basis points facility fee. The credit agreement was executed on October 10, 2008, and expires on October 10, 2011. At this time, management intends to renew this agreement although the terms may be different. On January 30, 2009, Chugach issued $36.0 million of commercial paper to repay its NRUCFC line of credit. On February 5, 2009, Chugach issued $10.0 million of commercial paper to repay the balance of its NRUCFC line of credit. Chugach had additional commercial paper activity in the first and second quarters of 2009. At June 30, 2009, Chugach had $33.5 million of commercial paper outstanding. Our commercial paper can be repriced between one and two hundred and seventy days.

Chugach Electric Association, Inc.

Notes to Financial Statements

June 30, 2009 and 2008

The following table provides information on average commercial paper balances outstanding (dollars in millions) and corresponding weighted average interest rates:

	Average	Weighted Average
Month	Balance	Interest Rate
January 2009	36.0	1.17
February 2009	44.6	1.48
March 2009	46.6	1.19
April 2009	47.0	0.60
May 2009	43.0	0.53
June 2009	41.7	0.49

7.	LEGAL PROCEEDINGS

Chugach has certain litigation matters and pending claims that arise in the ordinary course of business. In the opinion of management, no individual matter or matters in the aggregate are likely to have a material adverse effect on Chugach’s results of operations, financial condition or liquidity.

8. RECENT ACCOUNTING PRONOUNCEMENTS

SFAS 168 “The FASB Accounting Standards CodificationTM and the Hierarchy of Generally Accepted Accounting Principles – a replacement of FASB Statement No. 162”

In June 2009, the Financial Accounting Standards Board (FASB) issued SFAS No. 168, “The FASB Accounting Standards CodificationTM and the Hierarchy of Generally Accepted Accounting Principles.” This SFAS applies to all financial statements of nongovernmental entities that are presented in conformity with GAAP. SFAS No. 168 does not change GAAP, it establishes the FASB Accounting Standards CodificationTM (Codification) as the source of authoritative GAAP to be applied by nongovernmental entities, while also acknowledging the rules and interpretive releases of the SEC under authority of federal securities laws as sources of authoritative GAAP for SEC registrants. Additionally, the Codification creates a new format for tracking, identifying, and citing GAAP, by numbered topics, subtopics, sections and paragraphs. As of the effective date of this SFAS, all then-existing non-SEC standards will be superseded by the Codification and any non-SEC accounting literature not grandfathered will become non-authoritative. SFAS No. 168 is effective for financial statements issued for periods ending after September 15, 2009. Chugach will begin application of SFAS 168 to financial statements for the period ended September 30, 2009, which is not expected to have a material effect on our results of operations, financial position, and cash flows.

Chugach Electric Association, Inc.

Notes to Financial Statements

June 30, 2009 and 2008

SFAS 167 “Amendments to FASB Interpretation No. 46(R)”

In June 2009, the FASB issued SFAS No. 167, “Amendments to FASB Interpretation No. 46(R).” SFAS No. 167 applies to all entities except for those identified in FIN 46(R), “Consolidation of Variable Interest Entities,” as well as entities previously considered qualifying special-purpose entities, as the concept of these entities was eliminated by SFAS No. 166, “Accounting for Transfers of Financial Assets.” SFAS No. 167 amends FIN 46(R) to require additional disclosures regarding an entity’s involvement in variable interest entities. SFAS No. 167 is effective for interim and annual reporting periods beginning after November 15, 2009. Chugach will begin application of SFAS No. 167 on January 1, 2010, which is not expected to have a material effect on our results of operations, financial position, and cash flows.

SFAS 166 “Accounting for Transfers of Financial Assets – an amendment of FASB Statement No. 140”

In June 2009, the FASB issued SFAS No. 166, “Accounting for Transfers of Financial Assets – an amendment of FASB Statement No. 140.” SFAS No. 166 applies to all entities and amends SFAS No. 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities.” SFAS No. 140 was amended to enhance the disclosure requirements as well as to define some of the terms and measurements to be used, by removing the concept of a qualifying special-purpose entity and the exception from applying FIN 46, “Consolidation of Variable Interest Entities,” to qualifying special-purpose entities. SFAS No. 166 is effective for interim and annual reporting periods beginning after November 15, 2009. Chugach will begin application of SFAS No. 166 on January 1, 2010, which is not expected to have a material effect on our results of operations, financial position, and cash flows.

FAS 165 “Subsequent Events”

In May 2009, the FASB issued SFAS No. 165, “Subsequent Events.” SFAS No. 165 applies to the accounting for and disclosure of subsequent events, in both interim and annual financial statements. However, it does not apply to those subsequent events or transactions within the scope of other GAAP that provides different guidance of subsequent events and transactions. SFAS No. 165 is effective for interim and annual reporting periods ending after June 15, 2009. Chugach began application of SFAS No. 165 with the current financial statements ending June 30, 2009, which did not have a material effect on our results of operations, financial position, and cash flows.

Chugach Electric Association, Inc.

Notes to Financial Statements

June 30, 2009 and 2008

FAS 164 “Not-for-Profit Entities: Mergers and Acquisitions – Including an amendment of FASB Statement No. 142”

In April 2009, the FASB issued SFAS No. 164, “Not-for-Profit Entities: Mergers and Acquisitions – Including an amendment of FASB Statement No. 142.” SFAS No. 164 applies to the combination of not-for-profit entities meeting the definition of a merger or acquisition, with specific exceptions. SFAS No. 164 provides guidance on the accounting and disclosure of these combinations. SFAS No. 164 is effective for annual reporting periods beginning after December 15, 2009. Chugach will begin application of SFAS No. 164 on January 1, 2010, which is not expected to have a material effect on our results of operations, financial position, and cash flows.

FSP FAS 107-1 and APB 25-1 “Interim Disclosures about Fair Value of Financial Instruments”

In April 2009, the FASB issued FASB Staff Position (FSP) FAS 107-1 and APB 25-1, “Interim Disclosures about Fair Value of Financial Instruments.” This FSP applies to all financial instruments within the scope of SFAS No. 107, “Disclosures about Fair Value of Financial Instruments,” held by publicly traded companies, as defined by APB Opinion No. 28, “Interim Financial Reporting.” This FSP expands the reporting of fair value disclosures required by SFAS No. 107 to include interim reporting. This FSP also amends APB Opinion No. 28 to require those disclosures in summarized financial information of interim reports. FSP FAS 107-1 and APB 25-1 is effective for interim periods ending after June 15, 2009, with early adoption permitted for periods ending after March 15, 2009. Chugach began application of FSP FAS 107-1 and APB 25-1 to fair value disclosures on January 1, 2009, which did not have a material effect on our results of operations, financial position, and cash flows.

FSP FAS 115-2 and FAS 124-2 “Recognition and Presentation of Other-Than-Temporary Impairments”

In April 2009, the FASB issued FSP FAS 115-2 and FAS 124-2, “Recognition and Presentation of Other-Than-Temporary Impairments.” FSP FAS 115-2 and FAS 124-2 applies to debt securities classified as available-for-sale and held-to-maturity that are subject to other-than-temporary impairment guidance within specific parameters. This FSP amends current U.S. GAAP guidance on other-than-temporary impairment of debt securities to make the guidance more operational and to improve the presentation and disclosure of those impairments in the financial statements. FSP FAS 115-2 and FAS 124-2 is effective for interim and annual reporting periods ending after June 15, 2009. Chugach began application of FSP FAS 115-2 and FAS 124-2 on April 1, 2009, which did not have a material effect on our results of operations, financial position, and cash flows.

Chugach Electric Association, Inc.

Notes to Financial Statements

June 30, 2009 and 2008

FSP FAS 157-4 “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly”

In April 2009, the FASB issued FSP FAS 157-4, ”Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions.” FSP FAS 157-4 applies to all assets and liabilities within the scope of accounting pronouncements that require or permit fair value measurement. FSP FAS 157-4 is effective for interim and annual reporting periods ending after June 15, 2009. Chugach began application of FSP FAS 157-4 on April 1, 2009, which did not have a material effect on our results of operations, financial position, and cash flows.

9. FAIR VALUES OF ASSETS AND LIABILITIES

On January 1, 2008, Chugach adopted the provisions of SFAS No. 157, Fair Value Measurements. SFAS No. 157 defines fair value, establishes a consistent framework for measuring fair value and expands disclosure requirements for fair value measurements. On January 1, 2009, Chugach adopted certain provisions of SFAS No. 157 relating to nonfinancial assets and liabilities that are not recognized or disclosed at fair value in the financial statements on a recurring basis, at least annually. The adoption of these specific provisions of SFAS No. 157 relating to nonfinancial assets and liabilities did not have a material impact on our results of operations, financial position, and cash flows.

Fair Value Hierarchy

In accordance with SFAS No. 157 Chugach groups its financial assets and liabilities measured at fair value in three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value. These levels are:

Level 1 – Valuation is based upon quoted prices for identical instruments traded in active exchange markets, such as the New York Stock Exchange. Level 1 also includes U.S. Treasury and federal agency securities, which are traded by dealers or brokers in active markets. Valuations are obtained from readily available pricing sources for market transactions involving identical assets or liabilities.

Level 2 – Valuation is based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market.

Level 3 – Valuation is generated from model-based techniques that use significant assumptions not observable in the market. These unobservable assumptions reflect Chugach’s estimates of assumptions that market participants would use in pricing the asset or liability. Valuation techniques include use of option pricing models, discounted cash flow models and similar techniques.

Chugach Electric Association, Inc.

Notes to Financial Statements

June 30, 2009 and 2008

The table below presents the balance of Chugach’s non-qualified deferred compensation plan assets measured at fair value on a recurring basis.

Total	Level 1	Level 2	Level 3
$271,203	$271,203	$0	$0

Chugach had no Level 2 or Level 3 assets or liabilities measured at fair value on a recurring basis.

Fair Value of Long-Term Obligations

The estimated fair values (in thousands) of the long-term obligations included in the financial statements at June 30, 2009, are as follows:

	Carrying Value	Fair Value
Long-term obligations (including current installments)	$346,405	$365,902

Fair value estimates are dependent upon subjective assumptions and involve significant uncertainties resulting in variability in estimates with changes in assumptions. The fair value of long-term debt has been determined using discounted future cash flows at borrowing rates currently available to Chugach.

The fair values of cash and cash equivalents, accounts receivable and payable, and other short-term monetary assets and liabilities approximate carrying values due to their short-term nature.

10. ENVIRONMENTAL MATTERS

The Clean Air Act and Environmental Protection Agency (EPA) regulations under the act (the “Clean Air Act”) establish ambient air quality standards and limit the emission of many air pollutants. Some Clean Air Act programs that regulate electric utilities, notably the Title IV “acid rain” requirements, do not apply to facilities located in Alaska. In 2008, the EPA vacated regulations to limit mercury emissions from fossil-fired steam-electric generating facilities.

New Clean Air Act regulations impacting electric utilities may result from future events or may result from new regulatory programs that may be established to address problems such as global warming. While we cannot predict whether any new regulation would occur or its limitation, it is possible that new laws or regulations could increase our capital and operating costs. We have obtained or applied for all Clean Air Act permits currently required for the operation of our generating facilities.

Chugach Electric Association, Inc.

Notes to Financial Statements

June 30, 2009 and 2008

regulations until a water injection system to control NOx emissions from the turbines was installed and operational. With the water injection system, Chugach is able to fully utilize the power output from these turbines while complying with the NSPS regulations.

The Alaska Department of Environmental Conservation (ADEC) issued a Notice of Violation (NOV) on March 26, 2008, regarding the NSPS NOx emission limit exceedances. Chugach entered into a settlement with ADEC regarding the NOV for the past NSPS non-compliance. Chugach and the ADEC signed the settlement agreement on February 18, 2009. As part of the settlement, Chugach paid a civil penalty of $112,161 to ADEC on April 3, 2009, bringing the issue to a close.

Chugach is subject to numerous other environmental statutes including the Clean Water Act, the Resource Conservation and Recovery Act, the Toxic Substances Control Act, the Endangered Species Act, and the Comprehensive Environmental Response, Compensation and Liability Act and to the regulations implementing these statutes. We do not believe that compliance with these statutes and regulations to date has had a material impact on our financial condition or results of operation. However, new laws or regulations, implementation of final regulations or changes in or new interpretations of these laws or regulations could result in significant additional capital or operating expenses.

11. GENERATION COMMITMENTS

Chugach is in the process of constructing a natural gas fired generation plant on land currently owned by Chugach near its Anchorage headquarters. The Southcentral Power Project (SPP) will be developed and owned jointly with Anchorage Municipal Light & Power (AML&P). Chugach will own and take 70% of the new plant’s output and AML&P will own and take the remaining 30%. Chugach will account for its ownership in the SPP proportionately. Chugach and AML&P signed Participation, Operation and Maintenance (O&M) and Lease Agreements (Agreements) for this project on August 28, 2008. On November 17, 2008, Chugach executed a gas turbine purchase agreement for the purchase of three gas turbines with an option for a fourth turbine with General Electric Packaged Power (GEPP). The option to purchase a fourth turbine expired on January 31, 2009. Chugach made a payment of $5.1 million in 2008 and is expected to make progress and milestone payments of $23.5 million and $22.8 million in 2009 and 2010, respectively, pursuant to its purchase agreement with GEPP. In December of 2008, Chugach purchased land adjacent to its Anchorage headquarters. This land will be used as a project laydown area and to relocate materials and equipment previously located on the site of the new power plant. Chugach is currently preparing purchase documentation for engineering, procurement and construction services to be awarded in early 2010. On April 22, 2009, Chugach’s Board of Directors authorized the Chief Executive Officer to enter into an Owner’s Engineer Services Contract for the SPP. Chugach executed an Owner’s Engineer Services Contract on May 12, 2009.

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Reference is made to the information contained under the caption “CAUTION REGARDING FORWARD-LOOKING STATEMENTS” at the beginning of this report.

RESULTS OF OPERATIONS

Current Year Quarter versus Prior Year Quarter

Assignable margins decreased by $93.2 thousand, or 5.9%, during the second quarter of 2009 compared to the same quarter in 2008. Negative margin performance during the second and third quarters is representative of the seasonal nature of our business. Our customers’ requirements for capacity and energy generally are seasonal and increase in the fall and winter as home heating needs increase and then decline in the spring and summer as the weather becomes milder.

Operating revenues, which include sales of electric energy to retail, wholesale and economy energy customers and other miscellaneous revenues, increased $6.8 million, or 10.8%, in the second quarter of 2009 compared to the same quarter in 2008. This increase was due to higher fuel and purchased power expense recovered through the fuel and purchased power surcharge process, which was offset by a decrease in sales.

Total retail revenue increased in the second quarter of 2009 compared to the same quarter in 2008. Base rate revenue decreased due to lower retail kWh sales caused by a change in consumer consumption patterns and a 4.8 percent base rate decrease effective in June of 2008 as a result of Chugach’s 2005 Test Year Rate Case. The base rate revenue decrease was more than offset by higher fuel and purchased power expense recovered through the fuel and purchased power surcharge process. The increase was primarily driven by higher fuel prices in the second quarter of 2009 compared to the same period in 2008, which was somewhat offset by a decrease in MCF used due primarily to lower economy energy sales.

Total wholesale revenue increased in the second quarter of 2009 compared to the same quarter in 2008. Base rate revenue increased in part due to the base rate increase effective in June of 2008 as a result of Chugach’s 2005 Test Year Rate Case. That increase was somewhat offset by a decrease in wholesale kWh sales primarily caused by lower sales by HEA to its commercial customers. Fuel and purchased power expense recovered through the fuel and purchased power surcharge process increased due primarily to higher fuel prices in the second quarter of 2009 compared to the same period in 2008, which was somewhat offset by a decrease in fuel costs caused by lower economy energy sales. Economy energy revenue decreased during the second quarter of 2009 compared to the same quarter in 2008 due to decreased sales to Golden Valley Electric Association, Inc. (GVEA). The decrease was caused by the March 31, 2009, expiration of the current sales agreement and that it was more economic in 2009 for GVEA to generate their own power than to purchase from Chugach due primarily to their price of

fuel. GVEA has expressed interest in a new firm sales contract with Chugach. Chugach is currently involved in negotiations with GVEA.

Based on the results of fixed and variable cost recovery established in Chugach’s last rate case, wholesale sales to HEA, MEA and Seward contributed approximately $6.5 million to Chugach’s fixed costs for the quarter ended June 30, 2009 and $6.2 million for the quarter ended June 30, 2008.

The following table shows the base rate sales revenue and fuel and purchased power revenue by customer class that is included in revenue for the quarters ended June 30, 2009 and 2008:

	Base Rate Sales Revenue						Fuel and Purchased Power Revenue							Total Revenue
	2009		2008		% Variance		2009		2008		% Variance			2009		2008		% Variance

Retail
Residential	$	9.7	$	10.2	(4.9	%)	$	9.2	$	6.7		37.3	%	$	18.9	$	16.9	11.8	%
Small Commercial	$	1.9	$	1.9	0.0	%	$	2.1	$	1.4		50.0	%	$	4.0	$	3.3	21.2	%
Large Commercial	$	6.5	$	6.9	(5.8	%)	$	9.5	$	6.9		37.7	%	$	16.0	$	13.8	15.9	%
Lighting	$	0.3	$	0.4	(25.0	%)	$	0.0	$	0.0		0.0	%	$	0.3	$	0.4	(25.0	%)
Total Retail	$	18.4	$	19.4	(5.2	%)	$	20.8	$	15.0		38.7	%	$	39.2	$	34.4	14.0	%

Wholesale
HEA	$	2.9	$	2.8	3.6	%	$	8.2	$	6.3		30.2	%	$	11.1	$	9.1	22.0	%
MEA	$	4.5	$	4.3	4.7	%	$	12.3	$	8.5		44.7	%	$	16.8	$	12.8	31.3	%
SES	$	0.3	$	0.3	0.0	%	$	1.2	$	0.8		50.0	%	$	1.5	$	1.1	36.4	%
Total Wholesale	$	7.7	$	7.4	4.1	%	$	21.7	$	15.6		39.1	%	$	29.4	$	23.0	27.8	%

Economy Sales	$	0.0	$	1.3	(100.0	%)	$	0.0	$	3.1		(100.0	%)	$	0.0	$	4.4	(100.0	%)
Miscellaneous	$	0.6	$	0.7	(14.3	%)	$	0.0	$	0.0		0.0	%	$	0.6	$	0.7	(14.3	%)

Total Revenue	$	26.7	$	28.8	(7.3	%)	$	42.5	$	33.7		26.1	%	$	69.2	$	62.5	10.7	%

The following table summarizes kWh sales for the quarter ended June 30:

	Customer	2009 kWh		2008 kWh

Retail			265,271,449		273,220,992
Wholesale			283,348,845		293,959,650
Economy Energy			120,000		62,262,380

Total			548,740,294		629,443,022

Base rates charged to retail and wholesale customers in the second quarter of 2009 include base rate changes, which were effective June 1, 2008, as a result of Chugach’s 2005 Test Year Rate Case. Base rates charged to retail customers decreased 4.8 percent and base rates charged to wholesale customers HEA, MEA and SES increased 13.0 percent, 10.5 percent and 9.6 percent, respectively, in the first two months of the second quarter of 2009 compared to the same period in 2008.

Total operating expenses increased $7.0 million, or 11.9%, in the second quarter of 2009 over the same quarter in 2008, due largely to fuel and purchased power costs.

Fuel expense increased $5.8 million, or 21.1%, in the second quarter of 2009 compared to the same quarter in 2008, due to an increase in fuel price, which was somewhat offset by a decrease in MCF used due primarily to lower economy energy sales. In the second quarter of 2009, Chugach used 5,951,003 MCF of fuel at an average effective price of $6.73 per MCF, which includes 1,009,689 MCF of fuel that is recorded as purchased power expense. In the second quarter of 2008, Chugach used 6,648,669 MCF of fuel at an average effective price of $4.86 per MCF, which includes 997,594 MCF of fuel that is recorded as purchased power.

Production expense decreased $1.0 million, or 21.9%, in the second quarter of 2009 compared to the same quarter in 2008 due primarily to expenses associated with the Beluga Unit 7 maintenance project in the second quarter of 2008, which exceeded expenses associated with Beluga Unit 8 repairs in the second quarter of 2009 .

Purchased power expense, which includes the cost of 1,009,689 MCF of fuel associated with purchases from the Nikiski Cogeneration plant, increased $1.7 million, or 21.7%, in the second quarter of 2009 compared to the same quarter in 2008 due primarily to an increase in the price of fuel. In the second quarter of 2009, Chugach purchased 122,616 MWh of energy at an average effective price of 7.70 cents per kWh. In the second quarter of 2008, Chugach purchased 146,705 MWh of energy at an average effective price of 5.26 cents per kWh.

Transmission expense decreased $281.6 thousand, or 17.7%, in the second quarter of 2009 compared to the same quarter in 2008 due primarily to a decrease in overhead line inspection and clearing expenditures.

Distribution expense increased $272.3 thousand, or 8.6%, in the second quarter of 2009 compared to the same quarter in 2008 due primarily to an increase in overhead line maintenance and clearing caused primarily by weather related repairs.

Consumer accounts expense did not materially change in the second quarter of 2009 compared to the same quarter in 2008.

Administrative, general and other expenses did not materially change in the second quarter of 2009 compared to the same quarter in 2008.

Depreciation and amortization expense increased $437.6 thousand, or 5.8%, in the second quarter of 2009 compared to the same quarter in 2008. The increase was due in part to a change in depreciation rates, effective in June of 2008 as a result of Chugach’s 2005 Test Year Rate Case, as well as the continued closeout of completed construction projects.

Interest on long-term debt did not materially change in the second quarter of 2009 compared to the same quarter in 2008.

Other interest expense decreased $31.8 thousand, or 11.3%, in the second quarter of 2009 compared to the same quarter in 2008. The decrease was due primarily to the difference

between the balance of the NRUCFC line of credit used in 2008 to redeem the 2002 Series B Bonds and the balance of commercial paper outstanding, which was used to pay the balance of the NRUCFC line of credit in 2009, as well as lower interest rates on commercial paper compared to our NRUCFC line of credit.

Interest charged to construction increased $34.8 thousand, or 34.2%, in the second quarter of 2009 compared to the same quarter in 2008. The increase was largely due to a higher construction work in progress balance in the second quarter of 2009 compared to the same period in 2008 due primarily to expenditures associated with the SPP.

Non-operating margins decreased $60.2 thousand, or 49.5%, in the second quarter of 2009 compared to the same quarter in 2008. The decrease is due to lower interest income due primarily to a lower cash balance and lower interest rates. The decrease was somewhat offset by higher Allowance for Funds Used During Construction (AFUDC) due primarily to a higher construction work in progress balance in the second quarter of 2009 compared to the same period in 2008.

Current Year to Date versus Prior Year to Date

Assignable margins decreased by $1.2 million, or 33.6%, during the first half of 2009 compared to the same period in 2008.

Operating revenues, which include sales of electric energy to retail, wholesale and economy energy customers and other miscellaneous revenues, increased $18.3 million, or 13.6%, in the first half of 2009 compared to the same period in 2008. This increase was due primarily to higher fuel and purchased power expense recovered through the fuel and purchased power surcharge process.

Total retail revenue increased in the first half of 2009 compared to the same period in 2008. Base rate revenue decreased due to lower retail kWh sales caused by a change in consumer consumption patterns and a retail base rate decrease effective in June of 2008 as a result of Chugach’s 2005 Test Year Rate Case. The decrease in base rate revenue was more than offset by higher fuel and purchased power expenses recovered through the fuel and purchased power surcharge process. Higher fuel and purchased power costs were due in part to higher fuel prices, which was somewhat offset by a decrease in MCF used due primarily to lower economy energy sales in the first half of 2009 compared to the same period in 2008.

Wholesale revenue increased in the first half of 2009 compared to the same period in 2008. Base rate revenue increased due in part to the base rate increase charged to wholesale customers in June of 2008 as a result of Chugach’s 2005 Test Year Rate Case. This increase was somewhat offset by a decrease in wholesale kWh sales primarily due to lower sales by HEA to its commercial customers. Fuel and purchased power expense recovered through the fuel and purchased power surcharge process increased due to higher fuel prices in the first half of 2009 compared to the same period in 2008. That was somewhat offset by a decrease in fuel costs due primarily to lower economy energy sales.

Economy energy revenue decreased during the first half of 2009 compared to the same period in 2008 due to decreased sales to GVEA. The decrease was caused by the March 31, 2009, expiration of the current sales agreement and that it was more economic in 2009 for GVEA to generate their own power than to purchase from Chugach due primarily to their price of fuel. GVEA has expressed interest in a new firm sales contract with Chugach. Chugach is currently involved in negotiations with GVEA.

Based on the results of fixed and variable cost recovery established in Chugach’s last rate case, wholesale sales to HEA, MEA and Seward contributed approximately $14.6 million to Chugach’s fixed costs for the six months ended June 30, 2009 and $13.4 million for the six months ended June 30, 2008.

The following table shows the base rate sales revenue and fuel and purchased power revenue by customer class that is included in revenue for the six months ended June 30, 2009 and 2008:

	Base Rate Sales Revenue							Fuel and Purchased Power Revenue							Total Revenue
	2009		2008		% Variance			2009		2008		% Variance			2009		2008		% Variance
Retail
Residential	$	22.5	$	23.5		(4.3	%)	$	21.3	$	15.1		41.1	%	$	43.8	$	38.6		13.5	%
Small Commercial	$	4.1	$	4.2		(2.4	%)	$	4.6	$	3.1		48.4	%	$	8.7	$	7.3		19.2	%
Large Commercial	$	13.5	$	14.2		(4.9	%)	$	19.1	$	14.0		36.4	%	$	32.6	$	28.2		15.6	%
Lighting	$	0.6	$	0.6		0.0	%	$	0.2	$	0.1		0.0	%	$	0.8	$	0.7		14.3	%
Total Retail	$	40.7	$	42.5		(4.2	%)	$	45.2	$	32.3		39.9	%	$	85.9	$	74.8		14.8	%

Wholesale
HEA	$	5.8	$	5.5		5.5	%	$	17.5	$	12.8		36.7	%	$	23.3	$	18.3		27.3	%
MEA	$	10.9	$	10.0		9.0	%	$	27.3	$	18.4		48.4	%	$	38.2	$	28.4		34.5	%
SES	$	0.6	$	0.5		20.0	%	$	2.3	$	1.7		35.3	%	$	2.9	$	2.2		31.8	%
Total Wholesale	$	17.3	$	16.0		8.1	%	$	47.1	$	32.9		43.2	%	$	64.4	$	48.9		31.7	%

Economy Sales	$	0.2	$	2.5		(92.0	%)	$	0.9	$	6.7		(86.6	%)	$	1.1	$	9.2		(88.0	%)
Miscellaneous	$	1.2	$	1.4		(14.3	%)	$	0.0	$	0.0		0.0	%	$	1.2	$	1.4		(14.3	%)

Total Revenue	$	59.4	$	62.4		(4.8	%)	$	93.2	$	71.9		29.6	%	$	152.6	$	134.3		13.6	%

The following table summarizes kWh sales for the six months ended June 30:

Customer	2009 kWh		2008 kWh

Retail		591,710,865		603,632,487
Wholesale		635,311,445		650,744,675
Economy Energy		13,864,300		134,859,080

Total		1,240,886,610		1,389,236,242

Base rates charged to retail and wholesale customers in the first half of 2009 include base rate changes, which were effective June 1, 2008, as a result of Chugach’s 2005 Test Year Rate Case. Base rates charged to retail customers decreased 4.8 percent and base rates charged to wholesale customers HEA, MEA and SES increased 13.0 percent, 10.5 percent and 9.6 percent, respectively, in the first half of 2009 compared to the first five months of 2008.

Total operating expenses increased $19.9 million, or 16.6%, in the first half of 2009 over the same period in 2008, due largely to fuel and purchased power costs.

Fuel expense increased $13.9 million, or 23.4%, in the first half of 2009 compared to the same period in 2008, due to an increase in fuel price, which was somewhat offset by a decrease in MCF used due primarily to lower economy energy sales. In the first half of 2009, Chugach used 12,984,378 MCF of fuel at an average effective price of $6.75 per MCF, which includes 2,097,487 MCF of fuel that is recorded as purchased power expense. In the first half of 2008, Chugach used 14,678,809 MCF of fuel at an average effective price of $4.71 per MCF, which includes 2,036,762 MCF of fuel that is recorded as purchased power.

Production expense did not materially change in the first half of 2009 compared to the same period in 2008.

Purchased power expense, which includes the cost of 2,097,487 MCF of fuel associated with purchases from the Nikiski Cogeneration plant, increased $5.3 million, or 34.1%, in the first half of 2009 compared to the same period in 2008 due primarily to an increase in the price, primarily associated with the price of fuel. In the first half of 2009, Chugach purchased 249,317 MWh of energy at an average effective price of 8.12 cents per kWh. In the first half of 2008, Chugach purchased 275,410 MWh of energy at an average effective price of 5.42 cents per kWh.

Transmission expense decreased $249.7 thousand, or 8.6%, in the first half of 2009 compared to the same period in 2008 due primarily to a decrease in overhead line inspection and clearing and lower substation maintenance.

Distribution expense increased $317.6 thousand, or 5.4%, in the first half of 2009 compared to the same period in 2008 due primarily to an increase in overhead line maintenance and clearing caused primarily by weather related repairs.

Consumer accounts expense did not materially change in the first half of 2009 compared to the same period in 2008.

Administrative, general and other expenses did not materially change in the first half of 2009 compared to the same period in 2008.

Depreciation and amortization expense increased $1.0 million, or 6.9%, in the first half of 2009 compared to the same period in 2008. The increase was due in part to a change in depreciation rates, effective in June of 2008 as a result of Chugach’s 2005 Test Year Rate Case and the continued closeout of construction projects.

Interest on long-term debt decreased $755.6 thousand, or 6.9%, in the first half of 2009 compared to the same period in 2008. The decrease was related to the use of our NRUCFC line of credit to redeem the outstanding principal amount of the 2002 Series B Bonds in March of 2008, resulting in a shift from long-term to short-term interest

expense, lower interest rates in the first half of 2009 compared to the same period in 2008 and continued principal payments on our CoBank debt.

Other interest expense increased $250.9 thousand, or 71.2%, in the first half of 2009 compared to the same period in 2008. The increase was due in part to the use of the NRUCFC line of credit described above and for general working capital which wasn’t repaid until February 19, 2009. This increase is somewhat offset by the difference between the balance of the NRUCFC line of credit used in 2008 to redeem the 2002 Series B Bonds and the balance of commercial paper outstanding which was used to pay the balance of the NRUCFC line of credit in 2009. The increase is also net of the affect of a decrease in interest rates in the first half of 2009 compared to the same period in 2008.

Interest charged to construction increased $40.1 thousand, or 18.4%, in the first half of 2009 compared to the same period in 2008. The increase was due primarily to a higher construction work in progress balance in the first half of 2009 compared to the same period in 2008 due primarily to expenditures associated with the SPP.

Non-operating margins decreased $100.1 thousand, or 36.6%, in the first half of 2009 compared to the same period in 2008. The decrease is due to lower interest income due primarily to a lower cash balance as well as lower interest rates which was somewhat offset by higher Allowance for Funds Used During Construction (AFUDC) caused primarily by a higher construction work in progress balance in the first half of 2009 compared to the same period in 2008.

Financial Condition

Assets

Total assets decreased $25.5 million, or 4.4%, from December 31, 2008 to June 30, 2009. Net utility plant decreased $6.9 million, or 1.5%, primarily due to depreciation expense in excess of extension and replacement of plant. Cash and cash equivalents decreased $3.7 million, or 49.2%, due primarily to line of credit and commercial paper expenditures which exceeded the collection of the prior quarter’s fuel and purchased power costs. Fuel and purchased power cost recovery decreased $11.8 million, or 100%, due to the collection of the prior quarter’s fuel and purchased power costs recovered through the fuel surcharge process. Accounts receivable decreased $4.2 million, or 12.8%, due primarily to a decrease in the fuel component of consumer’s invoices. Prepayments decreased $374.8 thousand, or 24.3%, due primarily to the timing of annual renewals associated with permitting, dues, rating agency fees and software maintenance and support. Other current assets decreased $79.1 thousand, or 29.0%, due primarily to a decrease in the receivable associated with pole rentals. Deferred charges decreased $675.9 thousand, or 2.9%, due primarily to six months of amortization of deferred charges, offset by an increase in deferred charges associated with gas negotiations and the overhauls of units at the Cooper Lake Power Plant.

These decreases were offset by a $2.2 million, or 7.7% increase in materials and supplies due primarily to the purchase of materials for planned generation and distribution projects.

Liabilities

Total liabilities, equities and margins decreased $25.5 million, or 4.4%, from December 31, 2008 to June 30, 2009. The decrease includes a $2.9 million, or 100%, decrease in promissory notes payable caused by the payment of the note associated with the property Chugach acquired for construction of an additional electrical generation facility. The net of total long-term obligations and current installments of long-term debt decreased $12.4 million, or 3.5%, caused by the re-payment of commercial paper and the principal payments made on CoBank 2, 3, 4 and 5 in the first six months of 2009. The decrease also includes a $7.5 million, or 100% decrease in short-term obligations due to the payment of the outstanding balance on the CoBank line of credit. Accounts payable decreased $701.8 thousand, or 10.0%, due to the payment of invoices that were accrued but not paid at December 31, 2008. Fuel payable also decreased $3.5 million, or 12.2%, caused primarily by a decrease in fuel prices. Other liabilities decreased $612.0 thousand, or 36.7%, due primarily to a decrease in the municipal underground ordinance payable, a decrease in gross receipts payable due to the payment of Chugach’s annual gross receipts tax and a decrease in patronage capital payable due to the payment of the 2008 retirement of patronage capital in 2009. Deferred liabilities also decreased $1.0 million, or 44.6%, caused primarily by the transfer of customer advances to construction projects.

These decreases were offset by a $2.2 million, or 1.4%, increase in total equities and margins due to the margins generated in the first half of 2009. Fuel and purchased power cost over-recovery increased $958.5 thousand, or 100%, due to the over-collection of the prior quarter’s fuel and purchased power costs recovered through the fuel surcharge process, which created a payable instead of a receivable at June 30, 2009.

LIQUIDITY AND CAPITAL RESOURCES

Summary

We ended the first half of 2009 with $3.8 million of cash and cash equivalents, down from $7.5 million at December 31, 2008. We utilized the $57.5 million in lines of credit that we maintain with CoBank and NRUCFC in the first half of 2009, however, there was no outstanding balance on these lines of credit at June 30, 2009. Thus, our available borrowing capacity under these lines at June 30, 2009, was $57.5 million. We issued commercial paper in the first half of 2009 and had $33.5 million of commercial paper outstanding at June 30, 2009, thus our available borrowing capacity under our commercial paper program at June 30, 2009, was $266.5 million.

Cash equivalents consist of all highly liquid debt instruments with a maturity of three months or less when purchased and an Overnight Repurchase Agreement with First National Bank Alaska (FNBA).

Cash Flows

The following table summarizes our cash flows from operating, investing and financing activities for the six months ended June 30, 2009 and 2008.

	2009			2008
Total cash provided by (used in):

Operating activities		29,648,074			22,416,295
Investing activities		(10,444,800	)		(13,196,779	)
Financing activities		(22,889,474	)		(10,013,968	)

Decrease in cash and cash equivalents		(3,686,200	)		(794,452	)

Operating Activities

Cash provided by operating activities was $29.6 million for the six months ended June 30, 2009, compared with $22.4 million for the six months ended June 30, 2008. A decrease in assignable margins was offset by increased depreciation expense and changes in operating assets and liabilities. Assignable margins decreased to $2.3 million in the first six months of 2009, compared with $3.5 million in the first six months of 2008. The changes in operating assets and liabilities were due primarily to changes in accounts receivable, fuel and purchased power cost under-recovery, materials and supplies, fuel and purchased power cost over-recovery and fuel payable. The accounts receivable change was primarily due to a decrease in the fuel component of consumer’s invoices due to lower fuel prices while the change in fuel and purchased power cost under-recovery was due to the collection of fuel and purchased power costs recovered through the fuel surcharge process in the first quarter of 2009. The change in materials and supplies was primarily due to the change in inventory needed for projects. The change in fuel and purchased power cost over-recovery was due to the over-collection of fuel and purchased power costs recovered through the fuel surcharge process in the second quarter of 2009. The fuel payable change was primarily due to a decrease in the cost of fuel since December 31, 2008.

Investing Activities

Cash used in investing activities was $10.4 million for the six months ended June 30, 2009, compared with $13.2 million for the six months ended June 30, 2008. The change in cash used in investing activities for the six months ended June 30, 2009, compared with the six months ended June 30, 2008, was due primarily to the level of construction activity in the first six months of 2009 compared to the same period in 2008, which includes taking into account the adjustment described in the Notes to Financial Statements, see “Item 1 – Financial Statements – Note 2f – Presentation of Financial Information.” Capital construction for 2009 is estimated at $72.1 million. Capital improvement expenditures are expected to increase during the third quarter as the construction season continues.

Financing Activities

Cash used in financing activities was $22.9 million for the six months ended June 30, 2009, compared to $10.0 million for the six months ended June 30, 2008. The change in cash used in financing activities for the six months ended June 30, 2009, compared with the six months ended June 30, 2008, was primarily due to the use of short-term borrowings to pay long-term debt in 2008 compared to the reclassification of long-term debt to current portion in 2009, as well as the payment of short term borrowings in the first six months of 2009 compared to the same period in 2008. The change was also due to the payment of the 2008 retirement of patronage capital in 2009, which was less than the payment of the 2007 retirement of patronage capital in 2008. The change was also due to the payment of a promissory note associated with a land purchase.

Sources of Liquidity

Chugach has satisfied its operational and capital cash requirements primarily through internally generated funds, an annual $7.5 million line of credit with CoBank, a $50 million line of credit from NRUCFC and a $300 million commercial paper program. We issued $45.5 million of our available commercial paper in order to pay the outstanding balance of our NRUCFC line of credit which was used to redeem our 2002 Series B Bonds in March of 2008 and for general working capital. In April of 2009, Chugach had additional activity on our CoBank line of credit, however, Chugach paid the outstanding balance on this line of credit. At June 30, 2009, there was no outstanding balance on our CoBank or NRUCFC lines of credit and $33.5 million of commercial paper outstanding. Thus, at June 30, 2009, our available borrowing capacity under these lines of credit was $57.5 million and our available commercial paper capacity was $266.5 million.

Chugach also has a term loan facility with CoBank. Loans made under this facility are evidenced by promissory notes governed by the Master Loan Agreement, which became effective on January 22, 2003.

At June 30, 2009, Chugach had the following promissory notes outstanding with this facility:

Promissory Note	Principal Balance		Interest Rate at June 30, 2009			Maturity Date	Principal Payment Dates
CoBank 2	$	2,500,000		5.50	%	2010	2005 – 2010
CoBank 3		17,677,513		2.31	%	2022	2003 – 2022
CoBank 4		19,321,934		2.31	%	2022	2003 – 2022
CoBank 5		3,400,210		2.31	%	2012	2007 – 2012
Total	$	42,899,657

Over the next five years Chugach anticipates incurring significant capital expenditures due to the construction of a natural gas fired generation unit, on-going capital needs and refinancing of certain existing debt. In March of 2008 we issued a Request For Proposal (RFP) for a three to five year interim finance facility. Commercial paper will be issued

under this facility and will act as a bridge until Chugach converts Commercial Paper balances to long term debt and to refinance the 2011 and 2012 Series A bonds. The commercial paper program is backed by a $300 million Unsecured Credit Agreement between NRUCFC, KeyBank, CoBank and US Bank. At closing, the Credit Agreement was priced with an all-in drawn spread of LIBOR plus 60 basis points, along with a 17.5 basis points facility fee. The credit agreement was executed on October 10, 2008, and expires on October 10, 2011. Chugach began issuing short-term Commercial Paper in the first quarter of 2009.

Chugach management continues to expect that cash flows from operations and external funding sources, including additional commercial paper borrowings, will be sufficient to cover operational, financing and capital funding requirements in 2009 and thereafter.

CRITICAL ACCOUNTING POLICIES

Chugach’s accounting and reporting policies comply with U.S. generally accepted accounting principles (GAAP). The preparation of financial statements in conformity with GAAP requires that management apply accounting policies and make estimates and assumptions that affect results of operations and reported amounts of assets and liabilities in the financial statements. Critical accounting policies are those policies that management believes are the most important to the portrayal of Chugach's financial condition and results of its operations, and require management's most difficult, subjective, or complex judgments, often as a result of the need to make estimates about matters that are inherently uncertain. Most accounting policies are not considered by management to be critical accounting policies. Several factors are considered in determining whether or not a policy is critical in the preparation of financial statements. These factors include, among other things, whether the estimates are significant to the financial statements, the nature of the estimates, the ability to readily validate the estimates with other information including third parties or available prices, and sensitivity of the estimates to changes in economic conditions and whether alternative accounting methods may be utilized under GAAP. For all of these policies management cautions that future events rarely develop exactly as forecast, and the best estimates routinely require adjustment. Management has discussed the development and the selection of critical accounting policies with Chugach's Audit Committee. The following policies are considered to be critical accounting policies for the six months ended June 30, 2009.

Electric Utility Regulation

Chugach is subject to regulation by the RCA. The RCA sets the rates Chugach is permitted to charge customers based on allowable costs. As a result, Chugach applies SFAS No. 71, “Accounting for the Effects of Certain Types of Regulation” (SFAS No.71). Through the ratemaking process, the regulators may require the inclusion of costs or revenues in periods different than when they would be recognized by a non-regulated company. This treatment may result in the deferral of expenses and the recording of related regulatory assets based on anticipated future recovery through rates or the deferral of gains or creation of liabilities and the recording of related regulatory liabilities.

The application of SFAS No. 71 has a further effect on Chugach's financial statements as a result of the estimates of allowable costs used in the ratemaking process. These estimates may differ from those actually incurred by the Company; therefore, the accounting estimates inherent in specific costs such as depreciation and pension and post-retirement benefits have less of a direct impact on Chugach's results of operations than they would on a non-regulated company. Significant regulatory assets and liabilities have been recorded. Management reviews the ultimate recoverability of these regulatory assets and liabilities based on applicable regulatory guidelines. However, adverse legislation and judicial or regulatory actions could materially impact the amounts of such regulatory assets and liabilities and could adversely impact Chugach’s financial statements.

Unbilled revenue

Chugach calculates unbilled retail revenue at the end of each month to ensure the recognition of a full month’s revenue. Chugach estimates calendar-month unbilled sales based on billing cycle sales, billing cycle read dates, weather and hours of darkness to produce an estimate of calendar sales. This estimate of calendar sales is then calibrated to deliveries measured at Chugach distribution substations, net of losses. Until September of 2008, calendar unbilled revenue was determined by multiplying kWh sales by an average rate. Beginning in September of 2008, Chugach fully implemented an unbilled estimate based on respective billing class determinants to produce an estimate of calendar month revenue. Chugach accrued $7,230,117 and $6,121,614 of unbilled retail revenue at June 30, 2009 and 2008, respectively.

Allowance for Doubtful Accounts

Chugach maintains an allowance for doubtful accounts for estimated losses resulting from the inability of our customers to make required payments. We base our estimates on the aging of our accounts receivable balances, historical bad debt reserves, historical percent of retail revenue that has been deemed uncollectible, our collections process and regulatory requirements. If the financial condition of our customers were to deteriorate resulting in an impairment of their ability to make payments, additional allowances may be required. If their financial condition improves, allowances may be reduced. Such allowance changes could have a material effect on our consolidated financial condition and results of operations.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

Information required by this Item is contained in Note 8 to the “Notes to Financial Statements” within Part I of this Form 10-Q.

OUTLOOK

Procuring a new, highly efficient power generation facility, natural gas contracts, low cost financing and replacement revenue sources for wholesale customer loads that will be leaving in 2014, all while controlling operating expenses to minimize adverse customer rate impacts, are some of the challenges facing Chugach in the near and intermediate term.

These issues, along with emerging energy issues and plans at the state level, will shape how Chugach proceeds into the future.

Chugach has partnered with AML&P to construct and jointly own a new 183 megawatt natural gas fired power plant. Chugach will own and take 70% of the new plant’s output and AML&P will own and take the remaining 30%. The plant is scheduled to be placed into service in 2013. Currently, major components have been ordered and engineering is moving forward. Chugach’s interim financing for the plant will come from its’ established lines of credit and a commercial paper borrowing program that was established via a commercial paper $300 million unsecured credit agreement in 2008. Given the recent volatility in the bond and commercial paper market, close attention will be given to the timing and type of permanent financing Chugach obtains for the new plant and other capital additions.

Chugach will explore all potential sources of long term financing to include federal, state, private placement and the public markets to obtain the lowest cost financing available for the 2011 and 2012 maturing long-term debt refinancing and requirements for new, long-term financing for our capital additions that are expected to begin in 2010.

Notification by HEA and MEA that neither organization will be on the Chugach system under the current contractual arrangements post 2014 will result in a loss of approximately 50% of Chugach’s power sales load and approximately 40% of the utility’s annual sales revenue. Neither MEA nor HEA have significant resources in place at this time that would indicate a complete reduction in service from Chugach is possible. Due to the lack of this necessary physical evidence, Chugach is preparing for a continuation of some business with HEA and MEA. While financial management plan scenarios indicate Chugach can sustain operations and meet financial covenants in the event these two customers leave the system, the remaining customers will have to shoulder the burdens imposed by the remaining costs and will likely face higher rates.

Consequently, Chugach will be pursuing replacement sources of revenue through potential new firm power sales agreements and revised transmission wheeling and ancillary services tariff revisions. We believe that successful implementation of new power sales agreements and revised tariffs will mitigate anticipated rate increases in the 2014 and 2015 timeframe. However, we cannot assure that we will be able to replace sources of revenue or that any replacement of revenue sources or revised tariffs will fully mitigate any anticipated rate increases in this timeframe.

A recently released State of Alaska Energy Plan released by Alaska’s Governor called for a migration to alternative fuel sources for one half of the state by 2025. This is in concert with Chugach’s conceptual goal to move from a “90 – 10” (90 % natural gas fuel source – 10% alternative fuel source) generation mix to a “10 – 90” generation mix. Chugach’s challenge in the coming years will be to find low cost, highly efficient generation projects that fulfill this goal.

On March 5, 2009, the governor of Alaska transmitted a bill to the Alaska State Legislature that creates the Greater Railbelt Energy and Transmission Corporation. In the Governor’s transmittal letter, she identified the purpose of the corporation was to “plan for the financing, acquisition, construction, ownership, and operation of necessary electric power generation and transmission assets and services that would be necessary to provide the Railbelt with adequate, reliable, safe, and stable electric power and transmission services at the lowest feasible long-term cost.” The legislation (HB 182 and SB 143) was introduced in both the House and Senate special committees on energy and is being held in committee until the 2010 legislative session. In the interim, the six Railbelt utility governing bodies have agreed to form a special task force to further discuss the legislation and make recommendations to the state administration and the legislative committees this fall.

ENVIRONMENTAL MATTERS

Compliance with Environmental Standards

The Clean Air Act and Environmental Protection Agency (EPA) regulations under the act (the “Clean Air Act”) establish ambient air quality standards and limit the emission of many air pollutants. Some Clean Air Act programs that regulate electric utilities, notably the Title IV “acid rain” requirements, do not apply to facilities located in Alaska. In 2008 the EPA vacated regulations to limit mercury emissions from fossil-fired steam-electric generating facilities.

In March 2007, Chugach conducted emissions testing at the Bernice Lake Power Plant which indicated that two of the gas turbines at the facility were exceeding the New Source Performance Standards (NSPS) emission limit for nitrogen oxides (NOx). Chugach voluntarily limited the power output of these turbines to ensure interim compliance with the NSPS regulations until a water injection system to control NOx emissions from the turbines was installed and operational. With the water injection system, Chugach is able to fully utilize the power output from these turbines while complying with the NSPS regulations.

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT

MARKET RISK

Chugach is exposed to a variety of risks, including changes in interest rates and changes in commodity prices due to repricing mechanisms inherent in gas supply contracts. In the normal course of our business, we manage our exposure to these risks as described below. We do not engage in trading market risk-sensitive instruments for speculative purposes.

Interest Rate Risk

The following table provides information regarding cash flows for principal payments on total debt by maturity date (dollars in thousands) as of June 30, 2009.

Total Debt1	2009		2010		2011		2012		2013		Thereafter		Total		Fair Value
Fixed rate debt	$	1,000	$	1,500	$	150,000	$	120,000	$	0	$	0	$	272,500	$	291,997
Average interest rate		5.50%		5.50%		6.55%		6.20%		0.00%		0.00%		6.39%
Annual interest expense	$	8,689	$	17,297	$	9,487	$	620	$	0	$	0
Variable rate debt	$	33,985	$	2,618	$	2,852	$	2,694	$	2,076	$	29,680	$	73,905	$	73,905
Average interest rate		0.46%		1.78%		1.78%		1.78%		1.78%		1.78%		1.17%

1 Includes current portion

Chugach is exposed to market risk from changes in interest rates. A 100 basis-point change (up or down) would increase or decrease our interest expense by approximately $739,047 based on $73,904,657 of variable rate debt outstanding at June 30, 2009.

Commodity Price Risk

Chugach’s gas contracts provide for adjustments to gas prices based on fluctuations of certain commodity prices and indices. Because fuel and purchased power costs are passed directly to our wholesale and retail customers through a fuel surcharge process, fluctuations in the price paid for gas pursuant to long-term gas supply contracts does not normally impact margins.

ITEM 4.

CONTROLS AND PROCEDURES

Evaluation of Controls and Procedures

As of the end of the period covered by this report, Chugach evaluated the effectiveness of the design and operation of its disclosure controls and procedures. Chugach’s CEO and Chief Financial Officer (CFO) supervised and participated in this evaluation. Based on this evaluation, Chugach’s CEO and CFO each concluded that as of the end of the period covered by this report, Chugach’s disclosure controls and procedures are effective in timely alerting them to material information required to be included in its periodic reports to the SEC. In addition, there have been no changes in Chugach’s internal controls over financial reporting or in other factors known to management during the most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect its internal controls over financial reporting.

PART II.

OTHER INFORMATION

ITEM 1.

LEGAL PROCEEDINGS

Information required by this Item is contained in Note 7 to the “Notes to Financial Statements” within Part I of this Form 10-Q.

ITEM 1A.

RISK FACTORS

Fuel Supply

In 2008, 91% of our power was generated from gas, which included power generated at Nikiski. Our primary suppliers of natural gas are the Beluga River Field Producers and Marathon, of which we collectively have approximately 83 BCF of gas remaining. In 2008 Chugach used approximately 31 BCF of natural gas. Chugach’s supply contract with Marathon will expire in 2010. We estimate that our contract gas with the Beluga River Producers will expire in 2011.

On May 12, 2009, Chugach submitted a new long-term natural gas supply contract with ConocoPhillips Alaska, Inc. and ConocoPhillips, Inc. (collectively “COP”), to the RCA. The new contract will provide gas beginning in 2010 and terminating December 31, 2016. The total amount of gas under the contract is estimated to be 66 BCF. The new contract is designed to fill 100% of Chugach’s unmet needs until April 2011, approximately 50% of Chugach’s unmet needs from June 2011 through December 2015 and approximately 25% in 2016. There is no assurance that Chugach will be able to secure additional natural gas contracts in a timely manner, however, we are currently in contract negotiations with other fuel producers. Approval of the contract by the RCA is condition precedent for the effectiveness of the contract and will ensure, in advance, that costs incurred under the contract can be passed through and recovered from Chugach’s customers. The fuel and purchased power surcharge process allows Chugach to recover its current fuel and purchased power costs with minimal regulatory lag. To the extent the regulated fuel recovery process does not provide for the timely recovery of fuel expenses, Chugach could experience a material negative impact on its cash flows.

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF

PROCEEDS

Not applicable.

ITEM 3.

DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4.

SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Chugach’s annual membership meeting was held on April 30, 2009. One new board member was elected, while one current board member was re-elected. Total number of members of record was 66,034. Out of 10,439 votes, new board member Elizabeth “Pat” Kennedy received 5,157 votes, while current board member Jim Nordlund received 5,015 votes. These board members were elected to three-year terms.

There were also three proposed bylaw amendments before the membership which included housekeeping amendments, wording changes regarding the Election Committee section to conform to other provisions of the bylaws regarding Member Committees and wording changes regarding director meeting attendance. All three proposals passed. The amended bylaws were filed with an 8-K dated May 5, 2009.

ITEM 5.

OTHER INFORMATION

None.

ITEM 6.

EXHIBITS

Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Certification of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Certification of Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

SIGNATURES

Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this quarterly report to be signed on its behalf by the undersigned thereunto duly authorized.

CHUGACH ELECTRIC ASSOCIATION, INC.

		By:	For /s/ Lee D. Thibert
			Bradley W. Evans
			Chief Executive Officer

		By:	For /s/ Sherri L. McKay-Highers
			Michael R. Cunningham
			Chief Financial Officer

Date:

August 13, 2009

EXHIBITS

Listed below are the exhibits, which are filed as part of this Report:

Exhibit Number	Description

31.1	Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2	Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1	Certification of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2	Certification of Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002