10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

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

For the fiscal year ended      December 31, 2010

or

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

For the transition period from     _________________________     to     _________________________

Commission file number      33-42125

Chugach Electric Association, Inc.
(Exact name of registrant as specified in its charter)
Alaska	92-0014224
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
5601 Electron Dr., Anchorage, Alaska	99518
(Address of principal executive offices)	(Zip Code)
Registrant’s telephone number, including area code	(907) 563-7494
Securities registered pursuant to Section 12(b) of the Act:
Title of each class	Name of each exchange on which registered
N/A	N/A
Securities registered pursuant to Section 12(g) of the Act:
N/A
(Title of class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

oYes x No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

x Yes o No

Indicate by check mark whether 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.

x Yes 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 (Sec.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).

oYes o No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Registration S-K (Sec.229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.

x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, 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 Act).

oYes x No

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter.

N/A

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the last practicable date.

NONE

CHUGACH ELECTRIC ASSOCIATION, INC.

2010 Form 10-K Annual Report

Table of Contents

	PART I	Page
Item 1 –	Business	3
Item 1A –	Risk Factors	11
Item 1B –	Unresolved Staff Comments	16
Item 2 –	Properties	16
Item 3 –	Legal Proceedings	26
Item 4 –	Reserved	26
	PART II
Item 5 –	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	26
Item 6 –	Selected Financial Data	27
Item 7 –	Management’s Discussion and Analysis of Financial Condition and Results of Operation	28
Item 7A –	Quantitative and Qualitative Disclosures About Market Risk	50
Item 8 –	Financial Statements and Supplementary Data	51
Item 9 –	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	89
Item 9A –	Controls and Procedures	89
Item 9B –	Other Information	90
	PART III
Item 10 –	Directors, Executive Officers and Corporate Governance	90
Item 11 –	Executive Compensation	94
Item 12 –	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	100
Item 13 –	Certain Relationships and Related Transactions, and Director Independence	100
Item 14 –	Principal Accounting Fees and Services	101
	PART IV
Item 15 –	Exhibits and Financial Statement Schedules	101
SIGNATURES		116

2

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.  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

Item 1 - Business

General

Chugach was organized as an Alaska electric cooperative in 1948.  Cooperatives are business organizations that are owned by their members.  As not-for-profit organizations (Internal Revenue Code 501 (c)(12)), cooperatives are structured to provide services to their members at cost, in part by eliminating the need to produce profits or a return on equity other than for reasonable reserves and margins.  Today, cooperatives in general operate throughout the United States in such diverse areas as utilities, agriculture, irrigation, insurance and credit.  All cooperatives are based upon similar principles and legal foundations. Because members’ equity is not considered an investment, a cooperative’s objectives and policies are oriented to serving member interests, rather than maximizing return on investment.

Chugach makes its current and periodic reports available, free of charge, on its website at www.chugachelectric.com as soon as practicable after filing with the Securities and Exchange Commission (SEC).  Our website provides a link to the SEC website.

Chugach is the largest electric utility in Alaska.  We are engaged in the generation, transmission and distribution of electricity to approximately 81,339 service locations in the Anchorage and upper Kenai Peninsula areas.  We also provide service to three wholesale customers.  Through an interconnected regional electrical system, our energy is distributed 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.  Neither Chugach nor any other electric utility in Alaska has any connection to the electric grid of the continental United States or Canada.  Our principal executive offices are located at 5601 Electron Drive, Anchorage, Alaska 99518.  Our telephone number is (907) 563-7494.

Chugach is a rural electric cooperative that is exempt from federal income taxation as an organization described in Section 501(c)(12) of the Internal Revenue Code (Code).  Alaska electric cooperatives must pay to the State of Alaska, a gross receipts tax in lieu of state and local ad valorem, income and excise taxes, a tax at the rate of $0.0005 per kilowatt-hour (kWh) of electricity sold in the retail market during the preceding year.  This tax is accrued monthly and remitted annually.  In addition, we currently collect a regulatory cost charge (RCC) of $0.000552 per kWh of retail electricity sold.  This charge is assessed to fund the operations of the Regulatory Commission of Alaska (RCA).  This tax is collected monthly and remitted to the State of Alaska quarterly.  We also collect sales tax on retail electricity sold to Kenai Peninsula and Whittier consumers.  This tax is also collected monthly and remitted to the Kenai Peninsula Borough quarterly.  These taxes are a direct pass-through to consumer bills and therefore do not impact our margins.

3

We had 311 full-time employees as of March 12, 2011.  Approximately 70 percent of our employees are members of the International Brotherhood of Electrical Workers (IBEW).  Chugach has three Collective Bargaining Unit Agreements (CBA) with the IBEW. We also have an agreement with the Hotel Employees and Restaurant Employees (HERE).  All agreements were due to expire on June 30, 2010.  On February 24, 2010, the Board of Directors approved three year extensions of all three IBEW CBA’s.  The three extensions provide no wage increase in the first year and wage increases tied to changes in the Consumer Price Index (CPI) in the second and third years, with a floor on the minimum increase and a cap on the maximum increase.  The wage increases also have an indirect connection to Chugach’s financial performance.  The contract extensions expire on June 30, 2013.  On April 28, 2010, the Board of Directors approved a three year extension of the HERE agreement.  The extension contains an increase in the employer health and welfare contribution in each year of the extension but does not provide for a wage or pension increase.  The contract extension expires on June 30, 2013.  We believe our relationship with our employees is good.

Through direct service to retail customers and indirectly through wholesale and economy energy sales, we provide some or all of the electricity used by approximately two-thirds of Alaska’s electric customers.  We supply much of the power requirements of three wholesale customers, Matanuska Electric Association (MEA), Homer Electric Association (HEA) and the City of Seward (Seward).  We sell available generation in excess of our own needs to produce electric energy for sale to Golden Valley Electric Association, Inc. (GVEA).  In addition, on a periodic basis, we provide electricity to Anchorage Municipal Light & Power (AML&P).

Our members are the consumers of the electricity sold by us.  As of December 31, 2010, we had three major wholesale customers and 66,974 retail members receiving service at approximately 81,339 service locations.  No individual retail customer receives more than 5 percent of our power. Our customers’ requirements for capacity and energy generally are seasonal and increase in fall and winter as home heating and lighting needs increase and then decline in the spring and summer as the weather becomes milder and hours of daylight increase.

Our customers are billed on a monthly basis per a tariff rate for electrical power consumed during the preceding period.  Billing rates are approved by the RCA (see “Rate Regulation and Rates” below).

Base rates (derived on the basis of historic cost of service including margins) are established to generate revenues in excess of current period costs in any year and such excess is designated on our Statements of Revenues, Expenses and Patronage Capital as “assignable margins.”  Retained assignable margins are designated on our balance sheet as “patronage capital” that is assigned to each member on the basis of patronage.  Patronage capital is held for the account of the members without interest and returned when the board of directors of Chugach deems it appropriate to do so.

4

We have 530.1 megawatts (MW) of installed generating capacity provided by 17 generating units at our five owned power plants: Beluga Power Plant, Bernice Lake Power Plant, International Station Power Plant (historically known as “IGT”), Cooper Lake Hydroelectric Project and Eklutna Hydroelectric Project, in which we own a 30 percent interest. Approximately 85 percent (by rated capacity) of our generating capacity is fueled by natural gas, which we purchase under gas contracts.  The rest of our generating resources are hydroelectric facilities.  In 2010, 89 percent of our power was generated from gas, which included power generated at Nikiski, and 78 percent of that gas-fired generation took place at Beluga.  The Bradley Lake Hydroelectric Project provides up to 27.4 MW for our retail customers and up to an additional 24.1 MW for our wholesale customers. For more information concerning Bradley Lake, see “Item 2 – Properties – Other Property – Bradley Lake.”  We also purchase approximately 40 MW from the Nikiski power plant on the Kenai Peninsula. We operate 1,693 miles of distribution line and 539 miles of transmission line, which includes 128 miles of leased transmission lines and Chugach’s share of the Eklutna transmission line.  For the year ended December 31, 2010, we sold 2.7 billion kWh of electrical power.

Customer Revenue From Sales

The following table shows the megawatt-hour (MWh) energy sales to and electric revenues from our retail, wholesale, and economy energy customers for the year ended December 31, 2010:

	MWh		2010 Revenues		Percent of Sales Revenue
Direct retail sales:
Residential		545,123	$	72,355,957		28	%
Commercial		624,307		67,754,347		26	%
Total		1,169,430		140,110,304		54	%
Wholesale sales:
MEA		743,212		55,937,931		22	%
HEA		454,223		33,189,789		13	%
Seward		61,651		4,188,989	2		%
Total		1,259,086		93,316,709		37	%
Economy energy/other sales1		278,093		22,141,341		9	%
Total from sales		2,706,609		255,568,354		100	%
Miscellaneous energy revenue				2,756,991
Total energy revenues			$	258,325,345

1Economy energy/other sales were made to GVEA and AML&P.

5

Retail Customers

Service Territory

Our retail service area covers much of the populated areas of Anchorage (other than downtown Anchorage) as well as remote mountain areas and villages.  The service area ranges from the northern Kenai Peninsula on the south, to Tyonek on the west, to Whittier on the east and to the Glenn Highway on the north.

Customers

As of December 31, 2010, we had 66,974 members receiving power from approximately 81,339 services (some members are served by more than one service).  Our customers are primarily urban and suburban.  The urban nature of our customer base means that we have a relatively high customer density per line mile.  Higher customer density means that fixed costs can be spread over a greater number of customers.  As a result of lower average costs attributable to each customer, we benefit from a greater stability in revenue, as compared to a less dense distribution system in which each individual customer would have a more significant impact on operating results. For the past five years no retail customer accounted for more than 5 percent of our revenues.

Wholesale Customers

We are the principal supplier of power to MEA, HEA and Seward under separate wholesale power contracts.  For 2010, our wholesale power contracts, including the fuel and purchased power components, produced $93.3 million in revenues, representing 37 percent of our total revenues and 47 percent of our total MWh sales to customers.

MEA

We currently have a power sales contract with Alaska Electric Generation & Transmission Cooperative, Inc., (AEG&T) for firm, all-requirement sales to MEA.   In 2010, sales to MEA represented approximately 27 percent of Chugach’s total sales of energy (including both retail and wholesale).  AEG&T is a generation and transmission cooperative that was formed by MEA and HEA in the mid 1980’s.  Under this contract, we sell power to AEG&T for resale to MEA.  Under this contract, MEA is obligated to purchase all of its electric power and energy requirements from us.  MEA had the right under the contract to alter the terms on which it purchased power from Chugach.  MEA did not invoke any of these rights and time periods in which MEA could exercise these rights have expired.  The MEA contract is in effect through December 31, 2014.  Under our contract, MEA is obligated to pay us for power sold to AEG&T even if AEG&T does not pay.

Section 12(c) of the MEA/Chugach Power Sales Agreement requires the parties to meet no later than ten years prior to the termination date of the Agreement to discuss possible renewal, extension or modification of the Agreement, as well as the desires and potential circumstances of all parties following the termination date.  Pursuant to this provision of the contract, Chugach and MEA met on October 27, 2004.  At that meeting and shortly thereafter by letter dated November 2, 2004, MEA communicated to Chugach that MEA does not desire to renew, extend or modify the Agreement.  Further, MEA stated that it does not envision any type of firm power purchase arrangement with Chugach following expiration of the Agreement on December 31, 2014.  MEA assured Chugach that it intends to continue to purchase power from Chugach in accordance with the Agreement through December 31, 2014.

6

On August 5, 2008, Chugach and AML&P invited MEA to participate in the development of a gas-fired generation plant near Chugach’s Anchorage headquarters.  On November 21, 2008, MEA elected to not participate in the project.  At an August 26, 2009, Chugach Board of Directors’ meeting and in a letter dated September 3, 2009, MEA’s then Interim General Manager advised Chugach that MEA desires to open discussions regarding power sales possibilities beyond 2014.  Discussions have been ongoing and are expected to continue in 2011.

HEA

We had a power sales contract with AEG&T for firm, partial- requirement sales to HEA until June 19, 2002, when the RCA approved the request by Alaska Electric and Energy Cooperative, Inc. (AEEC) and AEG&T to transfer Certificate of Public Convenience and Necessity No. 345 to serve as the power supplier of HEA to AEEC, instead of AEG&T.  HEA is the sole member of AEEC.  As part of this transaction our power sales agreement was assigned to AEEC and the Nikiski dispatch agreement was assigned to HEA with certain exceptions with the remaining rights and obligations under the Dispatch Agreement being assigned to AEEC (discussed below).  Chugach has not experienced a decline in revenue as a result of this transfer. Under our contract, HEA is obligated to pay us for the power sold to AEEC even if AEEC does not pay.  Under this contract, HEA is obligated (through AEEC) to take or pay for 73 MW of capacity, and not less than 350,000 MWh per year.  The HEA contract, as interpreted by the Alaska Public Utilities Commission, the predecessor to the RCA, limits the costs that may be included in our rates charged to HEA.  The HEA contract expires on January 1, 2014.  HEA’s remaining resource requirements are provided by AEEC’s Nikiski cogeneration facility and AEEC’s contract rights to receive power from the Bradley Lake hydroelectric project for the benefit of HEA.  In 2010, sales to HEA represented approximately 17 percent of Chugach’s total sales of energy (including both retail and wholesale).

In February 1999, we entered into a dispatch agreement with AEG&T, now AEEC, to operate the Nikiski unit as a Chugach system resource.  The agreement provides that, in addition to the energy that we already sell to AEEC and HEA, we will sell energy to AEEC equal to HEA’s residual energy requirements less its allocated share of the Bradley Lake project, up to a maximum of 320,000 MWh per year.  A portion of the Nikiski unit output may be dispatched for HEA needs, provided HEA supplies the fuel, in excess of the sum of our contract demand plus HEA’s share of energy from the Bradley Lake project.  The dispatch agreement will terminate on January 1, 2014, when our power supply contract with HEA terminates.  In a letter dated January 9, 2007, HEA notified Chugach that HEA would not seek to renew, extend or modify the current Agreement for Sale of Electric Power and Energy (the Agreement) when the Agreement expires on January 1, 2014.  On January 15, 2008, Chugach and HEA signed an agreement entitled Settlement of Dispute over Nikiski Cogeneration Plant System Use and Dispatch Agreement and Premium Demand Charges under HEA’s Power Sales Agreement.  This resolved a dispute over the interpretation of the Nikiski Cogeneration Plant System Use and Dispatch agreement.  As part of the Settlement Agreement, Chugach agreed to dispatch HEA’s share of Bradley Lake output for $30,000 per year to minimize, to the extent possible, any premium demand charges to be paid to Chugach by HEA.

7

On February 18, 2008, Chugach offered AEEC the opportunity to participate in the development of a gas-fired generation plant in order to partially satisfy its power requirements.  In June 2008, AEEC elected to withdraw from further participation discussions and pursue its own generation project.

Seward

We currently provide nearly all the power needs of the City of Seward.  In 2010, sales to Seward represented approximately 2 percent of Chugach’s total sales of energy (including both retail and wholesale).  In February 1998, we entered into a power sales agreement (Old Contract) with Seward that allowed us to interrupt service to Seward up to 12 times per year, not to exceed seventy-two cumulative hours annually.  Seward’s demand charge was adjusted to reflect the level of service provided by Chugach (approximately $350,000 annually).  This agreement expired on May 31, 2006.

We entered into a new power sales agreement (2006 Agreement) with the City of Seward, nominally effective June 1, 2006.  The new contract is for five years with two automatic five-year extensions, after RCA review, unless notice of termination is given by either party.  The 2006 Agreement is an interruptible, all-requirements/no reserves contract.  It has many of the attributes of firm service, especially in the requirement that so long as Chugach has sufficient power available, it must meet Seward’s needs for power.  However, service is interruptible because Chugach is under no obligation to supply or plan for generation capacity reserves to supply Seward and there is no limit on the number of times or hours per year that the supply can be interrupted.  Counterbalancing this is the requirement that Chugach must provide power to Seward if Chugach has the power available after first meeting its obligations to its other customers for whom Chugach has an obligation to provide reserves (MEA, HEA and Chugach retail customers).  The price under the 2006 Agreement reflects the reduced level of service because no costs of generation in excess of that needed to meet the system peak will be assigned to Seward.

Economy Customers

Since 1989, we have sold economy (non-firm) energy to GVEA.  We use available generation in excess of our own needs to produce electric energy for sale to GVEA, which uses that energy to serve its own loads in place of more expensive energy that it would have otherwise generated itself or purchased from other sources.

On April 6, 2010, Chugach and GVEA finalized an agreement for Chugach to provide a minimum of 20 MW of economy energy to GVEA on a non-firm basis based on an interruptible gas supply arrangement.  The agreement commenced on May 1, 2010, and will continue through March 31, 2013, pending annual commitments from gas suppliers.  The price to GVEA will include the cost of fuel (based on a system average heat rate), plus variable operations and maintenance expense, plus a margin.  Sales will be made under the terms and conditions of Chugach’s economy energy sales tariff.

8

Non-firm sales to GVEA have been 277,793 MWh, 76,968 MWh and 254,372 MWh for 2010, 2009, and 2008, respectively.  For sales not covered by a contractual priority right, no seller enjoys a contractual priority in making such sales and GVEA makes purchases from the seller offering the lowest competitive price.

Rate Regulation and Rates

The RCA regulates our rates. We seek changes in our base rates by submitting semi-annual Simplified Rate Filings (SRF) or through general rate cases filed with the RCA on an as-needed basis.   Chugach’s base rates, whether set under a general rate case or an SRF, are established to allow the continued recovery of our specific costs of providing electric service.  In each rate filing, rates are set at levels to recover all of our specific allowable costs and those rates are then collected from our retail and wholesale customers.

On August 10, 2002, A.S. 42.05.175 imposed timelines for RCA decisions.  Among other provisions, it provided that for all dockets commenced on or after July 1, 2002, the RCA shall issue a final order not later than 15 months after a complete tariff filing is made for a tariff filing that changes the utility’s revenue requirement or rate design.  It is within the RCA’s authority to authorize, after a notice period, rate changes on an interim, refundable basis.  In addition, the RCA has been willing to open limited reviews of matters to resolve specific issues from which expeditious decisions can often be rendered.

The RCA has exclusive regulatory control of our retail and wholesale rates, subject to appeal to the Alaska courts. The regulatory environment in Alaska requires cooperatives to use a debt service coverage approach to ratemaking.  Times Interest Earned Ratio (TIER) is designed to ensure Chugach maintains a debt service coverage ratio that allows Chugach to remain in compliance with its debt covenants.  Under Alaska law, financial covenants of an Alaskan electric cooperative contained in a debt instrument will be valid and enforceable, and rates set by the RCA must be adequate to meet those covenants.  Under Alaska law, a cooperative utility that is negotiating to enter into a mortgage or other debt instrument that provides for a TIER greater than the ratio the RCA most recently approved for that cooperative must submit the mortgage or debt instrument to the RCA before the instrument takes effect.  The rate covenants contained in the instruments that govern our outstanding long-term indebtedness do not impose any greater TIER requirement than those previously approved by the RCA.

We expect to continue to recover changes in our fuel and purchased power expenses through routine fuel surcharge filings with the RCA.  See “Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations - Results of Operations – Overview – Rate Regulation and Rates - Fuel Surcharge.”

The Second Amended and Restated Indenture of Trust (Indenture), which became effective January 20, 2011, governs all of our outstanding bonds and requires us to set rates expected to yield margins for interest equal to at least 1.10 times total interest expense.  The Amended and Restated Master Loan Agreement with CoBank, which became effective January 19, 2011, also requires Chugach to establish and collect rates reasonably expected to yield margins for interest equal to at least 1.10 times total interest expense.  The 2010 Credit Agreement with National Rural Utilities Cooperative Finance Corporation (NRUCFC), Bank of America, N.A., KeyBank National Association, JPMorgan Chase Bank, N.A., Bank of Montreal, CoBank, ACB, Goldman Sachs Bank USA, Bank of Taiwan, Los Angeles Branch, and Chang Hwa Commercial Bank, Ltd., Los Angeles Branch, which became effective November 17, 2010, and governs the unsecured credit facility Chugach may use to meet its obligations under its Commercial Paper program, also requires Chugach to maintain a minimum margins for interest of at least 1.10 times interest charges for each fiscal year.  The Revolving Line of Credit Agreement with NRUCFC requires Chugach to maintain an average TIER of not less than 1.10 times total interest expense.

9

For the years ended December 31, 2010, 2009 and 2008, our Margins for Interest/Interest (MFI/I) was 1.26, 1.27 and 1.28, respectively.  For the same periods, our TIER was 1.44, 1.28 and 1.30, respectively.  The temporary increase in TIER in 2010 was due to certain debt classified as short term, which will later be replaced with long-term debt.

Our Service Areas and Local Economy

Our service areas and those of our wholesale and economy energy customers are often described collectively as the Railbelt region of Alaska because the three geographic areas (the Southcentral, the Kenai Peninsula and the Interior) are linked by the Alaska Railroad.

Anchorage is located in the Southcentral region of Alaska and is the trade, service, medical and financial center for most of Alaska and serves as a major center for many state governmental functions.  Other significant contributing factors to the Anchorage economy include a large federal government and military presence, tourism, air and rail transportation facilities and headquarters support for the petroleum, mining and other basic industries located elsewhere in the state.

The Matanuska-Susitna Borough is immediately north of the Municipality of Anchorage, centered around the communities of Palmer and Wasilla.  Although agriculture, tourism, mining and forestry are factors in the economy of the Matanuska-Susitna Borough, the economic well-being of the area is closely tied to that of Anchorage and many Matanuska-Susitna residents commute to jobs in Anchorage.

The Kenai Peninsula is south of Anchorage with an economy substantially independent of the Anchorage area.  The most significant basic industry on the Kenai Peninsula is the production and processing of oil and gas from the Cook Inlet region.  Consequently, the Kenai Peninsula economy is sensitive to oil and gas price trends.  Recent examples of the impact from these trends include the closure of Agrium’s Kenai facilities in 2008 due to Agrium’s inability to acquire an economic supply of gas.  Up until the closure, the Agrium facility was the largest value-added product exporter in Alaska.  A more recent example of the impact of world markets is the upcoming closure in April or May 2011 of the Marathon and ConocoPhillips jointly-owned liquefied natural gas (LNG) export facility due to the LNG markets and world pricing.  This LNG export facility, the only one operating in the United States, has been exporting LNG to Japan for 41 years.  Partially offsetting these losses, the Tesoro’s Kenai refinery (one of the largest Alaska refiners producing gasoline, jet fuel, heavy fuel oils, propane and asphalt) expanded its operations and capacity to include the production of ultra low sulfur gasoline and diesel.  Third party oil and gas developers have shown increased interests in multiple developments across the Kenai, which will also help offset the loss of long-time industrial consumers.  Other important basic industries include tourism and commercial fishing and processing.  Principal communities on the Kenai Peninsula are Homer, Seward, Kenai and Soldotna.

10

Fairbanks is the center of economic activity for the central part of the state, known as the Interior.  Fairbanks, which is approximately 350 miles north of Anchorage, is Alaska’s second largest city.  Economic activities in the Fairbanks region include federal and state government and military operations, coal mining, the University of Alaska, tourism and support of natural resource development in the Interior and northern parts of the state.  Several gold mines, served by GVEA, operate near Fairbanks.  The Trans-Alaska Pipeline System, which transports crude oil, passes near Fairbanks on its route from the North Slope oilfields to Valdez.

Load Forecasts

The following table sets forth our projected load forecasts for the next five years:

Load (MWh)	2011		2012		2013		2014		2015
Retail		1,159,995		1,158,684		1,157,377		1,156,073		1,154,772
Wholesale		1,249,919		1,262,491		1,266,362		815,806		58,173
Losses		125,000		125,277		125,294		111,739		89,013
Total		2,534,914		2,546,452		2,549,033		2,083,618		1,301,958

Overall, retail and wholesale energy requirements are expected to remain relatively flat over the next three years.  The single largest source of growth in Chugach’s system is the Goose Creek Correctional Center currently under construction in the MEA service area.  Also, while MEA’s growth has slowed over the last three years, the Matanuska-Susitna (MatSu) Borough economy continues to expand to serve an increasing suburban population.  Our total firm energy requirements are expected to grow at an average annual compounded rate of 0.3 percent from 2011 to 2013, with retail requirements slightly declining at a rate of 0.1 percent and wholesale requirements growing at a rate of 0.7 percent.  At the end of 2013, HEA’s contract to purchase their net requirements from Chugach expires, causing system requirements to decrease by 18%.  At the end of 2014, MEA’s contract to purchase their full requirements from Chugach expires, resulting in a decrease of 38% in system requirements. Overall, the expiration of these contracts amounts to a 49% decrease in Chugach system requirements based on 2013 sales levels.

Growth in retail and wholesale energy sales are expected to be partially or more than offset by expected consumer efficiency/conservancy. These projections are based on assumptions that management believes to be reasonable as of the date the projections were made. The occurrence of a significant change in any of the assumptions could effect a change in the projected sales forecast.

Item 1A – Risk Factors

Chugach’s consolidated financial results will be impacted by weather, the economy of our service territory, fuel availability and prices, the future direction customers may take and the decisions of regulatory agencies.  Our creditworthiness will be affected by national and international monetary trends, general market conditions and the expectations of the investment community, all of which are largely beyond our control.  In addition, the following statements highlight risk factors that may affect our consolidated financial condition, results of operations and cash flows.  The statements below must be read together with factors discussed elsewhere in this document and in our other filings with the SEC.

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Financing

Over the next two years Chugach anticipates financing increased capital expenditures due to the construction of a natural gas fired generation plant and on-going capital needs.  On November 17, 2010, Chugach replaced the $300 million unsecured Credit Agreement executed on October 10, 2008, which was due to expire on October 10, 2011.  The 2010 Credit Agreement with National Rural Utilities Cooperative Finance Corporation (NRUCFC), Bank of America, N.A., KeyBank National Association, JPMorgan Chase Bank, N.A., Bank of Montreal, CoBank, ACB, Goldman Sachs Bank USA, Bank of Taiwan, Los Angeles Branch and Chang Hwa Commercial Bank, Ltd., Los Angeles Branch, will expire on November 17, 2013.  The Credit Agreement is used to back Chugach’s Commercial Paper program, which will act as a bridge until Chugach converts commercial paper balances to long-term debt.  Chugach began issuing short term commercial paper in the first quarter of 2009, see “Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources – Commercial Paper.”  No assurance can be given that Chugach will be able to refinance commercial paper with longer term debt or that it will be able to continue to access the commercial paper market.  Global financial markets and economic conditions have been volatile due to a variety of factors, including current weak economic conditions.  As a result, the cost of raising money in the debt capital markets could increase while the availability of funds from those markets could diminish.The termination of the wholesale power contracts with MEA and HEA could negatively impact our ability to finance or could impact the cost associated with our financing efforts.

Wholesale Contracts

Chugach is the principal supplier of power under long-term wholesale power contracts with MEA and HEA.  These contracts, including the fuel component, represented $89.1 million, or 35 percent and $112.6 million, or 39 percent in 2010 and 2009, respectively, of total sales revenue.  The HEA and MEA contracts expire January 1, 2014, and December 31, 2014, respectively.

Pursuant to provisions of their contracts, notification was made by MEA in 2004 and by HEA in 2007 that neither organization intends to be on the Chugach system under the current contractual arrangements post 2014.  This would result in a loss of approximately 45 percent of Chugach’s power sales load and approximately 35 percent of the utility’s annual sales revenue.  At the August 26, 2009, Chugach Board of Directors’ meeting and in a letter dated September 3, 2009, MEA’s then-Interim General Manager advised Chugach that MEA desires to open discussions regarding power sales possibilities beyond 2014.  Discussions have been ongoing and are expected to continue in 2011.

Chugach’s planning process, however, reflects the termination of the MEA and HEA wholesale contracts post 2014.  Consequently, to mitigate this risk, Chugach will be pursuing replacement sources of revenue through potential new power sales agreements and transmission wheeling and ancillary services tariff revisions.  The loss of these wholesale customers may require Chugach to file a general rate case to recover total costs and/or restructure rates.  To the extent that the general rate case could take up to fifteen months to be completed, Chugach may request an interim and refundable rate increase in which the RCA is required to take action within 45 days.  To the extent a general rate case or an interim and refundable rate increase does not provide for the timely recovery of expenses, Chugach could experience a material negative impact on its cash flows.  Under Alaska law, financial covenants of an Alaskan electric cooperative contained in a debt instrument will be valid and enforceable, and rates set by the RCA must be adequate to meet those covenants.

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Credit Ratings

Changes in our credit ratings could affect our ability to access capital.  Standard & Poor's Rating Services (S&P), Moody's Investors Service (Moody's) and Fitch Inc. (Fitch) currently rate our outstanding bonds issued under the Amended & Restated Indenture at "A-", "A3" and "A-", respectively.  S&P and Moody's currently rate our commercial paper at "A-1" and "P-2", respectively.  If these agencies were to downgrade our ratings, particularly below investment grade, we may be required to pay higher interest rates on financings which we need to undertake in the future, and our potential pool of investors and funding sources could decrease.

Pension Plans

We participate in the Alaska Electrical Pension Fund (AEPF).  The AEPF is a multiemployer pension plan to which we make fixed, per employee contributions through our collective bargaining agreement with the IBEW, which covers our IBEW-represented workforce. We do not have control over the AEPF.  Chugach receives information concerning its funding status annually.  If a funding shortfall in the AEPF exists, we may incur a contingent withdrawal liability.  Our contingent withdrawal liability is an amount based on our pro rata share among AEPF participants of the value of the funding shortfall.  This contingent liability becomes due and payable by us if we terminate our participation in the AEPF.

We also participate in the National Rural Electric Cooperative Association (NRECA) Retirement Security Plan (the “Plan”), a multiple employer defined benefit master pension plan maintained and administered by the NRECA for the benefit of its members and their employees.  All our employees not covered by a union agreement become participants in the Plan.  We do not have control over the Plan.  The Plan updates contribution rates on an annual basis to maintain the health of the plan consistent with Pension Protection Act of 2006 minimum funding standards.  Currently, the plan does not require accelerated catch-up contributions to maintain minimum funding standards.

Equipment Failures and Other External Factors

The generation and transmission of electricity requires the use of expensive and complex equipment.  While we have a maintenance program in place, generating plants are subject to unplanned outages because of equipment failure.  In the event of unplanned outages, we must acquire power from other sources at unpredictable costs in order to supply our customers and comply with our contractual agreements.  The fuel surcharge process allows Chugach to reflect current purchased power cost and to recover under-recoveries and refund over-recoveries with a three-month lag.  If Chugach were to materially under-recover purchased power costs due to an unplanned outage, we would normally seek an increase in the surcharge to recover those costs at the time of the next quarterly fuel surcharge filing.  As a result, cash flow may be impacted due to the lag in payments for purchased power costs and the corresponding collection of those costs from customers.  To the extent the regulatory process does not provide for the timely recovery of purchased power costs, Chugach could experience a material negative impact on its cash flows.  Chugach has line of credit and commercial paper borrowing capacity to mitigate this risk.

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Southcentral Power Project (SPP)

We are currently in the process of developing a natural gas-fired generation plant near our Anchorage headquarters.  The generation plant is being developed jointly with AML&P.  All projects of this size and nature are subject to numerous schedule and cost risks including weather conditions, delays in obtaining key materials, labor difficulties, permitting, construction delays, difficulties with partners or other factors beyond our control.  Any of these events could cause the total costs of construction to be higher than anticipated and the performance of our business following the construction to not meet expectations, hence hindering our ability to timely and effectively integrate the SPP into our operations, resulting in unforeseen operating difficulties or unanticipated costs.  Any of these or other factors could adversely affect our ability to realize the anticipated benefits from the project.  We have contracts in place that utilize facilities in Japan.  We have received notification that impact assessments have begun following the March 11, 2011 earthquake and tsunami.  We are not aware of any specific delays at this time.  On December 20, 2010, Chugach received a construction permit from the Alaska Department of Environmental Conservation allowing the project to begin construction in the spring of 2011 as planned.  On March 15, 2011, Chugach received its initial building permit from the Municipality of Anchorage.

Fuel Supply

In 2010, 89 percent of our power was generated from natural gas, which included power generated at Nikiski.  Our primary suppliers of natural gas are ConocoPhillips, AML&P, Chevron/UNOCAL and Marathon. Chugach currently has contracts in place to fill 100 percent of Chugach’s unmet needs through December 2013, approximately 50 percent of Chugach’s unmet needs through December 2014, approximately 60 percent in 2015 and approximately 29 percent in 2016.

The State of Alaska Department of Natural Resources (DNR) completed a preliminary engineering and geological evaluation of the remaining Cook Inlet gas reserves in December of 2009.  The study identified 863 billion cubic feet (BCF) of proven, developed, producing reserves, additional probable reserves of 279 BCF and an additional increment of 353 BCF in high-confidence pay intervals.  Combined, these 1.5 trillion cubic feet of gas reserves are similar to the 1.4 trillion cubic feet of gas reserves identified in a 2004 study undertaken by the Department of Energy.  Given current demand and deliverability, DNR estimates at minimum a 10-year supply of gas exist in currently producing leases.  DNR does note that economic considerations will play a major role in whether producers continue drilling and development activities to meet demand.  Chugach has been working closely with the state and producers to develop a comprehensive Cook Inlet management plan that will meet this goal.

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Chugach continues to explore its options for future fuel supply needs by working with developers on commercial terms for natural gas storage and the state of Alaska on energy policies to promote gas development in Cook Inlet and other in-state gas options such as the North Slope Pipeline, Spur Line or Bullet line to South Central Alaska.  Chugach is also evaluating LNG storage and import options as transition gas until in-state gas options are developed.

Cooper Lake Hydroelectric Project

The Cooper Lake Hydroelectric Project received a 50-year license from the Federal Energy Regulatory Commission (FERC) in August of 2007.  A condition of that license is a requirement to construct a Stetson Creek diversion structure, a pipeline to Cooper Lake, and a bypass structure to release warm water from Cooper Lake into Cooper Creek potentially enhancing fish habitat.  The cost and feasibility of this project are currently being assessed.  If the project is not feasible or if the cost estimate materially exceeds the terms of the license it may require a license amendment.

Other Environmental Regulations

 We currently are required to comply with numerous federal, state and local laws and regulations relating to the protection of the environment.  While we believe that we have obtained all material environmental-related approvals currently required to own and operate our facilities, we may incur significant additional costs because of compliance with these requirements in addition to costs related to any costs of compliance with laws or regulations relating to CO2 emissions.  Failure to comply with environmental laws and regulations could have a material effect on us, including potential civil or criminal liability and the imposition of fines or expenditures of funds to bring our facilities into compliance.  Delay in obtaining, or failure to obtain and maintain in effect any environmental approvals, or the delay or failure to satisfy any applicable environmental regulatory requirements related to the operation of our existing facilities could result in significant additional costs to us.

Recovery of Fuel and Purchased Power Costs

The RCA approved inclusion of all fuel and transportation costs related to our current contracts in the calculation of Chugach’s fuel surcharge process which will ensure, in advance, that costs incurred under the contracts can be recovered from Chugach’s customers.  The fuel surcharge process recovers under-recoveries and refunds over-recoveries from prior periods with minimal regulatory lag.  Chugach's fuel surcharge rates are adjusted through quarterly filings with the RCA, which sets the rates on projected costs, sales and system operations for the quarter.  Any under or over recovery of costs is incorporated into the following quarterly surcharge.  At December 31, 2010, Chugach had under-recovered $2.4 million and at December 31, 2009, Chugach had over-recovered $3.2 million, net.  To the extent the regulated fuel and purchased power recovery process does not provide for the timely recovery of costs, Chugach could experience a material negative impact on its cash flows.  Chugach has line of credit and commercial paper borrowing capacity to mitigate this risk.

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Accounting Standards or Practices

We cannot predict the impact that future changes in accounting standards or practices may have on public companies in general, the energy industry or our operations specifically.  New accounting standards could be issued that could change the way we record revenues, expenses, assets and liabilities.  These changes in accounting standards could adversely affect our reported earnings or could increase reported liabilities.

Green House Gas Regulations, Carbon Emission and Climate Change

Substantial uncertainty remains regarding the potential impacts of green house gas (GHG) regulations, carbon emissions, and climate change on Chugach's operations. These issues are potentially responsible for increased frequency of warmer weather, including potentially decreased hydroelectric generation resulting from reduced runoff from snow pack.  If climate change reduces Chugach's hydroelectric energy production, there may be a need for additional production even if there is no change in average load.

In response to growing public concerns over these issues, the federal government has actively begun pursuing legislation that calls for the reduction of GHG emissions.  The proposed legislation typically consists of either a tax on GHG emissions or a cap and trade program that requires allowances to emit GHG.  Proposals that implement a GHG emission tax vary widely as to the amount of the tax.  Proposed cap and trade programs vary greatly regarding the number of allowances existing facilities would receive at “no cost”, similar to other Clean Air Act regulations.  Some proposals do not provide “no cost” allowances to existing facilities.

The additional costs related to a GHG tax or cap and trade program could affect the relative cost of the energy Chugach produces.  Because no applicable federal laws regulating GHG emissions have become effective, we cannot predict the cost or effect of future legislation or regulation.  In the event that some form of federal law or regulation regarding GHG emissions is enacted in the future, it could have a material adverse effect on our operations, financial position, and cash flows.

These factors, as well as weather, interest rates, economic conditions, fuel supply and prices, are largely beyond our control, but may have a material adverse effect on our consolidated earnings, cash flows and financial position.

Item 1B – Unresolved Staff Comments

Not applicable

Item 2 - Properties

General

We have 530.1 MW of installed capacity consisting of 17 generating units at five power plants.  These include 385.0 MW of operating capacity at the Beluga facility on the west side of Cook Inlet; 67.5 MW of power at the Bernice Lake facility on the Kenai Peninsula; 46.7 MW of power at IGT in Anchorage; and 19.2 MW at the Cooper Lake facility, which is also on the Kenai Peninsula.  We also own rights to 11.7 MW of capacity from the two Eklutna Hydroelectric Project generating units that we jointly own with MEA and AML&P. In addition to our own generation, we purchase power from the 126 MW Bradley Lake hydroelectric project owned by the Alaska Energy Authority (AEA) through the Alaska Industrial Development and Export Authority.  The Bradley Lake facility is operated by HEA and dispatched by us.  The Beluga, Bernice Lake and IGT facilities are all fueled by natural gas. We own our offices and headquarters, located adjacent to IGT in Anchorage.  We also lease warehouse space for some generation, transmission and distribution inventory (including a small amount of office space).

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Generation Assets

We own the land and improvements comprising our generating facilities at Beluga and IGT. In 2008 and 2009 we purchased land adjacent to our Anchorage headquarters for use during the construction of a new gas fired generation plant we are jointly developing with AML&P.  We also own all improvements comprising our generating plant at Bernice Lake, located on land leased from HEA for an immaterial amount.  The Bernice Lake ground lease expires in 2011.  We are currently involved in discussions with the lease holder concerning a lease extension.

The Cooper Lake Hydroelectric Project is partially located on Federal lands.  Chugach operates and maintains the Cooper Lake project pursuant to a 50-year license granted to us by FERC in August 2007.  As part of the relicensing process, there was a negotiated Relicensing Settlement Agreement (RSA) entered into in August of 2005.  The RSA required Chugach to paint the powerhouse and Cooper Lake intake structure per United States Forest Service (USFS) color specification to reduce visual impact of project facilities.  This task was completed in August of 2009.  The RSA also required Chugach to design, permit, and construct a winter access parking area.  This project was completed in September of 2009.  The most significant requirement of the RSA requires Chugach to establish a flow regime in Cooper Creek below the Cooper Lake Dam.  This is a complex project that includes a Stetson Creek Diversion (Dam), Pipeline (Conveyance System) and Cooper Lake Outlet Works.  In short, it is designed to remove colder water flowing into Cooper Creek drainage and replace it with warmer Cooper Lake water, possibly improving fish habitat.  Our consultants have completed extensive geotechnical feasibility work over the last two years and recently issued a “Draft” Basis of Design Report.  The next step is to complete the final design package to submit to FERC.  Chugach was successful in obtaining a two year extension on this deliverable, which is now due in August of 2012.

Cooper Lake Unit 2 was taken out of service in August of 2008 to perform repairs and major maintenance.  The unit was put back into service in May of 2009.  Unit 1 was taken out of service in May of 2009, shortly after the return to service of Unit 2, to perform repairs and major maintenance, and returned back into service in February of 2010.  Both units were in service or standby since February of 2010.

In 1997, we acquired a 30 percent interest in the Eklutna Hydroelectric Project.  The plant is located on federal land pursuant to a United States Bureau of Land Management right-of-way grant issued in October 1997.  MEA owns 17 percent of the project and AML&P owns the remaining 53 percent undivided interest and performs maintenance on the units as needed.

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Our principal generation units are Beluga 3, 5, 6, 7 and 8.  These units have a combined capacity of 345.8 MW and meet most of our load.  All other units are used principally as reserve.  While the Beluga turbine-generators have been in service for many years, they have been maintained in good working order with scheduled inspections and periodic upgrades.  Due to the age of Unit 3, several of the high risk parts of the turbine rotor were replaced during a major inspection in 2007.  Combustion inspections were performed on Unit 3 in 2008, 2009 and 2010 in accordance with the existing maintenance plan.  Beluga Unit 5 continued to have two combustion inspections per year in 2008, 2009 and 2010.  In 2007, this unit received a hot gas path inspection which involved generator repairs.  Beluga Unit 6 was re-powered in 2000 and received annual inspections in 2007, 2008 and 2009.  In 2010, Unit 6 received a major inspection in which many of the major components were replaced with new or refurbished parts.  Beluga Unit 7 was re-powered in 2001 and had major inspections in 2004 and 2008 with annual inspections in 2007, 2009 and 2010.  Beluga Unit 8, a steam turbine generator, received a major inspection in 2008 with annual inspections in 2009 and 2010.

Chugach is in the process of developing a natural gas-fired generation plant on land owned by Chugach near its Anchorage headquarters.  SPP will be developed and owned by Chugach and AML&P as tenants in common.  Chugach will own and take approximately 70 percent of the new plant’s output and AML&P will own and take the remaining output.  Chugach will proportionately account for its ownership in the SPP.

On November 17, 2008, Chugach executed a gas turbine purchase agreement for the purchase of three gas turbines with General Electric Packaged Power (GEPP).  During 2009 Chugach executed several amendments associated with its purchase agreement with GEPP, which included the purchase of a spare engine for maintenance purposes.  Chugach executed an Owner’s Engineer Services Contract on May 12, 2009.  On January 5, 2010, Chugach executed a Services Contract for the shipment of the combustion turbine generators and related accessories.  On February 25, 2010, Chugach purchased land adjacent to its Anchorage headquarters for the laydown of equipment displaced by the new power plant.  On April 13, 2010, Chugach executed a steam turbine generator (STG) purchase agreement.  On June 18, 2010, Chugach executed an Engineering, Procurement, and Construction (EPC) contract with SNC-Lavalin Constructors, Inc. (SLCI).  On August 27, 2010, Chugach executed a Once Through Steam Generator (OTSG) equipment contract with Innovative Steam Technologies (IST).  Chugach amended the contract for transportation of combustion turbine generators on September 28, 2010, to include transportation of the steam turbine generator.  On December 20, 2010, Chugach received a construction permit from the Alaska Department of Environmental Conservation allowing the project to begin construction in the spring of 2011 as planned.  On March 15, 2011, Chugach received its initial building permit from the Municipality of Anchorage.  Chugach made payments of $74.3 million in 2010 and $25.0 million in 2009, with additional payments of $153.7 million expected in 2011, pursuant to all these contracts.

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The following matrix depicts nomenclature, run hours for 2010 and percentages of contribution and other historical information for all Chugach generation units.

Facility		Commercial Operation Date	Nomenclature	Rating (MW)(1)			Run Hours (2010)			Percent of Total Run Hours			Percent of Time Available
Beluga Power Plant (3)
	1	1968	GE Frame 5		19.6			1,920.6			3.9			98.2
	2	1968	GE Frame 5		19.6			2,199.9			4.4			96.9
	3	1972	GE Frame 7		64.8			7,891.0			15.9			95.0
	5	1975	GE Frame 7		68.7			7,697.8			15.5			94.2
	6	1976	AP 11DM-EV		79.2			6,877.7			13.8			78.5
	7	1978	AP 11DM-EV		80.1			8,241.1			16.6			94.1
	8	1981	BBC DK021150(2)		53.0			7,740.4			15.6			88.6
Bernice Lake Power Plant (3)					385.0
	2	1971	GE Frame 5		19.0			1,051.2			2.1			91.6
	3	1978	GE Frame 5		26.0			214.9			0.4			51.0
	4	1981	GE Frame 5		22.5			456.3			0.9			75.9
Cooper Lake Hydroelectric Plant					67.5
	1	1960	BBC MV 230/10		9.6			2,570.5			5.2			85.2
	2	1960	BBC MV 230/10		9.6			2,506.1			5.1			95.9
IGT Power Plant					19.2
	1	1964	GE Frame 5		14.1			51.9			0.1			98.5
	2	1965	GE Frame 5		14.1			142.3			0.3			92.6
	3	1969	Westinghouse 191G		18.5			86.9			0.2			98.3
Eklutna Hydroelectric Plant					46.7
	1	1955	Newport News		5.8	(4)		N/A	(5)		N/A	(5)		93.8
	2	1955	Oerlikon custom		5.9	(4)		N/A	(5)		N/A	(5)		98.6
					11.7
System Total					530.1			49,648.6			100.0

(1) Capacity rating in MW at 30 degrees Fahrenheit.

(2) Steam-turbine powered generator with heat provided by exhaust from natural-gas fueled Units 6 and 7 (combined-cycle).

(3) Beluga Unit 4 and Bernice Lake Unit 1 were retired during 1994.

(4) The Eklutna Hydroelectric Project is jointly owned by Chugach, MEA and AML&P.  The capacity shown is our 30 percent share of the plant’s output under normal operating conditions.  The actual nameplate rating on each unit is 23.5MW.

(5) Because Eklutna Hydroelectric Project is managed by a committee of the three owners, we do not record run hours or in-commission rates.

Note: GE = General Electric, BBC = Brown Boveri Corporation, AP = Alstom Power

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Transmission and Distribution Assets

As of December 31, 2010, our transmission and distribution assets included 42 substations and 539 miles of transmission lines, which included 128 miles of leased transmission lines and Chugach’s share of the Eklutna transmission line, 914 miles of overhead distribution lines and 779 miles of underground distribution line.  We own the land on which 22 of our substations are located and a portion of the right-of-way connecting our Beluga plant to Anchorage.  As part of our 1997 acquisition of 30 percent of the Eklutna facility, we also acquired a partial interest in two substations and additional transmission facilities.

Many substations and a substantial number of our transmission and distribution rights-of-way are subject to federal or state permits, leases and licenses.  Under a federal license and a permit from the United States Forest Service, we operate the Quartz Creek transmission substation and the Hope substation.  We also operate transmission lines over federal, state and borough lands.  Under a State of Alaska permit from the Department of Natural Resources, we operate the Summit Lake and Daves Creek substations.  Long-term permits from the Alaska Division of Lands and the Alaska Railroad Corporation govern much of the rest of our transmission system outside the Anchorage area.  Within the Anchorage area, we operate our University substation and several major transmission lines pursuant to long-term rights-of-way grants from the U.S. Department of the Interior, Bureau of Land Management, and transmission and distribution lines have been constructed across privately owned lands via easements and across public rights-of-way and waterways pursuant to authority granted by the appropriate governmental entity.

Title

Under Chugach’s Amended and Restated Indenture dated April 1, 2001, all of Chugach’s bonds were general unsecured and unsubordinated obligations.  On January 20, 2011, Chugach and the indenture trustee entered into a Second Amended and Restated Indenture of Trust (the Indenture) granting a lien on substantially all of Chugach’s assets to secure Chugach’s long-term debt.  Assets that are generally not subject to the lien of the Indenture include cash (other than cash deposited with the indenture trustee); instruments and securities; patents, trademarks, licenses and other intellectual property; vehicles and other movable equipment; inventory and consumable materials and supplies; office furniture, equipment and supplies; computer equipment and software; office leases; other leasehold interests for an original term of less than five years; contracts (other than power sales agreements with members having an original term exceeding three years, certain contracts specifically identified in the indenture, and other contracts relating to the ownership, operation or maintenance of generation, transmission or distribution facilities); non-assignable permits, licenses and other contract rights; timber and minerals separated from land; electricity, gas, steam, water and other products generated, produced or purchased; other property in which a security interest cannot legally be perfected by the filing of a Uniform Commercial Code financing statement, and certain parcels of real property specifically excepted from the lien of the Indenture.  The lien of the Indenture may be subject to various permitted encumbrances that include matters existing on the date of the Indenture or the date on which property is later acquired; reservations in U.S. patents; non-delinquent or contested taxes, assessments and contractors’ liens; and various leases, rights-of-way, easements, covenants, conditions, restrictions, reservations, licenses and permits that do not materially impair Chugach’s use of the mortgaged property in the conduct of Chugach’s business.

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Many of Chugach’s properties are burdened by easements, plat restrictions, mineral reservation, water rights and similar title exceptions common to the area or customarily reserved in conveyances from federal or state governmental entities, and by additional minor title encumbrances and defects. We do not believe that any of these title defects will materially impair the use of our properties in the operation of our business.

Under the Alaska Electric and Telephone Cooperative Act, we possess the power of eminent domain for the purpose and in the manner provided by Alaska condemnation laws for acquiring private property for public use.

Other Property

Bradley Lake.  We are a participant in the Bradley Lake hydroelectric project, which is a 126 MW rated capacity hydroelectric facility near Homer on the southern end of the Kenai Peninsula that was placed into service in September 1991.  The project is nominally scheduled below 90 MW to minimize losses and ensure system stability.  We have a 30.4 percent (27.4 MW as currently operated) share in the Bradley Lake project’s output, and take Seward’s and MEA’s shares which we net bill to them, for a total of 45.2 percent of the project’s capacity.  We are obligated to pay 30.4 percent of the annual project costs regardless of project output.

The project was financed and built by AEA through grants from the State of Alaska and the issuance of $166 million principal amount of revenue bonds supported by power sales agreements with six electric utilities that share the output from the facility (AML&P, HEA and MEA (through AEG&T and AEEC), GVEA, Seward and us).  The participating utilities have entered into take-or-pay power sales agreements under which AEA has sold percentage shares of the project capacity and the utilities 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).  By contract, we also provide transmission and related services to all of the participants in the Bradley Lake project.

The term of our Bradley Lake power sales agreement is fifty years from the date of commercial operation of the facility (September 1991) or when the revenue bond principal is repaid, whichever is the longer.  The agreement may be renewed for successive forty-year periods or for the useful life of the project, whichever is shorter.  We believe that so long as this project produces power taken by us for our use that this expense will be recoverable through the fuel surcharge process.  The share of Bradley Lake indebtedness for which we are responsible is approximately $33 million.  Upon the default of a participant, and subject to certain other conditions, AEA is entitled to increase each participant’s share of costs and output pro rata, to the extent necessary to compensate for the failure of the defaulting participant to pay its share, provided that no participant’s percentage share is increased by more than 25 percent.  Upon default, Chugach could be faced with annual expenditures of approximately $5.3 million as a result of Chugach’s Bradley Lake take-or-pay obligations.

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On July 1, 2010, AEA issued $28,800,000 of Power Revenue Refunding Bonds, Sixth Series, for purposes of refunding $30,640,000 of the Fifth Series Bonds.  The refunded Fifth Series Bonds were called on August 2, 2010.  The refunding resulted in aggregate debt service payments over the next eleven years in a total amount approximately $3.3 million less than the debt service payments which would have been due on the refunded bonds.  Refunding the Fifth Series Bonds resulted in an economic gain of approximately $2.4 million.  Chugach’s share of these savings will be approximately $714,300, which represents the reduction in debt-service costs recorded as purchased power expense.

Eklutna.  We purchased a 30 percent undivided interest in the Eklutna Hydroelectric Project from the federal government in 1997.  MEA owns 17 percent of the Eklutna Hydroelectric Project.  The power MEA purchases from the Eklutna Hydroelectric Project is pooled with our purchases and sold back to MEA to be used in meeting MEA’s overall power requirements.  AML&P owns the remaining 53 percent undivided interest in the Eklutna Hydroelectric Project.

Fuel Supply

In 2010, 89 percent of our power was generated from natural gas, which included power generated at Nikiski, and 78 percent of that gas-fired generation took place at Beluga.

Total gas usage in 2010 was approximately 28.9 BCF.  Our primary sources of natural gas are divided among four long-term contracts with three major oil and gas companies and one utility.  All of the production came from Cook Inlet, Alaska.  ConocoPhillips Alaska Inc. under their Beluga River Unit (BRU) and new contract provided 42.0 percent of gas supplied for generation, while Marathon Oil Company provided 34.0 percent.  Chevron U.S.A. provided 15.0 percent and AML&P provided 10.0 percent of Chugach’s gas requirements.  Approximately 2.2 BCF of gas remains on the current contracts.  Our contract gas with Marathon expired in 2010 and we expect the remaining three contracts to run-out in early 2011.  The new contract with ConocoPhillips provides gas beginning in 2010, through December 31, 2016.  A new contract with Marathon will provide gas, now estimated to be 26 BCF, beginning in April of 2011, which together, will fill Chugach’s unmet needs through December 31, 2013.  Under almost all circumstances the deliverability supplied under our contracts is sufficient to meet all of our generating requirements.

ConocoPhillips

We entered into a contract with ConocoPhillips Alaska Inc. (COP) in 2009.  The new contract provides gas starting January 1, 2010, and will terminate December 31, 2016.  The total amount of gas under the contract is now estimated to be 62 BCF.  The new contract is designed to fill 100 percent of Chugach’s unmet needs until April 2011, approximately 50 percent of Chugach’s unmet needs from May 2011 through December 2014, approximately 60 percent in 2015 and approximately 29 percent in 2016.

The gas supplied by COP under the contract is separated into two volume tranches for pricing purposes.  “Firm Fixed Quantity” gas meets a portion of Chugach’s base load requirements, while “Firm Variable Quantity” gas meets peaking needs.  Chugach expects that ninety percent of the gas purchased under the contract will be firm fixed and ten percent will be firm variable.  The dividing line between firm fixed and firm variable volumes will be calculated based on a methodology that involves using a multiplier and the simple average of Chugach’s average daily volumes for the thirty lowest volume days during the last calendar year.  For example, in 2011 the Firm Fixed Quantity value has been calculated at 34,500 thousand cubic feet (Mcf) per day, which is the contract minimum.

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Pricing for firm fixed gas will be based on the average of five Lower 48 natural gas production areas.  The contract price will be calculated on a quarterly basis as the trailing average of the simple daily average of the Platts Gas Daily midpoint prices for each “flow day” in these market areas during the last quarter.  For the first half of 2010 there was a price collar, floor of $5.75 per Mcf and cap of $6.25 per Mcf, on the firm fixed gas between January 1, 2010 and June 30, 2010. After the initial period we experienced firm fixed price levels below the initial price floor of $5.75.  For the period July 1 through September 30, 2010, the Firm Fixed Quantity price was $4.15.  For the final quarter of 2010, (October 1 through December 21, 2010) the Firm Fixed Quantity price was $4.078.

Pricing for firm variable gas purchased between January 1, 2010, and March 31, 2011, was set based on one quarter trailing average of ninety-five percent of the average monthly price of Kenai liquefied natural gas delivered to Japan, as officially reported to the U.S. Department of Energy.  The price for the first quarter of 2010 was $10.388 per Mcf, while the price for the second quarter was $11.016 per Mcf.  Hourly volumes delivered up to this hourly rate will be priced based on the Firm Fixed Quantity price.  Hourly volumes delivered in excess of this hourly rate will be priced based on the Firm Variable Quantity price.  For the first quarter of 2011, the Firm Fixed Quantity is calculated at $3.689 per Mcf.  Pricing for firm variable gas purchased from April 1, 2011, to December 31, 2013, will be 120 percent of the one calendar quarter trailing average of “Platts National Average Price” as published in Platts Gas Daily for each “flow day.” ($4.31 per Mcf on January 1, 2011), plus taxes in excess of $0.25 per Mcf.  The price for firm variable gas is capped at two-hundred percent of the firm fixed price.  Firm variable gas is not provided by the contract after December 31, 2013.

Chugach also has the option to receive a fixed price quote from COP and lock that price of any quantity as long as the quantity does not exceed the “Firm Fixed Quantity” and for any term up to December 31, 2016, for which price is to be locked.

Beluga River Field Producers

We have similar requirements contracts with each of the one third working interest owners of the Beluga River Field, ConocoPhillips, AML&P and Chevron, which were executed in April 1989, superseding contracts that had been in place since 1973.

The current contracts continue until the earlier of the delivery of 180 BCF of natural gas or December 31, 2013.  Chugach is entitled to 180 BCF of natural gas (60 BCF per Beluga River Field producer).  During the term of the contracts, we are required to take 60 percent of our total fuel requirements at Beluga Power Plant from the three Beluga River Field producers, exclusive of gas purchased at Beluga Power Plant under the Marathon contract for use in making sales to GVEA.  The price for gas during this period under the ConocoPhillips and AML&P contracts is approximately 88 percent of the price of gas under the new Marathon contract (described below) ($5.90 per Mcf on April 1, 2011), plus taxes.  The price during this period under the Chevron contract is approximately 110 percent of the price of gas under the Marathon contract (described below) ($5.15 per Mcf on January 1, 2011), plus taxes.

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Chevron/UNOCAL

In May of 2010, Chugach entered into an interruptible gas purchase agreement with UNOCAL to supply gas for economy energy sales to GVEA.  Chugach has no exposure to the cost of gas related to economy energy sales since the cost of gas is directly paid for by its economy energy gas customer.

Marathon Alaska Production

We entered into a requirements contract with Marathon in September 1988 for an initial commitment of 215 BCF.  The contract was due to expire on the earlier of December 31, 2015, or the date on which Marathon delivered to us a volume of gas in total, which equaled 215 BCF.  The base price for gas under the Marathon contract was $1.35 per Mcf, adjusted quarterly to reflect the percentage change between the preceding twelve-month period and a base period in the average closing prices of New York Mercantile Exchange (NYMEX) Light, Sweet Crude Oil Futures, the Producer Price Index for natural gas, and the Consumer Price Index for heating fuel oil.

Under the terms of the Marathon contract, Marathon was to provide all of Chugach’s requirements at Bernice Lake, IGT and Nikiski.  Additionally, Marathon had responsibility to supply 40 percent of gas volumes to the Beluga plant.  This contract was estimated to expire and did expire in 2010.  During 2010, Marathon volumes were not sufficient to meet the 40% gas requirements for the full year.  To make the transition from the expiring Marathon contract to the new COP gas contract, Marathon and ConocoPhillips shared the gas deliverability of the 40% gas volume for the entire year.

The RCA approved a new long-term natural gas supply contract with Marathon Alaska Production, LLC (MAP) effective May 17, 2010.  The new MAP contract will provide gas beginning April 1, 2011, terminating March 31, 2013.  MAP has two contract extension options that can be exercised during the first year of the initial contract.  MAP extended the contract to December 31, 2013, by exercising the first contract extension on January 12, 2011.  The second contract option could be exercised by December 31, 2011, and would extend the contract through December 31, 2014.  The total amount of gas under contract is estimated at 26 billion cubic feet (BCF) for the initial two year term of the contract with volumetric and delivery terms to be determined for each contract extension period that could provide up to an additional 16 BCF through December 31, 2014.

Pricing for the first twelve month term of the MAP contract has been set at the contract floor price of $5.90 per Mcf.  This was established based on the average price point of the Platts Gas Daily NYMEX twelve month forward curve (PLATTS report as of February 1, 2011) for the period April, 2011 through March 2012 being set at $4.68 per Mcf, which was lower than the price floor making the price floor the pricing level for the first twelve month period.

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Natural Gas Transportation Contracts

The terms of the new COP, MAP and UNOCAL agreements require Chugach to handle the natural gas transportation over the connecting pipeline systems.  Chugach took over the transportation obligation for natural gas shipments for gas supplied under its new contracts on October 1, 2010.  Chugach started shipping significant quantities of gas over Marathon Pipe Line Company (MPL) operated pipelines and ENSTAR Natural Gas pipeline system.  Chugach entered into tariff supported contracts to serve its power plants through MPL effective October 1, 2010, and ENSTAR November 15, 2010.  The following information summarizes the transportation obligations for Chugach:

ENSTAR (Alaska Pipeline Company)

ENSTAR Natural Gas Company (ENSTAR) has a tariff to transport our gas purchased from gas suppliers on a firm basis to our IGT Power Plant at a transportation rate of $0.63 per Mcf.  The agreement contains a fixed monthly charge of $2,840 for firm service.  In December of 2010, Chugach applied for extension of this tariff rate with ENSTAR to service the Bernice Lake Power Plant.  Chugach expects regulatory approval in the first quarter of 2011.

Chugach entered into a special transportation agreement with ENSTAR for the transportation of natural gas to the Beluga Power Plant from points of receipt on the Kenai to the Beluga Power Plant on ENSTAR’s west side pipeline system.  This agreement has an initial term of November 15, 2010, through October 31, 2011.

Marathon Pipeline System

Marathon Oil Company, through its subsidiary Marathon Pipe Line Company, operates four major pipelines in the Cook Inlet basin, including the Kenai Nikiski Pipeline (KNPL), Granite Point Beluga Line (BPL), Cook Inlet Gas Gathering System (CIGGS) and the Kenai Katchemak Pipeline (KKPL).  Chugach has entered into two tariff agreements to ship gas over the KNPL and BPL.

Environmental Matters

General

Chugach’s operations are subject to certain federal, state and local environmental laws and regulations, which seek to limit air, water and other pollution and regulate hazardous or toxic waste disposal.  While we monitor these laws and regulations to ensure compliance, they frequently change and often become more restrictive.  When this occurs, the costs of our compliance generally increase.

We include costs associated with environmental compliance in both our operating and capital budgets.  We accrue for costs associated with environmental remediation obligations when those costs are probable and reasonably estimable.  We do not anticipate that environmental related expenditures will have a material effect on our results of operations or financial condition.  We cannot, however, predict the nature, extent or cost of new laws or regulations relating to environmental matters.

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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.

New Clean Air Act regulations impacting electric utilities may result from future events or may result from new regulatory programs.  On October 30, 2009, the EPA published new federal regulations requiring the mandatory reporting of greenhouse gases from all sectors of the economy. Chugach is subject to this new regulation, which is not expected to have a material effect on our results of operations, financial position, or cash flows.  While we cannot predict whether any additional new regulation would occur or the effect of that regulation, 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 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, results of operation or cash flows.  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.

Item 3 - Legal Proceedings

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

Item 4 – Reserved

None

PART II

Item 5 - Market for Registrant's

Common Equity, Related Stockholder Matters and

Issuer Purchases of Equity Securities

Not Applicable

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Item 6 - Selected Financial Data

The following table presents selected historical information relating to financial condition and results of operations for the years ended December 31:

Balance Sheet Data	2010			2009			2008			2007			2006
Electric plant, net:
In service	$	407,351,421		$	414,002,926		$	432,460,336		$	438,239,286		$	439,268,514
Construction work in progress		100,787,482			48,383,610			25,151,072			17,712,884			20,683,335
Electric plant, net		508,138,903			462,386,536			457,611,408			455,952,170			459,951,849
Other assets		121,588,825			105,958,000			119,080,561			101,773,948			103,733,881
Total assets	$	629,727,728		$	568,344,536		$	576,691,969		$	557,726,118		$	563,685,730
Capitalization:
Long-term debt		304,450,318			307,301,819			354,383,506			345,423,500			350,803,530
Equities and margins		161,842,284			156,320,597			153,766,999			149,310,436			150,716,100
Total capitalization	$	466,292,602		$	463,622,416		$	508,150,505		$	494,733,936		$	501,519,630
Equity Ratio1		34.7	%		33.7	%		30.3	%		30.2	%		30.1	%
Summary Operations Data
Operating revenues	$	258,325,345		$	290,247,308		$	288,292,112		$	257,443,919		$	267,542,713
Operating expenses		233,967,201			264,872,577			260,580,365			232,367,023			234,969,329
Interest expense, net		20,005,698			20,606,349			22,532,797			23,712,797			24,010,874
Net operating margins		4,352,446			4,768,382			5,178,950			1,364,099			8,562,510
Nonoperating margins		1,057,563			891,966			1,232,800			1,521,157			1,476,549
Assignable margins	$	5,410,009		$	5,660,348		$	6,411,750		$	2,885,256		$	10,039,059
Margins for Interest Ratio2		1.26			1.27			1.28			1.12			1.41

1Equity ratio equals equities and margins divided by the sum of our long-term debt and equities and margins.

2 Margins for interest ratio equals the sum of long and short-term interest expense and assignable margins divided by the sum of long and short-term interest expense.

Equity ratios and margins for interest ratios are considered non-GAAP measures.  We consider these ratios to be useful to users of Chugach’s financial statements and are components of financial covenants contained in Chugach’s Second Amended and Restated Indenture of Trust and debt agreements.

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Item 7 - Management's Discussion and Analysis

of Financial Condition and Results of Operations

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.  We undertake 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 herein, except as required by law.

Results of Operations

Overview

Margins.  We operate on a not-for-profit basis and, accordingly, seek only to generate revenues sufficient to pay operating and maintenance costs, the cost of fuel and purchased power, capital expenditures, depreciation and principal and interest on our indebtedness and to provide for reserves.  These amounts are referred to as “margins.”  Patronage capital, the retained margins of our members, constitutes our principal equity.

Times Interest Earned Ratio (TIER).   Alaska electric cooperatives generally set their rates on the basis of TIER, which is a debt service coverage approach to ratemaking.  TIER is determined by dividing the sum of assignable margins plus long-term interest expense (excluding capitalized interest) by long-term interest expense (excluding capitalized interest).  Chugach’s long-term interest expense for the years ended December 31, 2010, 2009 and 2008 was $12,377,668, $20,159,196 and $21,309,900, respectively.  Chugach’s authorized TIER for ratemaking purposes on a system basis is 1.30, which was established by the RCA in order U-01-08(26) on January 31, 2003.

Chugach’s achieved TIER includes nonoperating margins that are not generated by electric rates. We manage our business with a view towards achieving our authorized TIER (currently 1.30) averaged over a 5-year period.  For further discussion on factors that contribute to TIER results, see “Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations – Results of Operations - Years ended December 31, 2010, compared to the years ended December 31, 2009, and December 31, 2008 – Expenses.”  We achieved TIERs for the past three years as follows:

Year	TIER
2010	1.44
2009	1.28
2008	1.30

The temporary increase in TIER in 2010 was due to certain debt classified as short term, which will later be replaced with long-term debt.

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Rate Regulation and Rates.  Our electric rates are made up of two primary components: “base rates” and “fuel surcharge rates.”  Base rates provide the recovery of fixed and variable costs (excluding fuel and purchased power) related to providing electric service.  Fuel surcharge rates provide the recovery of fuel and purchased power costs.

The RCA approves both base rates and fuel surcharge rates paid by our retail and wholesale customers.  In addition, an RCC is assessed on each retail customer invoice to fund Chugach’s share of the RCA’s budget.  In general, the RCC tax is revised annually by the RCA.

Base Rates.  Chugach’s base rates, whether set under a general rate case or an SRF, are established to allow the continued recovery of our specific costs of providing electric service.  In each rate filing, rates are set at levels to recover all of our specific allowable costs, other than fuel and purchased power, and those rates are then collected from our retail and wholesale customers.  Under SRF, base rate increases are limited to 8 percent over a 12-month period and 20 percent over a 36-month period.  Chugach is still permitted to submit general rate case filings while participating in the SRF process.  However, during these periods, rate adjustments under SRF would temporarily cease.  The RCA may authorize, after a notice period, rate changes on an interim and refundable basis.

On November 15, 2010, base rates increased 0.2 percent to Chugach retail customers and 0.3 percent to Seward and decreased 0.6 percent and 1.2 percent to HEA and MEA, respectively. The base rate changes were the result of Chugach’s SRF utilizing the twelve months ended June 30, 2010, see “Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations – Overview – Rate Regulation and Rates – Request for Participation in the Simplified Rate Filing Process.”

On November 1, 2010, base rates charged to retail customers decreased 1.5 percent and base rates charged to wholesale customers HEA, MEA and Seward decreased 2.3 percent, 2.2 percent and 1.8 percent, respectively.  The base rate changes were the result of final rates associated with Chugach’s 2008 Test Year Rate Case, see “Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations – Overview – Rate Regulation and Rates – 2008 Test Year General Rate Case (Docket U-09-080).”

On October 9, 2009, base rates charged to retail customers increased 3.3 percent and base rates charged to wholesale customers HEA, MEA and Seward increased 7.8 percent, 2.0 percent and 9.7 percent, respectively.  The base rate changes were effective on an interim and refundable basis and were the result of proposed rates included in Chugach’s 2008 Test Year Rate Case filed with the RCA on June 23, 2009, see “Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations – Results of Operations – Overview – Rate Regulation and Rates - 2008 Test Year General Rate Case (Docket U-09-080).”

In June of 2008, the base rates charged to retail customers decreased 4.8 percent and base rates charged to wholesale customers HEA, MEA and Seward increased 13.0 percent, 10.5 percent and 9.6 percent, respectively.  The base rate changes were the result of Chugach’s 2005 Test Year Rate Case adjudicated under Docket U-06-134, see “Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations – Results of Operations - Overview – Rate Regulation and Rates - 2005 Test Year General Rate Case (Docket  U-06-134).”

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Request for Participation in the Simplified Rate Filing Process

On December 15, 2009, Chugach submitted a request to the RCA for approval to implement the SRF process for the adjustment of base energy and demand rates in accordance with Alaska Statute 42.05.381(e).  Chugach requested that base rate adjustments under SRF be completed on a semi-annual basis, utilizing the twelve months ended June and December as the test periods in each year.

Under SRF, base rate increases are limited to 8 percent over a 12-month period and 20 percent over a 36-month period.  Chugach is still permitted to submit general rate case filings while participating in the SRF process.  However, during these periods, rate adjustments under SRF would temporarily cease.  Utilization of SRF will allow Chugach to more efficiently adjust base rates in response to lower sales resulting from both energy conservation and technological improvements.  Chugach is also interested in SRF as a means to expedite the rate adjustment process with the goal of timely cost recovery and lower adjudicatory costs.

On April 21, 2010, the RCA opened docket U-10-20 to consider Chugach’s request to implement the simplified rate filing process.  A technical conference was held on June 1, 2010, to discuss guidelines that Chugach should follow in future simplified rate filings.  All parties agreed to modify the deadline for a final order to July 26, 2010.

A public hearing was held on July 19, 2010.  The parties to the docket entered into a stipulation on the outstanding issues in the case and the RCA issued a bench order at the hearing approving the stipulation.  A formal written order was issued on July 26, 2010.

On September 28, 2010, Chugach filed its initial filing under this process to decrease base rate revenue by $0.2 million, with increases of 0.2 percent to Chugach retail customers and 0.3 percent to Seward and decreases of 0.6 percent and 1.2 percent to HEA and MEA, respectively.  The RCA approved Chugach’s Simplified Rate Filing on November 4, 2010, for base rate changes effective November 15, 2010.

2008 Test Year General Rate Case (Docket U-09-080)

On June 23, 2009, Chugach filed a general rate case with the RCA to increase base rate revenue by $4.2 million, with increases of $2.7 million to Chugach retail customers and $1.5 million to wholesale customers.  Base rates charged to retail customers increased 3.3 percent and base rates charged to wholesale customers HEA, MEA and Seward increased 7.8 percent, 2.0 percent and 9.7 percent, respectively.

On October 9, 2009, the RCA granted Chugach’s original request that the proposed rates go into effect on an interim and refundable basis.

On October 15, 2009, the RCA consolidated Docket U-09-080 (General Rate Case) and Docket U-09-097 (Depreciation Study Update).

Chugach reached a settlement with its wholesale customers, HEA, MEA and Seward, which resolved issues in both the general rate case and the depreciation study update.

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After a June 2010 hearing, the RCA issued a final order in the consolidated case (2008 Test Year General Rate Case and Revision to Current Depreciation Rates) on September 16, 2010.  The RCA accepted Chugach’s settlements with its wholesale customers, HEA, MEA and Seward and resolved depreciation issues disputed by the Attorney General, which resulted in no change to the depreciation rates contained in the settlement agreements.

As a result of the RCA accepting the settlement agreements and resolving depreciation issues, Chugach refunded its wholesale and retail customers approximately $0.7 million, including interest.

On November 1, 2010, the RCA materially accepted Chugach’s compliance filing.  Base rate changes were approved effective November 1, 2010.

2005 Test Year General Rate Case (Docket U-06-134)

On September 29, 2006, Chugach filed a general rate case based on a 2005 test year with the RCA.  Overall revenues were proposed to increase $2.8 million in the initial filing.

A settlement agreement reached in July 2007 between several of the intervenors and Chugach was accepted by the RCA in Order No. 15.  On April 1, 2008, the RCA issued Order No. 21 in Docket U-06-134, approving the rates from the Settlement Agreement among Chugach, HEA and Seward. MEA did not join the Settlement Agreement.  The effect of Order 21 was that overall revenues decreased by 0.8 percent, or $0.9 million, with retail base rate revenue decreasing by 4.8 percent, or $4.2 million and wholesale base rate revenue increasing by 11.0 percent, or $3.3 million. Order No. 21 was effective June 1, 2008.

After reconsiderations concerning a long-term debt allocator, the computation of depreciation expense and re-affirming filing requirements, the RCA issued Order No. 25 on November 7, 2008, accepting Chugach’s filings and closed docket U-06-134.  In this rate case, we modified the rate design so that all fuel and purchased power costs would be recovered through the fuel and purchased power process, which was approved by the RCA.

Fuel Surcharge.  We recover fuel and purchased power costs directly from our wholesale and retail customers through the fuel surcharge process.  Changes in fuel and purchased power costs are primarily due to fuel price adjustment mechanisms in our gas-supply contracts based on natural gas, crude oil and fuel oil indexed price changes.  Other factors, including generation unit availability also impact fuel surcharge rate levels.  The fuel surcharge is approved on a quarterly basis by the RCA.  There are no limitations on the number or amount of fuel surcharge rate changes.  Increases in our fuel and purchased power costs result in increased revenues while decreases in these costs result in lower revenues.  Therefore, revenue from the fuel surcharge does not impact margins.  We recognize differences between projected recoverable fuel costs and amounts actually recovered through rates.  The fuel cost under/over recovery on our Balance Sheet represents the net accumulation of any under or over collection of fuel and purchase power costs.  Fuel cost under-recovery will appear as an asset on our Balance Sheet and will be collected from our members in subsequent periods.  Conversely, fuel cost over-recovery will appear as a liability on our Balance Sheet and will be refunded to our members in subsequent periods.

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Years ended December 31, 2010, compared to the years ended December 31, 2009, and December 31, 2008

Margins

Our margins for the years ended December 31 were as follows:

	2010		2009		2008
Net Operating Margins	$	4,352,446	$	4,768,382	$	5,178,950
Nonoperating Margins	$	1,057,563	$	891,966	$	1,232,800
Assignable Margins	$	5,410,009	$	5,660,348	$	6,411,750

The decrease in net operating margins in 2010 from 2009 of $415.9 thousand, or 8.7 percent, was due to an increase in power production and administrative, general and other expense, which was partially offset by a decrease in interest expense.  The decrease in net operating margins in 2009 from 2008 of $410.6 thousand, or 7.9 percent, was due primarily to a decrease in sales revenue and an increase in depreciation and administrative and general expense, which was partially offset by a decrease in net interest expense, see “Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations – Results of Operations – Years ended December 31, 2010, compared to the years ended December 31, 2009, and December 31, 2008 – Expenses.”

Nonoperating margins include interest income, allowance for funds used in construction, capital credits and patronage capital allocations and other.  Nonoperating margins increased in 2010 from 2009 by $165.6 thousand, or 18.6 percent due primarily to higher interest income as a result of a higher cash balance and higher interest rates, higher Allowance for Funds Used During Construction (AFUDC) due to more construction activity and higher other nonoperating margins caused by a gain associated with the sale of land and settlement funds, which was partially offset by a lower patronage capital allocation from CoBank as our outstanding CoBank debt decreased.  Nonoperating margins decreased in 2009 from 2008 by $340.8 thousand, or 27.6 percent due primarily to lower interest income as a result of a lower cash balance and lower interest rates and a lower patronage capital allocation.  Our patronage capital allocation from CoBank decreased in 2009 as our total debt outstanding with CoBank decreased.

Revenues

Operating revenues include sales of electric energy to retail, wholesale and economy energy customers and other miscellaneous revenues.  In 2010, operating revenues were $31.9 million, or 11.0 percent lower than in 2009.  The decrease was due primarily to lower fuel and purchased power costs recovered in revenue through the fuel surcharge process.

In 2009, operating revenues were $2.0 million, or 0.7 percent higher than in 2008.  The increase was due primarily to higher purchased power costs recovered in revenue through the fuel surcharge process which was partially offset by lower overall base revenue.  The increase was also offset by a decrease in kWh and economy energy sales and a decrease in fuel recovered in revenue through the fuel surcharge process due primarily to lower kWh and economy energy sales.

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Overall, retail revenue decreased in 2010 from 2009.  The decrease was due primarily to lower fuel and purchased power costs recovered in revenue through the fuel surcharge process.  Lower kWh sales, which also contributed to the variance was somewhat offset by higher net rates charged to retail customers as a result of the 2008 Test Year Rate Case and September 28, 2010, SRF.

Overall, retail revenue increased in 2009 from 2008.  The increase was due primarily to higher purchased power costs recovered in revenue through the fuel surcharge process due primarily to an increase in MWh purchased and a higher average effective price caused by higher fuel prices, which was partially offset by a decrease in base revenue due to lower kWh sales caused by observed patterns of conservation and implementation of protective measures in response to the threat of volcanic ash fall that continued as additional conservation measures.

Wholesale revenue decreased in 2010 from 2009.  The decrease was due primarily to lower fuel and purchased power costs recovered in revenue through the fuel surcharge process.  Lower kWh sales were somewhat offset by higher net rates charged to wholesale customers as a result of the 2008 Test Year Rate Case and September 28, 2010, SRF.

Wholesale revenue was higher in 2009 from 2008 caused by higher base rates charged to wholesale customers as a result of Chugach’s 2008 Test Year Rate Case and higher purchased power costs recovered in revenue through the fuel surcharge process.  These increases were offset by lower kWh sales caused by conservation and protection measures in response to the threat of volcanic ash fall that continued as additional conservation measures.

Based on the results of fixed and variable cost recovery established in Chugach’s last rate case, wholesale sales to MEA, HEA and Seward contributed approximately $27.2 million, $28.6 million and $27.7 million to Chugach’s fixed costs for the years ended December 31, 2010, 2009 and 2008, respectively.

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 years ended December 31, 2010, and 2009.

	Base Rate Sales Revenue							Fuel and Purchased Power Revenue							Total Revenue
	2010		2009		% Variance			2010		2009		% Variance			2010		2009		% Variance
Retail
Residential	$	45.5	$	45.0		1.1	%	$	26.9	$	37.3		(27.9	%)	$	72.4	$	82.3		(12.0	%)
Small Commercial	$	7.5	$	8.0		(6.3	%)	$	5.8	$	7.9		(26.6	%)	$	13.3	$	15.9		(16.4	%)
Large Commercial	$	28.3	$	27.8		1.8	%	$	24.6	$	34.5		(28.7	%)	$	52.9	$	62.3		(15.1	%)
Lighting	$	1.3	$	1.3		0.0	%	$	0.2	$	0.3		(33.3	%)	$	1.5	$	1.6		(6.3	%)
Total Retail	$	82.6	$	82.1		0.6	%	$	57.5	$	80.0		(28.1	%)	$	140.1	$	162.1		(13.6	%)
Wholesale
HEA	$	11.9	$	11.8		0.8	%	$	21.3	$	31.1		(31.5	%)	$	33.2	$	42.9		(22.6	%)
MEA	$	21.4	$	21.9		(2.3	%)	$	34.5	$	47.8		(27.8	%)	$	55.9	$	69.7		(19.8	%)
SES	$	1.4	$	1.3		7.7	%	$	2.8	$	4.4		(36.4	%)	$	4.2	$	5.7		(26.3	%)
Total Wholesale	$	34.7	$	35.0		(0.9	%)	$	58.6	$	83.3		(29.7	%)	$	93.3	$	118.3		(21.1	%)
Economy Sales	$	4.0	$	1.2		233.3	%	$	18.1	$	6.1		196.7	%	$	22.1	$	7.3		202.7	%
Miscellaneous	$	2.8	$	2.6		7.7	%	$	0.0	$	0.0		0.0	%	$	2.8	$	2.6		7.7	%
Total Revenue	$	124.1	$	120.9		2.6	%	$	134.2	$	169.4		(20.8	%)	$	258.3	$	290.3		(11.0	%)

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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 years ended December 31, 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	$	45.0	$	46.4		(3.0	%)	$	37.3	$	33.9		10.0	%	$	82.3	$	80.3		2.5	%
Small Commercial	$	8.0	$	8.4		(4.8	%)	$	7.9	$	7.2		9.7	%	$	15.9	$	15.6		1.9	%
Large Commercial	$	27.8	$	28.3		(1.8	%)	$	34.5	$	31.8		8.5	%	$	62.3	$	60.1		3.7	%
Lighting	$	1.3	$	1.3		0.0	%	$	0.3	$	0.2		50.0	%	$	1.6	$	1.5		6.7	%
Total Retail	$	82.1	$	84.4		(2.7	%)	$	80.0	$	73.1		9.4	%	$	162.1	$	157.5		2.9	%
Wholesale
HEA	$	11.8	$	11.4		3.5	%	$	31.1	$	29.8		4.4	%	$	42.9	$	41.2		4.1	%
MEA	$	21.9	$	20.9		4.8	%	$	47.8	$	42.6		12.2	%	$	69.7	$	63.5		9.8	%
SES	$	1.3	$	1.1		18.2	%	$	4.4	$	3.7		18.9	%	$	5.7	$	4.8		18.8	%
Total Wholesale	$	35.0	$	33.4		4.8	%	$	83.3	$	76.1		9.5	%	$	118.3	$	109.5		8.0	%
Economy Sales	$	1.2	$	4.6		(73.9	%)	$	6.1	$	13.9		(56.1	%)	$	7.3	$	18.5		(60.5	%)
Miscellaneous	$	2.6	$	2.8		(7.1	%)	$	0.0	$	0.0		0.0	%	$	2.6	$	2.8		(7.1	%)
Total Revenue	$	120.9	$	125.2		(3.4	%)	$	169.4	$	163.1		3.9	%	$	290.3	$	288.3		0.7	%

The major components of our operating revenue for the year ending December 31 were as follows:

	2010		2010		2009		2009		2008		2008
	Sales (MWh)		Revenue		Sales (MWh)		Revenue		Sales (MWh)		Revenue
Retail		1,169,430	$	140,110,304		1,183,705	$	162,101,007		1,205,832	$	157,549,359
Wholesale:
HEA		454,223		33,189,789		472,136		42,865,550		517,368		41,133,287
MEA		743,212		55,937,931		740,358		69,685,271		742,666		63,500,034
Seward		61,651		4,188,989		62,509		5,711,358		63,734		4,798,286
Total Wholesale		1,259,086		93,316,709		1,275,003		118,262,179		1,323,768		109,431,607
Economy energy		278,093		22,141,341		76,968		7,280,870		256,105		18,526,481
Other		N/A		2,756,991		N/A		2,603,252		N/A		2,784,665
Total		2,706,609	$	258,325,345		2,535,676	$	290,247,308		2,785,705	$	288,292,112

Since 1989, we have sold economy (non-firm) energy to GVEA under an agreement that expired on March 31, 2009.  Under that agreement, we used available generation in excess of our own needs to produce electric energy for sale to GVEA, which used that energy to serve its own loads in place of more expensive energy that it would have otherwise generated itself or purchased from other sources. We purchased gas from Marathon to produce energy for sale to GVEA.  Chugach negotiated a three-month gas sales agreement, spanning September through November of 2009, with Marathon, to provide between 5,000 and 7,000 Mcf per day to facilitate a 20 MW economy energy sale to GVEA.  The short-term agreement was extended through December 31, 2009.  On April 6, 2010, Chugach and GVEA finalized an agreement for Chugach to provide a minimum of 20 MW of economy energy to GVEA on a non-firm basis based on an interruptible gas supply arrangement.  The agreement commenced on May 1, 2010, and will continue through March 31, 2013, pending annual commitments from gas suppliers.  The price to GVEA will include the cost of fuel (based on a system average heat rate), plus variable operations and maintenance expense, plus a margin.  Sales will be made under the terms and conditions of Chugach’s economy energy sales tariff.

In 2010, 2009, and 2008, economy sales to GVEA constituted approximately 9 percent, 3 percent, and 6 percent, respectively, of our sales revenues.  Economy energy revenue increased in 2010 from 2009 due to the agreement Chugach finalized with GVEA on April 6, 2010.  Economy energy revenue decreased in 2009 from 2008 due primarily to the expiration of our original agreement with GVEA.

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Expenses

The major components of our operating expenses for the years ended December 31 were as follows:

	2010		2009		2008
Fuel	$	111,718,947	$	136,416,761	$	137,894,553
Power production		18,248,656		16,406,911		16,718,777
Purchased power		26,691,968		35,690,476		31,486,621
Transmission		5,697,446		5,709,578		5,841,405
Distribution		12,216,252		12,740,381		12,398,832
Consumer accounts		5,323,551		5,259,348		5,396,662
Administrative, general and other		21,434,273		20,518,688		20,014,239
Depreciation		32,636,108		32,130,434		30,829,276
Total operating expenses	$	233,967,201	$	264,872,577	$	260,580,365

Fuel

Chugach recognizes actual fuel expense as incurred.  Fuel expense decreased $24.7 million, or 18.1 percent, in 2010 from 2009 due primarily to a lower average effective fuel price, which was somewhat offset by an increase in Mcf used as a result of higher economy sales.  In 2010, Chugach used 28,908,216 Mcf of fuel at an average effective price of $4.38 per Mcf, which did not include 3,409,580 Mcf of fuel that is recorded as purchased power expense.  Fuel expense decreased $1.5 million, or 1.1 percent, in 2009 from 2008 due primarily to a decrease in Mcf used as a result of lower kWh and economy sales, which was somewhat offset by a higher average effective fuel price.  In 2009, Chugach used 26,139,407 Mcf of fuel at an average effective price of $6.08 per Mcf, which did not include 3,711,074 Mcf of fuel that is recorded as purchased power expense.

Power Production

Power production expense increased $1.8 million, or 11.2 percent, in 2010 from 2009 due primarily to maintenance associated with Beluga unit 6 and Bernice Lake units 3 and 4, which was partially offset by a decrease in maintenance associated with Beluga unit 8.

Power production expense did not materially change in 2009 from 2008.

Purchased Power

Purchased power costs decreased $9.0 million, or 25.2 percent, in 2010 from 2009 due primarily to a lower average effective price caused by lower fuel prices.  In 2010, Chugach purchased 504,205 MWh of energy at an average effective price of 5.01 cents per kWh.  Purchased power costs increased $4.2 million, or 13.4 percent, in 2009 from 2008 due primarily to an increase in MWh purchased and a higher average effective price caused by higher fuel prices.  In 2009, Chugach purchased 502,063 MWh of energy at an average effective price of 6.81 cents per kWh.

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Transmission

Transmission expense did not materially change in 2010 from 2009 or in 2009 from 2008.

Distribution

Distribution expense did not materially change in 2010 from 2009 or in 2009 from 2008.

Consumer Accounts

Consumer Accounts did not materially change in 2010 from 2009 or in 2009 from 2008.

Administrative, General and Other Charges

Overall, administrative, general and other charges did not materially change in 2010 from 2009, however, an increase in current costs associated with prior workers compensation claims, labor and indirect labor associated with vacation and cash in lieu and the amortization of gas contract negotiations was offset by a decrease in other deductions caused by the write off of obsolete inventory and cancelled projects in 2009.

 Overall, administrative, general and other charges did not materially change in 2009 from 2008, however, an increase in other deductions caused by the write off of obsolete inventory and cancelled projects and an increase in labor was partially offset by a decrease in legal expenses and credit card fees.

Depreciation

Depreciation expense did not materially change in 2010 from 2009.

Depreciation expense increased $1.3 million, or 4.2 percent, in 2009 from 2008 due to a full year of new depreciation rates as a result of Chugach’s 2005 Test Year Rate Case and the closeout of construction projects.

Interest

Interest on long-term obligations decreased $7.8 million, or 38.6 percent, in 2010 from 2009 due to the reclassification of the interest expense associated with the 2001 Series A Bonds, due March 15, 2011, from long-term to short-term.  Interest on long-term obligations decreased $1.2 million, or 5.4 percent, in 2009 from 2008 due primarily 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 2009 and lower principal balances on our CoBank debt.

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Interest on short-term obligations increased $7.6 million, or 723.8 percent, in 2010 from 2009 due primarily to the reclassification of the interest expense associated with the 2001 Series A Bonds, due March 15, 2011 from long-term to short-term and the difference between the use and interest rates of commercial paper in 2010 and the interest associated with the NRUCFC line of credit and the use and interest rates on commercial paper in 2009.  Interest on short-term borrowings decreased $0.6 million, or 37.2 percent, in 2009 from 2008 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.  The decrease is also due to the difference in interest rates between the NRUCFC line of credit in 2008 and the commercial paper interest rates in 2009.  The decreases were slightly offset by a shift from long-term to short-term interest expense described above.

Interest charged to construction increased $407.4 thousand, or 67.8 percent, in 2010 from 2009 due primarily to a higher average balance in Construction Work In Progress, primarily due to capital spending associated with SPP, which was slightly offset by a lower weighted average rate during 2010 of 4.8 percent compared to 4.9 percent during 2009.  Interest charged to construction increased $154.8 thousand, or 34.7 percent, in 2009 from 2008 due primarily to a higher average balance in Construction Work In Progress (CWIP), primarily due to capital spending associated with SPP, which was slightly offset by a lower weighted average rate during 2009 of 4.9 percent compared to 5.1 percent during 2008.

 Patronage Capital (Equity)

The following table summarizes our patronage capital and total equity position for the years ended December 31:

	2010			2009			2008
Patronage capital at beginning of year	$	144,228,221		$	142,009,998		$	138,713,338
Retirement of capital credits		(94,278	)		(3,442,125	)		(3,115,090	)
Assignable margins		5,410,009			5,660,348			6,411,750
Patronage capital at end of year		149,543,952			144,228,221			142,009,998
Other equity1		12,298,332			12,092,376			11,757,001
Total equity at end of year	$	161,842,284		$	156,320,597		$	153,766,999

1Other equity includes memberships, donated capital and gain on capital credit retirements.

We credit to our members all amounts received from them for the furnishing of electricity in excess of our operating costs, expenses and provision for reasonable reserves.  These excess amounts (i.e., assignable margins) are considered capital furnished by the members, and are credited to their accounts and held by us until such future time as they are retired and returned without interest. Approval of distributions of these amounts to members, also known as capital credits, is at the discretion of our Board.   We currently have a practice of retiring patronage capital on a first-in, first-out basis for retail customers.  The Board may also return capital credits to former members and estates who have requested early retirements at discounted rates under a discounted capital credits retirement plan authorized by the Board in September 2002. Chugach retired $94,278, $3,442,125, and $3,115,090 in capital credits for the years ended December 31, 2010, 2009, and 2008, respectively.  Prior to 2000, wholesale capital credits had been retired on a 10-year cycle pursuant to an approved capital credit retirement program, which was contained in the Chugach business plan.  However, in 2000 we implemented a plan to return the capital credits of wholesale and retail customers on a 15-year rotation. In 2010, no wholesale capital credits were retired.  In 2009 and 2008, $1,674,809 and $1,478,779, respectively, of 1999 and 1998 wholesale capital credits were retired to MEA, HEA and SES pursuant to a prior settlement agreement.

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Under the Second Amended and Restated Indenture of Trust, which became effective January 20, 2011, and the Amended and Restated Master Loan Agreement with CoBank, which became effective January 19, 2011, Chugach is prohibited from making any distribution of patronage capital to Chugach’s customers if an event of default under the Amended and Restated Master Loan Agreement exists.  Otherwise, Chugach may make distributions to Chugach’s members in each year equal to the lesser of 5 percent of Chugach’s patronage capital or 50 percent of assignable margins for the prior fiscal year.  This restriction does not apply if, after the distribution, Chugach’s aggregate equities and margins as of the end of the immediately preceding fiscal quarter are equal to at least 30 percent of Chugach’s total liabilities and equities and margins.

During 2008 the Board of Directors approved the deferral of capital credit retirements after 2009 due to the construction of new generation and the anticipated loss of wholesale load in 2014.

Changes in Financial Condition

Assets

Total assets increased $61.4 million, or 10.8 percent, from December 31, 2009, to December 31, 2010.  The increase was due in part to a $45.7 million, or 9.9 percent, increase in net utility plant due to extension and replacement of plant in excess of depreciation expense and an increase of $2.1 million, or 752.6 percent, increase in fuel cost under-recovery due to the under collection of fuel and purchased power costs through the fuel surcharge process.  The increase was also caused by a $6.0 million, or 20.0 percent, increase in materials and supplies caused primarily by the purchase of a spare engine associated with SPP and materials for other planned generation projects, an $8.6 million, or 244.5 percent, increase in cash and cash equivalents and a $663.5 thousand, or 52.6 percent increase in prepayments caused primarily by the prepayment of Bradley Lake purchased power for the month of January.  The increase was offset by a $1.1 million, or 4.7 percent, decrease in deferred charges due to the amortization of deferred charges which exceeded the costs associated with financing and commercial paper renewal and a $670.4 thousand, or 1.9 percent, decrease in accounts receivable primarily caused by lower fuel and purchased power costs.

Liabilities

Total liabilities increased by $55.9 million, or 13.6 percent, in 2010 as compared to 2009. Contributors to this change include a $47.0 million, or 91.3 percent, increase in commercial paper outstanding due to the continued construction of the SPP and an $8.6 million, or 84.7 percent, increase in accounts payable primarily caused by the timing of cash payments on invoices for goods and services and capital spending.  Fuel payable increased by $6.9 million, or 47.2 percent, and salaries, wages and benefits payable increased $777.5 thousand, or 13.1 percent, caused by the timing of cash payments on invoices for fuel and labor and benefits, respectively.  Other liabilities increased $637.9 thousand, or 51.7 percent, due primarily to an increase in the municipal underground ordinance payable.  These increases were offset by a $4.1 million, or 9.9 percent, decrease in the net of total long-term obligations and current installments of long-term debt caused by the principal payments on outstanding CoBank debt and a $3.5 million, or 100 percent, decrease in fuel cost over-recovery due to the under-collection of fuel and purchased power costs through the fuel surcharge process.  The increases were also offset by a $249.5 thousand, or 15.4 percent, decrease in deferred credits caused primarily by the transfer of customer advances to construction projects which was somewhat offset by an increase in Chugach’s postretirement benefit obligation.

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Equities and Margins

Total margins and equities increased $5.5 million, or 3.5 percent, in 2010 compared to 2009 due primarily to a $5.3 million, or 3.7 percent, net increase in patronage capital ($5.4 million increase in margins coupled with a $0.1 million retirement of capital credits).

Inflation

Chugach is subject to the inflationary trends existing in the general economy.  We do not believe that inflation had a significant effect on our operations in 2010.  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 significantly affect our operations.

Contractual Obligations and Commercial Commitments

The following are Chugach’s contractual and commercial commitments as of December 31, 2010:

Contractual cash obligations – Payments Due By Period

(In thousands)	Total		2011			2012-2013		2014-2015	Thereafter
Long-term debt, including current portion	$	307,302	$	152,852	$	124,770	$	4,739	$	24,941
Long-term interest expense1		16,570		10,426		2,287		1,427		2,430
Commercial Paper2		98,500		98,500		0		0		0
Bradley Lake3		45,048		3,694		7,339		7,326		26,689
Fuel and fuel transportation expense4		555,457		140,457		287,000		107,000		21,000
SPP Contracts5		220,854		153,758		67,096		0		0
Capital credit retirements6		7,500		0		0		3,000		4,500
Total	$	1,251,231	$	559,687	$	488,492	$	123,492	$	79,560

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1Long-term interest expense includes fixed and variable rates.  Variable rates are based on rates at December 31, 2010, for years 2011-2015 and thereafter.  (See “Part II – Item 8 – Financial Statements and Supplementary Data – Note (8) Debt.”)

2At December 31, 2010, Chugach’s Commercial Paper Program was backed by a $300 million Unsecured Credit Agreement between NRUCFC, Bank of America, N.A., KeyBank National Association, JPMorgan Chase Bank, N.A., Bank of Montreal, CoBank, ACB, Goldman Sachs Bank USA, Bank of Taiwan, Los Angeles Branch and Chang Hwa Commercial Bank, Ltd., Los Angeles Branch, which funds capital requirements.  At December 31, 2010, there was $98.5 million of commercial paper outstanding, therefore, the available borrowing capacity under the Commercial Paper Program was $201.5 million and could be used for future operational and capital funding requirements.

3Estimated annual cost

4 Estimated committed fuel and fuel transportation expense

5 In accordance with contractual commitments associated with SPP

6 Estimated capital credit retirements

Purchase obligations

Chugach is a participant and has a 30.4 percent share in the Bradley Lake hydroelectric project (See “Item 2-Properties-Other Property-Bradley Lake.”)  This contract runs through 2041.  We have agreed to pay a like percentage of annual costs of the project, which has averaged $4.8 million over the past five years.  We believe these costs, adjusted for inflation, reasonably reflect anticipated future project costs.

Our primary sources of natural gas are the Beluga River Field producers and Marathon Oil Company (See “Item 2-Properties-Fuel Supply-Beluga River Field Producers-Marathon Alaska Production.”)  Our fuel costs vary due to the impact of the energy future indices used to index the price of fuel and are inherently difficult to predict. We pass fuel costs directly to our wholesale and retail customers through the fuel surcharge process (See “Item 7-Management’s Discussion and Analysis of Financial Condition and Results of Operations-Results of Operations-Overview-Rate Regulation and Rates-Fuel Surcharge.”)

Chugach is in the process of developing a natural gas fired generation plant on land currently owned by Chugach near its Anchorage headquarters.  The SPP will be developed and owned jointly with AML&P.  Chugach will own and take 70 percent of the new plant’s output and AML&P will own and take the remaining 30 percent.  Chugach will account for its ownership in the SPP proportionately.  On November 17, 2008, Chugach executed a gas turbine purchase agreement for the purchase of three gas turbines with GEPP.  During 2009 Chugach executed several amendments associated with its purchase agreement with GEPP, which included the purchase of a spare engine for maintenance purposes.  Chugach executed an Owner’s Engineer Services Contract on May 12, 2009.  On January 5, 2010, Chugach executed a Services Contract for the shipment of the combustion turbine generators and related accessories.  On February 25, 2010, Chugach purchased land adjacent to its Anchorage headquarters for the laydown of equipment displaced by the new power plant.  On April 13, 2010, Chugach executed a STG purchase agreement.  On June 18, 2010, Chugach executed an EPC contract with SLCI.  On August 27, 2010, Chugach executed an OTSG equipment contract with IST.  Chugach amended the contract for transportation of combustion turbine generators on September 28, 2010, to include transportation of the steam turbine generator.  On December 20, 2010, Chugach received a construction permit from the Alaska Department of Environmental Conservation allowing the project to begin construction in spring of 2011.  On March 15, 2011, Chugach received its initial building permit from the Municipality of Anchorage.  Chugach made payments of $74.3 in 2010 and $25.0 million in 2009, with additional payments of $153.7 million expected in 2011, pursuant to all these contracts.

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Liquidity And Capital Resources

We ended 2010 with $12.1 million of cash and cash equivalents, up from $3.5 and $7.5 million at December 31, 2009 and 2008, respectively.  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).

The following table summarizes our cash flows from operating, investing and financing activities for the periods ended December 31, 2010.

	2010			2009			2008
Total cash provided by (used in):
Operating activities	$	41,124,009		$	42,409,427		$	23,651,941
Investing activities		(74,875,800	)		(38,100,312	)		(30,276,605	)
Financing activities		42,318,739			(8,296,652	)		7,906,030
Increase (decrease) in cash and cash equivalents	$	8,566,948		$	(3,987,537	)	$	1,281,366

Operating activities in 2010 were primarily impacted by changes in fuel cost over and under recovery, materials and supplies, fuel and other liabilities.  In 2009, changes included fuel cost over and under recovery, materials and supplies and fuel.  In 2008, changes included accounts receivable, fuel cost over and under recovery, deferred charges, accounts payable and fuel.

Investing activities in 2010 and 2009 were primarily impacted by expenditures associated with the SPP.

Financing activities in 2010, 2009 and 2008 were primarily impacted by changes in the amount of commercial paper used to finance expenditures associated with the SPP and the retirement of patronage capital and estate payments.

Sources of Liquidity

Chugach has satisfied its operational and capital cash requirements through internally generated funds, a $50 million line of credit from NRUCFC and a $300 million Commercial Paper Program.  At December 31, 2010, there was no outstanding balance on our NRUCFC line of credit and $98.5 million of outstanding commercial paper.  Thus, at December 31, 2010, our available borrowing capacity under our line of credit was $50 million and our available commercial paper capacity was $201.5 million.

Over the next two years, Chugach anticipates financing increased capital expenditures due to the construction of a natural gas fired generation plant and on-going capital needs.  Commercial paper is being issued and will act as a bridge until Chugach converts commercial paper balances to long term debt.  On November 17, 2010, Chugach replaced the $300 million unsecured Credit Agreement executed on October 10, 2008, which was due to expire on October 10, 2011.  The 2010 Credit Agreement with National Rural Utilities Cooperative Finance Corporation (NRUCFC), Bank of America, N.A., KeyBank National Association, JPMorgan Chase Bank, N.A., Bank of Montreal, CoBank, ACB, Goldman Sachs Bank USA, Bank of Taiwan, Los Angeles Branch and Chang Hwa Commercial Bank, Ltd., Los Angeles Branch, will expire on November 17, 2013.  The Credit Agreement is used to back Chugach’s Commercial Paper program, which will act as a bridge until Chugach converts commercial paper balances to long-term debt. The 2010 Credit Agreement was priced with an all-in drawn spread of one month LIBOR plus 150 basis points, along with a 25 basis points facility fee (based on an A-/A3 unsecured debt rating).

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Our commercial paper can be repriced between one day and two hundred and seventy days.  The following table provides information regarding monthly average commercial paper balances outstanding (dollars in millions), as well as corresponding weighted average interest rates:

Month	Average Balance	Weighted Average Interest Rate
January 2010	54.2	0.26
February 2010	57.1	0.26
March 2010	60.2	0.27
April 2010	59.8	0.28
May 2010	59.0	0.32
June 2010	58.7	0.37
July 2010	58.6	0.33
August 2010	60.8	0.33
September 2010	67.6	0.31
October 2010	71.4	0.31
November 2010	77.4	0.30
December 2010	87.5	0.31

Chugach had a term loan facility with CoBank.  Loans made under that facility were evidenced by promissory notes governed by a Master Loan Agreement, which became effective on January 22, 2003.  On January 19, 2011, Chugach and CoBank amended and restated the existing Master Loan Agreement.  The existing loans from CoBank are now governed by the Amended and Restated Master Loan Agreement dated January 19, 2011, evidenced by a promissory note dated January 19, 2011, and secured by the Second Amended and Restated Indenture of Trust dated January 20, 2011.  At December 31, 2010, Chugach had $37.3 million outstanding with CoBank.

Under the Second Amended and Restated Indenture of Trust, additional obligations may be sold by Chugach upon the basis of bondable additions and the retirement or defeasance of or principal payments on previously outstanding obligations.  The beginning balance of bondable additions on January 20, 2011 was $322.2 million, which would support the issuance of additional debt of approximately $293 million.  Chugach’s ability to sell additional debt obligations will be dependent on the market’s perception of Chugach’s financial condition and credit rating, and Chugach’s continuing compliance with the financial covenants, including the rate covenant, contained in the Second Amended and Restated Indenture of Trust and its other credit documents.  No assurance can be given that Chugach will be able to sell additional debt obligations even if otherwise permitted under the Second Amended and Restated Indenture of Trust.

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Financing

On January 21, 2011, Chugach issued $90,000,000 of First Mortgage Bonds, 2011 Series A, due March 15, 2031 and $185,000,000 of First Mortgage Bonds, 2011 Series A, due March 15, 2041 for the purpose of refinancing the 2001 and 2002 Series A Bonds due March 15, 2011, and February 1, 2012, respectively, and for general corporate purposes.The 2011 Series A Bonds due March 15, 2031, will bear interest at 4.20% per annum, payable semi-annually on March 15 and September 15 of each year commencing on September 15, 2011.  Principal on the 2011 Series A Bonds due March 15, 2031 will be paid in equal annual installments beginning March 15, 2012, resulting in an average life of approximately 10 years.  The 2011 Series A Bonds due March 15, 2041, will bear interest at 4.75% per annum, payable semi-annually on March 15 and September 15 of each year commencing on September 15, 2011.  Principal on the 2011 Series A Bonds due March 15, 2041 will be paid in equal annual installments beginning March 15, 2012, resulting in an average life of approximately 15.5 years.  The bonds and all other long-term debt obligations of Chugach are secured by a lien on substantially all of Chugach’s assets, as set forth in the Second Amended and Restated Indenture of Trust, which became effective January 20, 2011.

Principal maturities of our outstanding indebtedness, including commercial paper, at December 31, 2010 are set forth below:

Year Ending December 31	Principal Maturities
2011	$	251,351,500
2012		122,693,543
2013		2,076,355
2014		2,266,145
2015		2,473,110
Thereafter		24,941,165
	$	405,801,818

During 2010 we spent approximately $74.9 million on capital-construction projects, net of reimbursements, which includes interest capitalized during construction.  We develop five-year capital improvement plans that are updated every year. Our capital improvement requirements are based on long-range plans and other supporting studies and are executed through the five-year capital improvement program.

Set forth below is an estimate of capital expenditures for the years 2011 through 2015 as contained in the Capital Improvement Plan (CIP), which was approved by the board on October 27, 2010:

Year	Estimated Expenditures
2011	$166.3 million
2012	$83.6 million
2013	$26.1 million
2014	$32.1 million
2015	$15.3 million

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We expect that cash flows from operations and external funding sources, including our available lines of credit and commercial paper program, will be sufficient to cover future operational and capital funding requirements.

Outlook

Constructing a new, highly efficient power generation facility, managing natural gas contracts, securing 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 Chugach has faced and will continue to face 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 MW natural gas fired power plant.  Chugach will own and take 70 percent of the new plant’s output and AML&P will own and take the remaining 30 percent.  The plant is scheduled to be placed into service in 2012. Currently, major components have been ordered, engineering is moving forward and initial construction permits allowing the project to begin construction in the spring of 2011 have been received. Chugach’s interim financing for the plant will come from a commercial paper borrowing program that was initially established via a $300 million unsecured credit agreement in 2008 and refinanced in 2010.

Chugach will continue to 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 our capital additions that are expected to continue in 2011.

Chugach currently has fuel contracts in place to fill 100 percent of Chugach’s unmet needs through December 2013, approximately 50 percent of Chugach’s unmet needs through December 2014, approximately 60 percent in 2015 and approximately 29 percent in 2016.  The State of Alaska Department of Natural Resources (DNR) completed a preliminary engineering and geological evaluation of the remaining Cook Inlet gas reserves in December of 2009.  The study identified 863 billion cubic feet (BCF) of proven, developed, producing reserves, additional probable reserves of 279 BCF and an additional increment of 353 BCF in high-confidence pay intervals.  Combined, these 1.5 trillion cubic feet of gas reserves are similar to the 1.4 trillion cubic feet of gas reserves identified in a 2004 study undertaken by the Department of Energy in 2004.  Given current demand and deliverability, DNR estimates at minimum a 10-year supply of gas exists in currently producing leases.  DNR does note that economic considerations will play a major role in whether producers continue drilling and development activities to meet demand.  Chugach has been working closely with the state and producers to develop a comprehensive Cook Inlet management plan that will meet this goal.  Chugach continues to explore its options for future fuel supply needs by working with developers on commercial terms for natural gas storage and the state of Alaska on energy policies to promote gas development in Cook Inlet and other in-state gas options such as the North Slope Pipeline, Spur Line or Bullet line to Southcentral Alaska.  Chugach is also evaluating LNG storage and import options as transition gas until in-state gas options are developed.

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In 2010 the Alaska Legislature passed legislation House Bill 280 and Senate Bill 309 (HB280 and SB309) providing incentives (including tax credits) intended to spur exploration and development of natural gas and oil in Cook Inlet.  It is too early to know just how successful the bills will be in achieving their intended purposes.  The legislation does underscore the point that legislators are paying close attention to Cook Inlet natural gas issues.

Chugach and other utilities have a need for gas storage.  A storage facility will provide a place for gas to flow to during times of lower demand and flow from as customer demand rises.  Cook Inlet Natural Gas Storage Alaska (CINGSA) is a project to develop a gas storage facility using a depleted underground reservoir.  The facility will have an initial storage capacity of 11 bcf so that local utilities, including Chugach, will have gas available to meet deliverability requirements during peak periods.  Chugach's share of the initial capacity is 2.3 bcf. Injections into the facility are expected to begin in the spring of 2012 and withdrawals of gas are expected to begin in the winter of 2012.  Chugach is entitled to withdraw gas a rate of up to 35 MMcf per day.  On December 17, 2010, the RCA approved a certificate of public convenience and necessity for the natural gas storage facility.

Notification was made by MEA in 2004 and by HEA in 2007 that neither organization intends to be on the Chugach system under the current contractual arrangements post 2014.  This would result in a loss of approximately 50 percent of Chugach’s power sales load and approximately 40 percent of the utility’s annual sales revenue.  On April 13, 2010, HEA issued a press release stating that HEA’s solely-owned power generation and transmission entity, AEEC, approved a design engineer to complete design for the Nikiski generation conversion project. AEEC currently owns a 40 MW natural gas fired generation plant that is dispatched as part of Chugach’s overall system.  The conversion project entails adding a steam turbine and increasing the output of the plant to 77 MW.  HEA intends to purchase all of the output from this unit upon expiration of the Chugach contract in 2013.  Chugach is currently negotiating with HEA for generation and transmission reserves necessary to meet the balance of HEA’s power requirements.  Negotiations with MEA were also ongoing throughout 2010 and are anticipated to continue into 2011.  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 burden imposed by the remaining costs and will likely face higher rates.  Chugach, however, is continuing to pursue replacement sources of revenue through potential new firm power sales agreements and 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 State of Alaska Energy Policy was amended to include legislature intent that the state achieve a 15 percent increase in energy efficiency on a per capita basis between 2010 and 2020; receive 50 percent of its electric generation from renewable and alternative energy sources by 2025, work to ensure a reliable in-state gas supply for residents of the state, the state power project fund serve as the main source of state assistance for energy projects, remain a leader in petroleum and natural gas production and become a leader in renewable and alternative energy development.

Chugach is coordinating with other parties, including the State of Alaska, private developers and other utilities in the planning and potential development of renewable energy resources.  The proposed operating and capital budgets released by the state on December 15, 2010, included strong backing for energy activities.  The budget contained $65.7 million for the Alaska Energy Authority to conduct planning, design and permitting for a major hydro project on the Susitna River.  The proposed project could provide up to half the electric energy needed in the Railbelt.  In November of 2010, the AEA released a decision document concluding that Susitna should be considered the primary hydroelectric project for the region.  Chugach will work with AEA and other parties on this effort.  Other potential renewable resources that Chugach is actively exploring with developers include Mt. Spurr Geothermal being proposed by Ormat Technologies, Inc., landfill gas, wind power and a potential waste-to-energy project in Anchorage.  Other potential projects include wind power developments in the HEA and GVEA service areas.

Five Railbelt electric utilities have joined together to create a new organization that will help plan, construct and operate key components of the regional electric grid.  The organization, Alaska Railbelt Cooperative Transmission and Electric Company (ARCTEC), is a generation and transmission cooperative organized under existing state law.  Chugach, GVEA, HEA, MEA and SES organized the G&T to provide a framework for collective action on projects of mutual benefit.  Each of the organizations has two seats on the 10-member board of directors.  Another advantage of ARCTEC is its ability to prioritize capital project requests and speak with a unified regional voice at the state capitol.  ARCTEC was incorporated on December 23, 2010.

Off-Balance Sheet Arrangements

We have not created, and are not party to, any special-purpose or off-balance-sheet entities for the purpose of raising capital, incurring debt or operating parts of our business that are not consolidated into our financial statements.  We do not have any arrangements or relationships with entities that are not consolidated into our financial statements that are reasonably likely to materially affect our liquidity or the availability of our capital resources.

Critical Accounting Policies

Our 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.  Significant accounting policies are described in Note 1 to the financial statements (See “Item 8 -Financial Statements and Supplementary Data.”). 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 year ended December 31, 2010.

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Electric Utility Regulation

Chugach is subject to regulation by the RCA. The RCA sets the rates Chugach is permitted to charge customers based on our specific allowable costs. As a result, Chugach applies FASB ASC 980, “Topic 980 – Regulated Operations.”  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 FASB ASC 980 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 Chugach; 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. As reflected in the financial statements (See “Item 8 -Financial Statements and Supplementary Data – Note 1k – Deferred Charges and Credits”), 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 $8,612,454 and $9,417,906 of unbilled retail revenue at December 31, 2010 and 2009, respectively.

Allowance for Doubtful Accounts

We maintain 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.

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New Accounting Standards

ASC Update 2010-29 “Business Combinations (Topic 805): Disclosure of Supplementary Pro Forma Information for Business Combinations (a consensus of the FASB Emerging Issues Task Force)

In December 2010, the FASB issued ASC Update 2010-29, “Business Combinations (Topic 805): Disclosure of Supplementary Pro Forma Information for Business Combinations (a consensus of the FASB Emerging Issues Task Force).”  ASC Update 2010-29 clarifies the pro forma information disclosure requirements of public entities that enter into business combinations that are material on an individual or aggregate basis.  This update is effective for the first annual reporting period beginning on or after December 15, 2010.  Chugach will begin application of ASC 2010-29 on January 1, 2011, which is not expected to have any effect on results of operations, financial position, and cash flows.

ASC Update 2010-06 “Fair Value Measurements and Disclosures (Topic 820): Improving Disclosures about Fair Value Measurements”

In January 2010, the FASB issued ASC Update 2010-06, “Fair Value Measurements and Disclosures (Topic 820): Improving Disclosures about Fair Value Measurements.”  ASC Update 2010-06 applies to all entities that are required to make disclosures about recurring or nonrecurring fair value measurements and expands the disclosures required based on the measurement Level.  This update is effective for the first reporting period (including interim periods) beginning after December 15, 2009, except for certain Level 3 transactions.  Those transaction disclosure requirements are effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years.  Chugach began application of ASC Update 2010-06 to the financial statements for the period ended March 31, 2010, which did not have a material effect on our results of operations, financial position, and cash flows.  Chugach will begin application of the Level 3 transaction disclosures on January 1, 2011, which is not expected to have any effect on results of operations, financial position and cash flows.

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

In June 2009, the FASB issued Statement of Financial Accounting Standard (SFAS) No. 167, “Amendments to FASB Interpretation No. 46(R).”  SFAS No. 167 applies to all entities except for those identified in FASB Interpretation No. (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 began application of SFAS No. 167 on January 1, 2010, which did not have any effect on our results of operations, financial position, and cash flows.

In December 2009, the FASB issued ASC Update 2009-17, “Improvements to Financial Reporting by Enterprises Involved with Variable Interest Entities,” an adaptation of SFAS No. 167 into the Codification.  To view the adapted content, see FASB ASC 810-10-30, for the Initial Measurement Section of Subtopic 10, and FASB ASC 810-10-65, for the Transition and Open Effective Date Information Section of Subtopic 810-10.  The update did not have any effect on our results of operations, financial position and cash flows.

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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 began application of SFAS No. 166 on January 1, 2010, which did not have any effect on our results of operations, financial position, and cash flows.

In December 2009, the FASB issued ASC Update 2009-16,”Accounting for Transfers of Financial Assets,” an adaptation of SFAS No. 166 into the Codification.  To view the adapted content, see FASB ASC 860-10-40, for the Derecognition Section of Subtopic 10, and FASB ASC 860-10-65, for the Transition and Open Effective Date Information of Subtopic 860-10.  The update did not have any effect on our results of operations, financial position and cash flows.

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 began application of SFAS No. 164 on January 1, 2010, which did not have any effect on our results of operations, financial position, and cash flows.

In January 2010, the FASB issued ASC Update 2010-07, “Not-for-Profit Entities (Topic 958): Not-for-Profit Entities: Mergers and Acquisitions,” an adaptation of SFAS No. 164 into the Codification. To view the adapted content, see FASB ASC 954-805 for the Business Combinations Subtopic of Topic 954, FASB ASC 958-805 for the Business Combinations Subtopic of 958, FASB ASC 805-10-15 for the Scope and Scope Exceptions Section of Subtopic 805-10, FASB ASC 805-50-15 for the Scope and Scope Exceptions Section of Subtopic 805-50, and FASB ASC 350-10-65 for the Transition and Open Effective Date Information Section of Subtopic 350-10.

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Item 7A - 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

At December 31, 2010, our short- and long- term debt was comprised of our 2001 and 2002 Series A Bonds, promissory notes owed to CoBank and outstanding commercial paper.

The interest rates of our 2001 and 2002 Series A Bonds are fixed at 6.55 and 6.20 percent, respectively, per annum.  At December 31, 2010, we had $270 million of 2001 and 2002 Series A Bonds outstanding.  The fair value at December 31, 2010, was $278.1 million.

Chugach is exposed to market risk from changes in interest rates associated with our other credit facilities.  Our credit facilities’ interest rates may be reset due to fluctuations in a market-based index, such as the London Interbank Offered Rate (LIBOR) or the base rate or prime rate of our lenders.  A 100 basis-point change rise in interest rates would increase our interest expense by approximately $1.4 million, and a 100 basis point decline in interest rates would decrease our interest expense by approximately $678.4 thousand, based on $135.8 million of variable rate debt outstanding at December 31, 2010.

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 gas supply contracts does not normally impact margins.

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Item 8 – Financial Statements and Supplementary Data

Report of Independent Registered Public Accounting Firm

The Board of Directors

Chugach Electric Association, Inc.

We have audited the accompanying balance sheets of Chugach Electric Association, Inc. as of December 31, 2010 and 2009, and the related statements of operations, changes in equities and margins, and cash flows for each of the years in the three-year period ended December 31, 2010. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Chugach Electric Association, Inc. as of December 31, 2010 and 2009, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2010, in conformity with U.S. generally accepted accounting principles.

/s/ KPMG, LLP

March 30, 2011

Anchorage, Alaska

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Chugach Electric Association, Inc.

Balance Sheets

December 31, 2010 and 2009

Assets	2010			2009
Utility Plant (notes 1d, 3, 10 and 11):
Electric plant in service	$	853,933,739		$	834,467,734
Construction work in progress		100,787,482			48,383,610
Total utility plant		954,721,221			882,851,344
Less accumulated depreciation		(446,582,318	)		(420,464,808	)
Net utility plant		508,138,903			462,386,536
Other property and investments, at cost:
Nonutility property		84,735			24,461
Special Funds		395,833			345,792
Investments in associated organizations (note 4)		12,163,097			12,333,936
Total other property and investments		12,643,665			12,704,189
Current assets:
Cash and cash equivalents, including repurchase agreements of $12,008,821 in 2010 and $3,026,893 in 2009		12,070,713			3,503,765
Special deposits		211,858			125,037
Fuel cost under-recovery (note 1n)		2,371,631			278,164
Accounts receivable, less provision for doubtful accounts of $307,169 in 2010 and $397,815 in 2009		35,140,119			35,810,543
Materials and supplies		35,974,170			29,990,618
Prepayments		1,925,424			1,261,897
Other current assets		256,290			246,380
Total current assets		87,950,205			71,216,404
Deferred charges, net (notes 5 and 12)		20,994,955			22,037,407
Total assets	$	629,727,728		$	568,344,536

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Chugach Electric Association, Inc.

Balance Sheets (continued)

December 31, 2010 and 2009

Liabilities, Equities and Margins	2010		2009
Equities and margins (notes 6 and 7):
Memberships	$	1,474,869	$	1,432,054
Patronage capital		149,543,952		144,228,221
Other		10,823,463		10,660,322
Total equities and margins		161,842,284		156,320,597
Long-term obligations, excluding current installments (note 8):
Bonds payable		270,000,000		270,000,000
National Bank for Cooperatives bonds payable		34,450,318		37,301,819
Total long-term obligations		304,450,318		307,301,819
Current liabilities:
Current installments of long-term obligations (note 8)		2,851,500		4,118,028
Commercial Paper		98,500,000		51,500,000
Accounts payable		18,860,926		10,212,105
Consumer deposits		5,225,729		5,492,950
Fuel cost over-recovery (note 1n)		0		3,511,422
Accrued interest		6,049,531		6,067,630
Salaries, wages and benefits		6,733,842		5,956,320
Fuel		21,569,538		14,658,058
Other current liabilities		1,872,314		1,234,371
Total current liabilities		161,663,380		102,750,884
Deferred compensation		395,833		345,792
Deferred credits (note 5)		1,375,913		1,625,444
Total liabilities, equities and margins	$	629,727,728	$	568,344,536

See accompanying notes to financial statements.

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Chugach Electric Association, Inc.

Statements of Operations

Years Ended December 31, 2010, 2009 and 2008

	2010			2009			2008
Operating revenues (notes 1m, 2 and 12)	$	258,325,345		$	290,247,308		$	288,292,112
Operating expenses:
Fuel (note 12)		111,718,947			136,416,761			137,894,553
Power production		18,248,656			16,406,911			16,718,777
Purchased power		26,691,968			35,690,476			31,486,621
Transmission		5,697,446			5,709,578			5,841,405
Distribution		12,216,252			12,740,381			12,398,832
Consumer accounts		5,323,551			5,259,348			5,396,662
Administrative, general and other charges		21,434,273			20,518,688			20,014,239
Depreciation		32,636,108			32,130,434			30,829,276
Total operating expenses		233,967,201			264,872,577			260,580,365
Interest expense:
Long-term debt and other		21,014,387			21,207,600			22,979,276
Charged to construction		(1,008,689	)		(601,251	)		(446,479	)
Interest expense, net		20,005,698			20,606,349			22,532,797
Net operating margins		4,352,446			4,768,382			5,178,950
Nonoperating margins:
Interest income		310,964			250,958			553,362
Allowance for Funds Used During Construction		83,966			145,281			112,611
Capital credits, patronage dividends and other		662,633			495,727			566,827
Total nonoperating margins		1,057,563			891,966			1,232,800
Assignable margins	$	5,410,009		$	5,660,348		$	6,411,750

See accompanying notes to financial statements.

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Chugach Electric Association, Inc.

Statements of Changes in Equities and Margins

Years Ended December 31, 2010, 2009 and 2008

	Memberships		Other Equities and Margins		Patronage Capital			Total
Balance, January 1, 2008	$	1,345,013	$	9,252,085	$	138,713,338		$	149,310,436
Assignable margins		0		0		6,411,750			6,411,750
Retirement of capital credits		0		0		(3,115,090	)		(3,115,090	)
Unclaimed capital credit retirements		0		963,133		0			963,133
Memberships and donations received		45,400		151,370		0			196,770
Balance, December 31, 2008		1,390,413		10,366,588		142,009,998			153,766,999
Assignable margins		0		0		5,660,348			5,660,348
Retirement of capital credits		0		0		(3,442,125	)		(3,442,125	)
Unclaimed capital credit retirements		0		213,527		0			213,527
Memberships and donations received		41,641		80,207		0			121,848
Balance, December 31, 2009		1,432,054		10,660,322		144,228,221			156,320,597
Assignable margins		0		0		5,410,009			5,410,009
Retirement of capital credits		0		0		(94,278	)		(94,278	)
Unclaimed capital credit retirements		0		90,320		0			90,320
Memberships and donations received		42,815		72,821		0			115,636
Balance, December 31, 2010	$	1,474,869	$	10,823,463	$	149,543,952		$	161,842,284

See accompanying notes to financial statements.

55

Chugach Electric Association, Inc.

Statements of Cash Flows

Years Ended December 31, 2010, 2009 and 2008

Cash flows from operating activities:	2010			2009			2008
Assignable margins	$	5,410,009		$	5,660,348		$	6,411,750
Adjustments to reconcile assignable margins to net cash provided by operating activities:
Depreciation		32,636,108			32,130,434			30,829,276
Amortization and depreciation cleared to operating expenses		5,457,480			4,755,265			5,029,029
Allowance for funds used during construction		(83,966	)		(145,281	)		(112,611	)
Property losses, net / other		74,726			(121,417	)		(182,159	)
Write-off of inventory, deferred charges and projects		210,596			1,461,349			18,000
Changes in assets and liabilities:
(Increase) decrease in assets:
Accounts receivable		670,424			35,367			(2,427,101	)
Fuel cost under-recovery		(2,093,467	)		11,509,914			(11,788,078	)
Materials and supplies		(6,061,005	)		(1,407,931	)		(384,553	)
Prepayments/Other assets		(448,456	)		298,537			(183,715	)
Deferred charges		(1,511,639	)		(2,522,027	)		(6,640,741	)
Increase (decrease) in liabilities:
Accounts payable		339,929			169,466			(1,673,495	)
Consumer deposits/Other liabilities		2,434,124			515,513			758,655
Fuel cost over-recovery		(3,511,422	)		3,511,422			(1,596,010	)
Accrued interest		(18,099	)		(91,297	)		(145,682	)
Salaries, wages and benefits		777,522			474,699			(472,252	)
Fuel		6,911,480			(13,836,153	)		6,156,558
Deferred credits		(70,335	)		11,219			55,070
Net cash provided by operating activities		41,124,009			42,409,427			23,651,941
Investing activities:
Extension and replacement of plant		(74,875,800	)		(38,100,312	)		(30,276,605	)
Net cash used in investing activities		(74,875,800	)		(38,100,312	)		(30,276,605	)
Financing activities:
Payments of notes payable		0			(2,860,000	)		0
Payments for debt issue costs		(1,493,572	)		0			0
Proceeds from short-term obligations		47,000,000			66,998,000			7,500,000
Proceeds from long-term obligations		0			0			38,560,006
Repayments of short-term obligations		0			(22,998,000	)		0
Repayments of long-term obligations		(4,118,029	)		(47,367,312	)		(35,303,151	)
Memberships and donations received		205,956			21,624			70,761
Retirement of patronage capital and estate payments		(146,596	)		(3,022,246	)		(4,027,156	)
Net receipts of consumer advances for construction		870,980			931,282			1,105,570
Net cash provided by (used in) financing activities		42,318,739			(8,296,652	)		7,906,030
Net changes in cash and cash equivalents		8,566,948			(3,987,537	)		1,281,366
Cash and cash equivalents at beginning of period	$	3,503,765		$	7,491,302		$	6,209,936
Cash and cash equivalents at end of period	$	12,070,713		$	3,503,765		$	7,491,302
Supplemental disclosure of non-cash investing and financing activities
Retirement of plant (net of salvage)	$	6,666,875		$	991,011		$	9,027,644
Notes payable on land	$	0		$	0		$	2,860,000
Extension and replacement of plant included in accounts payable	$	14,054,396		$	5,712,404		$	2,656,989
Non-cash capital credit retirements	$	0		$	331,987		$	1,089,142
Patronage capital retired and estate payments included in other current liabilities	$	388,463		$	503,237		$	415,345
Supplemental disclosure of cash flow information – interest expense paid, including amounts capitalized	$	19,173,013		$	19,710,442		$	21,536,503

See accompanying notes to financial statements.

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Chugach Electric Association, Inc.

Notes to Financial Statements

December 31, 2010 and 2009

(1) Description of Business and Significant Accounting Policies

a. Description of Business

Chugach Electric Association, Inc. (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 of three wholesale customers, Matanuska Electric Association, Inc. (MEA), Homer Electric Association, Inc. (HEA) and the City of Seward (Seward).  Chugach’s retail and wholesale members are the consumers of the electricity sold.

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 in conformity with generally accepted accounting principles, 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 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 Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 980, “Topic 980 - Regulated Operations.”

FASB ASC 980 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.  Our regulated rates are established to recover all of our specific costs of providing electric service.  In each rate filing, rates are set at levels to recover all of our specific allowable costs and those rates are then collected from our retail and wholesale customers.  The regulatory assets or liabilities are then reduced as the cost or credit is reflected in earnings.  See Note (1k) – “Deferred Charges and Credits.”

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Chugach Electric Association, Inc.

Notes to Financial Statements

December 31, 2010 and 2009

(1) Description of Business and Significant Accounting Policies (continued)

d. Utility Plant and Depreciation

Additions to electric plant in service are recorded at original cost of contracted services, direct labor and materials, indirect overhead charges and capitalized interest.  For property replaced or retired, the book value of the property, plus removal cost, less salvage, is charged to accumulated depreciation.  Renewals and betterments are capitalized, while maintenance and repairs are normally charged to expense as incurred.

In accordance with FASB ASC 360, “Topic 360 – Property, Plant, and Equipment,” certain utility plant is reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable in rates.  Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset.  If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset.

Depreciation and amortization rates have been applied on a straight-line basis and at December 31 are as follows:

Annual Depreciation Rate Ranges

	01/01/05	-	05/31/08	06/01/08	-	10/31/10	11/01/10	-	12/31/10
Steam production plant	2.55%	-	3.24%	4.45%	-	5.85%	4.81%	-	7.04%
Hydraulic production plant	1.63%	-	3.00%	1.22%	-	3.00%	1.06%	-	3.00%
Other production plant	3.32%	-	9.81%	3.77%	-	10.56%	3.98%	-	10.15%
Transmission plant	1.72%	-	5.26%	1.61%	-	6.67%	1.58%	-	7.86%
Distribution plant	2.10%	-	9.98%	1.95%	-	9.77%	2.17%	-	9.63%
General plant	2.23%	-	27.25%	1.25%	-	26.11%	1.57%	-	20.00%
Other	2.75%	-	2.75%	2.75%	-	2.75%	2.75%	-	2.75%

On November 1, 2010, the RCA approved revised depreciation rates effective November 1, 2010. See Note (2) – “Regulatory Matters – Revision to Current Depreciation Rates (Docket U-09-097).”  Chugach’s depreciation rates include a provision for cost of removal. Given that the estimated timing and amount cannot be reasonably estimated, Chugach does not record a separate liability for its obligation associated with the retirement of plant.

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Chugach Electric Association, Inc.

Notes to Financial Statements

December 31, 2010 and 2009

(1) Description of Business and Significant Accounting Policies (continued)

e. Capitalized Interest

Allowance for funds used during construction (AFUDC) and interest charged to construction - credit (IDC) are the estimated costs of the funds used during the period of construction from both equity and borrowed funds.  AFUDC and IDC are applied to specific projects during construction.  AFUDC and IDC uses the net cost of borrowed funds and a rate of return on member’s equity when used and is recovered through rates as utility plant is depreciated.  Chugach capitalized such funds at the weighted average rate (adjusted monthly) of 4.8 percent during 2010, 4.9 percent during 2009 and 5.1 percent during 2008.  Chugach capitalized actual interest expense and related fees associated with the construction of the Southcentral Power Project (SPP).

f. Investments in Associated Organizations

The loan agreements with CoBank, ACB (CoBank) and National Rural Utilities Cooperative Finance Corporation (NRUCFC) require as a condition of the extension of credit, that an equity ownership position be established by all borrowers.  Chugach’s equity ownership in these organizations is less than 1 percent.  These investments are non-marketable and accounted for at cost.  Management evaluates these investments annually for impairment.  No impairment was recorded during 2010, 2009 and 2008.

g. Fair Value of Financial Instruments

FASB ASC 825, “Topic 825 – Financial Instruments,” requires disclosure of the fair value of certain on and off balance sheet financial instruments for which it is practicable to estimate that value.  The following methods are used to estimate the fair value of financial instruments:

Cash and cash equivalents - the carrying amount approximates fair value because of the short maturity of those instruments.

Consumer deposits - the carrying amount approximates fair value because of the short refunding term.

Long-term obligations - the fair value is estimated based on the quoted market price for same or similar issues (note 8).

Deferred compensation – the fair value is based on the quoted market price for identical instruments traded in active exchange markets.

59

Chugach Electric Association, Inc.

Notes to Financial Statements

December 31, 2010 and 2009

(1) Description of Business and Significant Accounting Policies (continued)

h. Cash and Cash Equivalents

For purposes of the statement of cash flows, Chugach considers all highly liquid instruments with a maturity of three months or less upon acquisition by Chugach to be cash equivalents.  Chugach has an Overnight Repurchase Agreement with First National Bank Alaska (FNBA).  Each day the balance is invested by FNBA and Chugach receives varying interest rates for our investment pursuant to our Overnight Purchase Agreement.  The Overnight Repurchase Agreement account had an average balance in 2010 and 2009 of $5,092,665 and $4,103,891, at an average interest rate of 0.14 percent and 0.17 percent, respectively.

i. Accounts Receivable

Trade accounts receivable are recorded at the invoiced amount.  The allowance for doubtful accounts is management’s best estimate of the amount of probable credit losses in existing accounts receivable.  Chugach determines the allowance based on its historical write-off experience and current economic conditions.  Chugach reviews its allowance for doubtful accounts monthly.  Past due balances over 90 days in a specified amount are reviewed individually for collectability.  All other balances are reviewed in aggregate.  Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote.  Chugach does not have any off–balance-sheet credit exposure related to its customers.

j. Materials and Supplies

Materials and supplies are stated at average cost.

k. Deferred Charges and Credits

In accordance with FASB ASC 980, Chugach’s financial statements reflect regulatory assets and liabilities.  Continued accounting under FASB ASC 980, requires that certain criteria be met.  We capitalize all or part of costs that would otherwise be charged to expense if it is probable that future revenue in an amount at least equal to the capitalized cost will result from inclusion of that cost in allowable costs for ratemaking purposes and future revenue will be provided to permit recovery of the previously incurred cost.  Management believes Chugach’s operations currently satisfy these criteria.  Chugach regulatory asset recoveries are embedded in base rates approved by the RCA.  Specific costs incurred and recorded as Regulatory Assets, including the amortization period for recovery, are approved by the RCA either in standard SRFs, general rate case filings or specified independent requests.  The rates approved related to the regulatory assets are matched to the amortization of actual expenditures recognized on the books. The regulatory assets are amortized and collected through rates over differing periods depending upon the period of benefit as established by the RCA.   Deferred credits, primarily representing regulatory liabilities, are amortized to operating expense over the period allowed for ratemaking purposes.  It also includes refundable contributions in aid of construction, which are credited to the associated cost of construction of property units.  Refundable contributions in aid of construction are held in deferred credits pending their return or other disposition.  If events or circumstances

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Chugach Electric Association, Inc.

Notes to Financial Statements

December 31, 2010 and 2009

(1) Description of Business and Significant Accounting Policies (continued)

k. Deferred Charges and Credits (continued)

should change so the criteria are not met, the write off of regulatory assets and liabilities could have a material effect on Chugach’s financial position or results of operations.

l. Patronage Capital

Revenues in excess of current period costs (net operating margins and nonoperating margins) in any year are designated on Chugach's statement of revenues and expenses as assignable margins. These excess amounts (i.e. assignable margins) are considered capital furnished by the members, and are credited to their accounts and held by Chugach until such future time as they are retired and returned without interest at the discretion of the Board of Directors.  Retained assignable margins are designated on Chugach's balance sheet as patronage capital.  This patronage capital constitutes the principal equity of Chugach.  The Board of Directors may also approve the return of capital to former members and estates who request early retirements at discounted rates under a discounted capital credits retirement plan authorized by the Board in September 2002.

m. Operating Revenues

Revenues are recognized upon delivery of electricity.  Operating revenues are based on billing rates authorized by the RCA, which are applied to customers' usage of electricity.  Chugach’s rates are established, in part, on test period sales levels that reflect actual operating results.  Chugach calculates unbilled revenue at the end of each month to ensure the recognition of a calendar year’s revenue.  Chugach accrued $8,612,454 and $9,417,906 of unbilled retail revenue at December 31, 2010 and 2009, respectively.Wholesale revenue is recorded from metered locations on a calendar month basis, so no accrual is made.  Chugach's tariffs include provisions for the recovery of gas costs according to gas supply contracts, as well as purchased power costs.

n. Fuel and Purchased Power Costs Recovery

Expenses associated with electric services include fuel used to generate electricity and power purchased from others.  Chugach is authorized by the RCA to recover fuel and purchased power costs through the fuel surcharge process, which is adjusted quarterly to reflect increases and decreases of such costs.  We recognize differences between projected recoverable fuel costs and amounts actually recovered through rates.  The fuel cost under/over recovery on our Balance Sheet represents the net accumulation of any under or over collection of fuel and purchase power costs.  Fuel cost under-recovery will appear as an asset on our Balance Sheet and will be collected from our members in subsequent periods.  Conversely, fuel cost over-recovery will appear as a liability on our Balance Sheet and will be refunded to our members in subsequent periods.  Fuel costs were under-recovered by $2,371,631 in 2010 and over-recovered by $3,233,258 in 2009.  Total fuel and purchased power costs in 2010, 2009, and 2008 were $138,410,915, $172,107,237, and $169,381,174, respectively.

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Chugach Electric Association, Inc.

Notes to Financial Statements

December 31, 2010 and 2009

(1)           Description of Business and Significant Accounting Policies (continued)

o. Environmental Remediation Costs

Chugach accrues for losses and establishes a liability associated with environmental remediation obligations when such losses are probable and can be reasonably estimated.  Such accruals are adjusted as further information develops or circumstances change.   Estimates of future costs for environmental remediation obligations are not discounted to their present value. However, various remediation costs may be recoverable through rates and accounted for as a regulatory asset.

p. 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 years ended December 31, 2010, 2009 and 2008 was in compliance with that provision.  In addition, as described in “Note (12) - Commitments, Contingencies and Concentrations,” Chugach collects sales tax and is assessed gross receipts and excise taxes which are presented on a net basis in accordance with FASB ASC 605-45-50, “Topic 605 - Revenue Recognition – Subtopic 45 - Principal Agent Considerations – Section 50 - Disclosure.”

Chugach applies a more-likely-than-not recognition threshold for all tax uncertainties.  FASB ASC 740 only allows the recognition of those tax benefits that have a greater than fifty percent likelihood of being sustained upon examination by the taxing authorities.  Chugach’s management reviewed Chugach’s tax positions and determined there were no outstanding, or retroactive tax positions, that were not highly certain of being sustained upon examination by the taxing authorities.

Management has concluded that there are no significant uncertain tax positions requiring recognition in its financial statements for all periods presented. Chugach’s evaluation was performed for the tax periods ended December 31, 2006 through December 31, 2010 for U.S. Federal Income Tax, the tax years which remain subject to examination by major tax jurisdictions as of December 31, 2010.

q. Consumer deposits

Consumer deposits are the amounts certain customers are required to deposit to receive electric service.  Consumer deposits for the years ended December 31, 2010 and 2009, totaled $2.1 million and $2.4 million, respectively.  Consumer deposits also represent customer credit balances as a result of prepaid accounts.  Credit balances for the years ended December 31, 2010 and 2009 totaled $3.1 million and $3.0 million, respectively.

62

Chugach Electric Association, Inc.

Notes to Financial Statements

December 31, 2010 and 2009

(1)  Description of Business and Significant Accounting Policies (continued)

r. Recently Issued Accounting Pronouncements

ASC Update 2010-29 “Business Combinations (Topic 805): Disclosure of Supplementary Pro Forma Information for Business Combinations (a consensus of the FASB Emerging Issues Task Force)

In December 2010, the FASB issued ASC Update 2010-29, “Business Combinations (Topic 805): Disclosure of Supplementary Pro Forma Information for Business Combinations (a consensus of the FASB Emerging Issues Task Force).”  ASC Update 2010-29 clarifies the pro forma information disclosure requirements of public entities that enter into business combinations that are material on an individual or aggregate basis.  This update is effective for the first annual reporting period beginning on or after December 15, 2010.  Chugach will begin application of ASC 2010-29 on January 1, 2011, which is not expected to have any effect on results of operations, financial position, and cash flows.

ASC Update 2010-06 “Fair Value Measurements and Disclosures (Topic 820): Improving Disclosures about Fair Value Measurements”

In January 2010, the FASB issued ASC Update 2010-06, “Fair Value Measurements and Disclosures (Topic 820): Improving Disclosures about Fair Value Measurements.”  ASC Update 2010-06 applies to all entities that are required to make disclosures about recurring or nonrecurring fair value measurements and expands the disclosures required based on the measurement Level.  This update is effective for the first reporting period (including interim periods) beginning after December 15, 2009, except for certain Level 3 transactions.  Those transaction disclosure requirements are effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years.  Chugach began application of ASC Update 2010-06 to the financial statements for the period ended March 31, 2010, which did not have a material effect on our results of operations, financial position, and cash flows.  Chugach will begin application of the Level 3 transaction disclosures on January 1, 2011, which is not expected to have any effect on results of operations, financial position and cash flows.

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

In June 2009, the FASB issued Statement of Financial Accounting Standards (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 began application of SFAS No. 167 on January 1, 2010, which did not have any effect on our results of operations, financial position, and cash flows.

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Chugach Electric Association, Inc.

Notes to Financial Statements

December 31, 2010 and 2009

(1) Description of Business and Significant Accounting Policies (continued)

r. Recently Issued Accounting Pronouncements (continued)

In December 2009, the FASB issued ASC Update 2009-17, “Improvements to Financial Reporting by Enterprises Involved with Variable Interest Entities,” an adaptation of SFAS No. 167 into the Codification.  To view the adapted content, see FASB ASC 810-10-30, for the Initial Measurement Section of Subtopic 10, and FASB ASC 810-10-65, for the Transition and Open Effective Date Information Section of Subtopic 810-10.  The update did not have any 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 began application of SFAS No. 166 on January 1, 2010, which did not have any effect on our results of operations, financial position, and cash flows.

In December 2009, the FASB issued ASC Update 2009-16,”Accounting for Transfers of Financial Assets,” an adaptation of SFAS No. 166 into the Codification.  To view the adapted content, see FASB ASC 860-10-40, for the Derecognition Section of Subtopic 10, and FASB ASC 860-10-65, for the Transition and Open Effective Date Information of Subtopic 860-10.  The update did not have any effect on our results of operations, financial position, and cash flows.

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 began application of SFAS No. 164 on January 1, 2010, which did not have any effect on our results of operations, financial position, and cash flows.

In January 2010, the FASB issued ASC Update 2010-07, “Not-for-Profit Entities (Topic 958): Not-for-Profit Entities: Mergers and Acquisitions,” an adaptation of SFAS No. 164 into the Codification. To view the adapted content, see FASB ASC 954-805 for the Business Combinations Subtopic of Topic 954, FASB ASC 958-805 for the Business Combinations Subtopic of 958, FASB ASC 805-10-15 for the Scope and Scope Exceptions Section of Subtopic 805-10, FASB ASC 805-50-15 for the Scope and Scope Exceptions Section of Subtopic 805-50, and FASB ASC 350-10-65 for the Transition and Open Effective Date Information Section of Subtopic 350-10.

64

Chugach Electric Association, Inc.

Notes to Financial Statements

December 31, 2010 and 2009

(1) Description of Business and Significant Accounting Policies (continued)

s. Fair Values of Assets and Liabilities

Fair Value Hierarchy

In accordance with FASB ASC 820, 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.

The table below presents the balance of Chugach’s non-qualified deferred compensation plan and Overnight Repurchase Agreement assets measured at fair value on a recurring basis at December 31, 2010, and December 31, 2009.

	Total		Level 1		Level 2		Level 3
December 31, 2010
Deferred compensation	$	395,833	$	395,833	$	0	$	0
Repurchase agreement	$	12,008,821	$	0	$	12,008,821	$	0
December 31, 2009
Deferred compensation	$	345,792	$	345,792	$	0	$	0
Repurchase agreement	$	3,026,893	$	0	$	3,026,893	$	0

Chugach had no Level 3 assets or liabilities measured at fair value on a recurring basis.  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 value of cash and cash equivalents, accounts receivable and payable, and other short-term monetary assets and liabilities approximate carrying value due to their short-term nature.

65

Chugach Electric Association, Inc.

Notes to Financial Statements

December 31, 2010 and 2009

(1) Description of Business and Significant Accounting Policies (continued)

t. Presentation of Financial Information

For the year ended December 31, 2010, Chugach recorded a reclassification to more accurately present accounts receivable and consumer deposits for the year ended December 31, 2009.  The reclassification represents customer credit balances as a result of prepaid accounts previously included as a reduction to accounts receivable and now included as consumer deposits.  The impact was to increase accounts receivable and consumer deposits by $3.0 million in 2009.

For the year ended December 31, 2010, Chugach recorded a reclassification to present the amount of capitalized interest previously included as a reduction of cash provided by operating activities and now included as an increase of cash used in investing activities.  The impact was to increase cash provided by operating activities and increase cash used in investing activities by $601,251 in 2009 and $446,479 in 2008.

(2)  Regulatory Matters

2008 Test Year General Rate Case (Docket U-09-080)

On June 23, 2009, Chugach filed a general rate case with the RCA to increase base rate revenue by $4.2 million, with increases of $2.7 million to Chugach retail customers and $1.5 million to wholesale customers.  Base rates charged to retail customers increased 3.3 percent and base rates charged to wholesale customers HEA, MEA and Seward increased 7.8 percent, 2.0 percent and 9.7 percent, respectively.

The RCA named the Attorney General and Chugach’s wholesale customers HEA, MEA and Seward parties to the docket.

On October 9, 2009, the RCA granted Chugach’s original request that the proposed rates go into effect on an interim and refundable basis.  On October 15, 2009, the RCA consolidated Docket U-09-080 (General Rate Case) and Docket U-09-097 (Depreciation Study Update, explained below).

Chugach reached a settlement with its wholesale customers, HEA, MEA and Seward, which resolved issues in both the general rate case and the depreciation study update.  The settlement, along with a request to vacate schedule, was filed with the RCA on May 21, 2010.  On June 2, 2010, the RCA granted the request to vacate schedule.  A final order in the consolidated case is explained below.

Revision to Current Depreciation Rates (Docket U-09-097)

In accordance with a stipulation with its wholesale customers, HEA and MEA, Chugach filed on August 31, 2009, an updated depreciation study based on plant balances as of December 31, 2008. The RCA opened Docket U-09-097 to consider Chugach’s updated depreciation study.  The RCA named Chugach’s wholesale customers HEA, MEA and Seward parties to the docket.

66

Chugach Electric Association, Inc.

Notes to Financial Statements

December 31, 2010 and 2009

(2) Regulatory Matters (continued)

Revision to Current Depreciation Rates (Docket U-09-097) (continued)

As indicated in the discussion under the 2008 Test Year General Rate Case above, the RCA consolidated the depreciation study update with the general rate case.  A hearing was held in June of 2010, which addressed unresolved depreciation issues between Chugach and the Attorney General, who acts as the public advocate on behalf of rate payers in RCA cases.

On September 16, 2010, the RCA issued a final order in the consolidated case (2008 Test Year General Rate Case and Revision to Current Depreciation Rates), accepting the settlements with its wholesale customers, HEA, MEA and Seward and resolving depreciation issues disputed by the Attorney General, which resulted in no change to the depreciation rates contained in the settlement agreements.

On September 28, 2010, Chugach filed revised tariffs in compliance with the settlement agreements, refund calculations, and a plan for refunding its customers the difference between the amounts paid under the interim and refundable rates and the amounts established by the settlement agreements.  As a result of the RCA accepting the settlement agreements and resolving depreciation issues, Chugach refunded its wholesale and retail customers approximately $0.7 million, including interest.

On November 1, 2010, the RCA materially accepted Chugach’s compliance filing.  Base rate changes were approved effective November 1, 2010.

Request for Participation in the Simplified Rate Filing Process

On December 15, 2009, Chugach submitted a request to the RCA for approval to implement the Simplified Rate Filing (SRF) process for the adjustment of base energy and demand rates in accordance with Alaska Statute 42.05.381(e).  Chugach requested that base rate adjustments under SRF be completed on a semi-annual basis, utilizing the twelve months ended June and December as the test periods in each year.  Chugach requested that its initial SRF be submitted on the June 2010 test year for rate adjustments, if necessary, during fourth quarter, 2010.

Under SRF, base rate increases are limited to 8 percent over a 12-month period and 20 percent over a 36-month period.  Chugach is still permitted to submit general rate case filings while participating in the SRF process.  However, during these periods, rate adjustments under SRF would temporarily cease.  Utilization of SRF will allow Chugach to more efficiently adjust base rates in response to lower sales resulting from both energy conservation and technological improvements.  Chugach is also interested in SRF as a means to expedite the rate adjustment process with the goal of timely cost recovery and lower adjudicatory costs.

On April 21, 2010, the RCA opened docket U-10-20 to consider Chugach’s request to implement the simplified rate filing process.  A technical conference was held on June 1, 2010, to discuss guidelines that Chugach should follow in future simplified rate filings.  All parties agreed to modify the deadline for a final order to July 26, 2010.

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Chugach Electric Association, Inc.

Notes to Financial Statements

December 31, 2010 and 2009

(2) Regulatory Matters (continued)

Request for Participation in the Simplified Rate Filing Process (continued)

A public hearing was held on July 19, 2010.  The parties to the docket entered into a stipulation on the outstanding issues in the case and the RCA issued a bench order at the hearing approving the stipulation.  A formal written order was issued on July 26, 2010.

On September 28, 2010, Chugach filed its initial filing under this process to decrease base rate revenue by $0.2 million, with increases of 0.2 percent to Chugach retail customers and 0.3 percent to Seward and decreases of 0.6 percent and 1.2 percent to HEA and MEA, respectively.  The RCA approved Chugach’s Simplified Rate Filing on November 4, 2010, for base rate changes effective November 15, 2010.

Natural Gas Contract Submittal

On April 2, 2010, Chugach submitted a new long-term natural gas supply contract with Marathon Alaska Production, LLC (MAP), to the RCA.  The new MAP contract will provide gas beginning April 1, 2011, terminating March 31, 2013.  MAP has two contract extension options that can be exercised during the first year of the initial contract.  MAP extended the contract to December 31, 2013, by exercising the first contract extension on January 12, 2011.  The second contract option could be exercised by December 31, 2011, and would extend the contract through December 31, 2014.  The total amount of gas under contract is estimated at 26 billion cubic feet (BCF) for the initial two year term of the contract with volumetric and delivery terms to be determined for each contract extension period that could provide up to an additional 16 BCF through December 31, 2014.  The RCA approved the gas supply contract effective May 17, 2010.

Net Metering Regulations

On June 16, 2010, regulations establishing net metering requirements for certain electric utilities became effective.  Net metering allows a customer to install and use certain types of renewable generation to offset their monthly usage and sell excess power to their serving utility at the utility’s avoided generation cost.  The net metering requirements adopted by the RCA apply to Chugach and nine other Alaska electric utilities.  The RCA’s order limits customer generation to units up to 25 kilowatts and installations must comply with approved interconnection standards.  Chugach has approved interconnection standards and non-firm buy-back rates in its tariff.  On June 17, 2010, Chugach filed with the RCA the final summary tariff necessary to implement net metering.  The RCA approved the tariff effective August 2, 2010.

Southcentral Power Project (SPP)

On June 30, 2010, Chugach filed a petition with the RCA for advance determination of decisional prudence and assurance of cost recovery for the Southcentral Power Project.  The petition requested regulatory assurance of future recovery in rates of the contract amounts Chugach has already executed.  Recovery would begin after an appropriate rate proceeding is completed such that recovery of SPP costs begin coincident with the date the SPP goes into service.  Chugach

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Chugach Electric Association, Inc.

Notes to Financial Statements

December 31, 2010 and 2009

(2) Regulatory Matters (continued)

Southcentral Power Project (SPP)(continued)

determined that substantial benefit could flow to our members if certain advance regulatory approvals were obtained to provide additional assurances to potential lenders. Public hearings were held in September of 2010.  On October 5, 2010, the RCA concluded that Chugach may include in future rates $197 million in costs attributable to three principal contracts to build the SPP when the plant becomes used and useful.  The RCA found that “it is in the public interest to provide cost recovery assurance” to Chugach regarding these costs.  Chugach’s share of the project cost is estimated to be $256 million, as budgeted.  Chugach will request approval of the additional costs associated with the project in a future general rate case that is expected to be filed in 2012.

(3) Utility Plant

Major classes of utility plant as of December 31 are as follows:

Electric plant in service:	2010		2009
Steam production plant	$	60,462,671	$	60,462,671
Hydraulic production plant		20,402,466		20,315,628
Other production plant		134,400,210		132,645,379
Transmission plant		248,084,767		247,810,006
Distribution plant		249,408,094		242,798,640
General plant		49,275,336		47,756,148
Unclassified electric plant in service1		80,498,560		71,053,056
Intangible plant		4,710,912		4,710,912
Other		6,690,723		6,915,294
Total electric plant in service		853,933,739		834,467,734
Construction work in progress 2		100,787,482		48,383,610
Total electric plant in service and construction work in progress	$	954,721,221	$	882,851,344

1Unclassified electric plant in service consists of complete unclassified general plant, generation plant, transmission plant and distribution plant.  Depreciation of unclassified electric plant in service has been included in functional plant depreciation accounts in accordance with the anticipated eventual classification of the plant investment.  Intangible plant represents Chugach's share of a Bradley Lake transmission line financed internally.  Other represents Electric Plant Held for Future Use.

2The amount associated with the construction of the SPP included in construction work in progress was $84.9 and $26.5 million at December 31, 2010 and 2009, respectively.

69

Chugach Electric Association, Inc.

Notes to Financial Statements

December 31, 2010 and 2009

(4) Investments in Associated Organizations

Investments in associated organizations include the following at December 31:

	2010		2009
National Rural Utilities Cooperative Finance Corporation	$	6,095,980	$	6,095,980
CoBank, ACB		6,003,555		6,174,680
NRUCFC capital term certificates / Other		63,562		63,276
Total Investments in Associated Organizations	$	12,163,097	$	12,333,936

The Farm Credit Administration, CoBank's federal regulators, requires minimum capital adequacy standards for all Farm Credit System institutions.  Loan agreements and financing arrangements with CoBank and NRUCFC require, as a condition of the extension of credit, that an equity ownership position be established by all borrowers.

(5) Deferred Charges and Credits

Deferred Charges

Deferred charges, or regulatory assets, net of amortization, consisted of the following at December 31:

	2010		2009
Debt issuance and reacquisition costs	$	2,851,601	$	3,439,420
Refurbishment of transmission equipment		160,495		169,754
Feasibility Studies		334,853		111,121
Beluga Gas Compression		3,053,198		3,772,461
Cooper Lake Relicensing / projects		6,052,811		6,119,493
Fuel supply negotiations		1,467,986		1,587,238
Major overhaul of steam generating unit		3,020,092		3,775,114
Other regulatory deferred charges		2,757,644		1,721,180
Environmental matters and other		1,296,275		1,341,626
Total deferred charges	$	20,994,955	$	22,037,407

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Chugach Electric Association, Inc.

Notes to Financial Statements

December 31, 2010 and 2009

(5) Deferred Charges and Credits (continued)

Deferred Charges (continued)

Deferred charges, or regulatory assets, not currently being recovered in rates charged to consumers, consisted of the following at December 31, 2010 and 2009:

	2010		2009
Fuel supply negotiations	$	203,231	$	1,444,789
Studies/Other		334,853		111,122
Cooper Lake Unit 1 Major Overhaul		1,356,489		1,053,269
Cooper Lake Relicensing		491,091		438,380
Rate case costs		0		14,315
Financing costs		350,380		0
Total deferred charges	$	2,736,044	$	3,061,875

We believe all regulatory assets not currently being recovered in rates charged to consumers are probable of recovery in the future based upon prior recovery of similar costs allowed by our regulator.  The recovery of regulatory assets is requested in SRF rate adjustments filed with the RCA on a semi-annual basis.In most cases, deferred charges are recovered over the life of the underlying asset.

Deferred Credits

Deferred credits, or regulatory liabilities, at December 31 consisted of the following:

	2010		2009
Refundable consumer advances for construction	$	447,025	$	857,322
Estimated initial installation costs for meters		89,208		120,185
Post retirement benefit obligation		824,700		593,600
Other		14,980		54,337
Total deferred credits	$	1,375,913	$	1,625,444

71

Chugach Electric Association, Inc.

Notes to Financial Statements

December 31, 2010 and 2009

(6) Patronage Capital

Chugach has a Board approved capital credit retirement policy, which is contained in Chugach’s Financial Management Plan.  This establishes, in general, a plan to return the capital credits of wholesale and retail customers based on the members’ proportionate contribution to Chugach’s assignable margins.  At December 31, 2010, Chugach had $149,543,952 of patronage capital (net of capital credits retired in 2010), which included $144,133,943 of patronage capital that had been assigned and $5,410,009 of patronage capital to be assigned to its members.  Approval of actual capital credit retirements is at the discretion of Chugach's Board of Directors.  Chugach records a liability when the retirements are approved by the Board of Directors. The Second Amended and Restated Indenture of Trust and the CoBank Amended and Restated Master Loan Agreement prohibit Chugach from making any distribution of patronage capital to Chugach’s customers if an event of default under the Second Amended and Restated Indenture of Trust or CoBank Amended and Restated Master Loan Agreement exists.  Otherwise, Chugach may make distributions to Chugach’s members in each year equal to the lesser of 5 percent of Chugach’s patronage capital or 50 percent of assignable margins for the prior fiscal year.  This restriction does not apply if, after the distribution, Chugach’s aggregate equities and margins as of the end of the immediately preceding fiscal quarter are equal to at least 30 percent of Chugach’s total liabilities and equities and margins.

Capital credits retired were $94,278, $3,442,125, and $3,115,090 for the years ended December 31, 2010, 2009, and 2008, respectively.  The outstanding liability for capital credits authorized but not paid was $388,463 and $503,237 at December 31, 2010 and 2009, respectively.

During 2008, the Board of Directors approved the deferral of capital credit retirements after 2009 due to the construction of new generation and the anticipated loss of wholesale load in 2014.

(7) Other Equities

A summary of other equities at December 31 follows:

	2010		2009
Nonoperating margins, prior to 1967	$	23,625	$	23,625
Donated capital		1,453,305		1,380,484
Unclaimed capital credit retirement1		9,346,533		9,256,213
Total other equities	$	10,823,463	$	10,660,322

1Represents unclaimed capital credits that have met all requirements of section 34.45.200 of Alaska’s unclaimed property law and has therefore reverted to Chugach.

72

Chugach Electric Association, Inc.

Notes to Financial Statements

December 31, 2010 and 2009

(8) Debt

Long-term obligations at December 31 are as follows:	2010		2009
CoBank 2, 5.50% fixed rate note matured in 2010, with interest and principal payable monthly	$	0	$	1,500,000
CoBank 3 and 4, 2.61% variable rate notes maturing in 2022, with interest payable monthly and principal due annually beginning in 2003		35,402,290		36,999,447
CoBank 5, 2.61% variable rate note maturing in 2012, with interest and principal payable monthly		1,899,528		2,920,400
2001 Series A Bond of 6.55%, maturing in 2011, with interest payable semi-annually March 15 and September 15		150,000,000		150,000,000
2002 Series A Bond of 6.20%, maturing in 2012, with interest payable semi-annually February 1 and August 1		120,000,000		120,000,000
Total long-term obligations	$	307,301,818	$	311,419,847
Less current installments		2,851,500		4,118,028
Long-term obligations, excluding current installments	$	304,450,318	$	307,301,819

Covenants

Chugach was required to comply with all covenants set forth in the Amended and Restated Indenture, dated April 1, 2001, and effective January 22, 2003.  Effective January 20, 2011, Chugach is required to comply with all covenants set forth in the Second Amended and Restated Indenture of Trust that now secures the 2011 Series A Bonds and the 2011 promissory note to CoBank, which has replaced the outstanding CoBank 3, 4 and 5 promissory notes.

Chugach was also required to comply with the Master Loan Agreement between Chugach and CoBank dated December 27, 2002, which governed the outstanding CoBank 3, 4 and 5 promissory notes. On January 19, 2011, CoBank and Chugach replaced the CoBank 3, 4 and 5 promissory notes with a promissory note that is governed by the Amended and Restated Master Loan Agreement, which is now secured by the Second Amended and Restated Indenture of Trust dated January 20, 2011.

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Chugach Electric Association, Inc.

Notes to Financial Statements

December 31, 2010 and 2009

(8) Debt (continued)

Covenants (continued)

Chugach is also required to comply with the 2010 Credit Agreement, between Chugach and NRUCFC, Bank of America, N.A., KeyBank National Association, JPMorgan Chase Bank, N.A., Bank of Montreal, CoBank, ACB, Goldman Sachs Bank USA, Bank of Taiwan, Los Angeles Branch and Chang Hwa Commercial Bank, Ltd., Los Angeles Branch dated November 17, 2010, governing loans and extensions of credit associated with Chugach’s commercial paper program, in an aggregate principal amount not exceeding $300 million at any one time outstanding.

Chugach is also required to comply with other covenants set forth in the Revolving Line of Credit Agreement with NRUCFC and the Reimbursement and Indemnity Agreement with MBIA Insurance Corporation, relating to Chugach’s outstanding 2001 Series A and 2002 Series A bonds.

Security

Under the Amended and Restated Indenture of Trust, Chugach was prohibited from creating or permitting to exist any mortgage, lien, pledge, security interest or encumbrance on Chugach’s properties and assets (other than those arising by operation of law) to secure the repayment of borrowed money or the obligation to pay the deferred purchase price of property unless Chugach equally and ratably secured the Bonds subject to the Amended and Restated Indenture, except that Chugach was permitted to incur secured indebtedness in an amount not to exceed $5 million or enter into sale and leaseback or similar agreements.

On January 20, 2011, Chugach and the indenture trustee entered into a Second Amended and Restated Indenture of Trust (the Indenture) imposing a lien on substantially all of Chugach’s assets to secure Chugach’s long-term debt obligations.  Assets that are generally not subject to the lien of the Indenture include cash (other than cash deposited with the indenture trustee); instruments and securities; patents, trademarks, licenses and other intellectual property; vehicles and other movable equipment; inventory and consumable materials and supplies; office furniture, equipment and supplies; computer equipment and software; office leases; other leasehold interests for an original term of less than five years; contracts (other than power sales agreements with members having an original term exceeding three years, certain contracts specifically identified in the indenture, and other contracts relating to the ownership, operation or maintenance of generation, transmission or distribution facilities); non-assignable permits, licenses and other contract rights; timber and minerals separated from land; electricity, gas, steam, water and other products generated, produced or purchased; other property in which a security interest cannot legally be perfected by the filing of a Uniform Commercial Code financing statement, and certain parcels of real property specifically excepted from the lien of the Indenture.  The lien of the Indenture may be subject to various permitted encumbrances that include matters existing on the date of the Indenture or the date on which property is later acquired; reservations in U.S. patents; non-delinquent or contested taxes, assessments and contractors’ liens; and various leases, rights-of-way, easements, covenants, conditions, restrictions, reservations, licenses and permits that do not materially impair Chugach’s use of the mortgaged property in the conduct of Chugach’s business.

74

Chugach Electric Association, Inc.

Notes to Financial Statements

December 31, 2010 and 2009

(8) Debt (continued)

Rates

Under the Amended and Restated Indenture of Trust, dated April 1, 2001, Chugach was required, subject to any necessary regulatory approval, to establish and collect rates reasonably expected to yield margins for interest equal to at least 1.10 times total interest expense.  If there occurred any material change in the circumstances contemplated at the time rates were most recently reviewed, the Amended and Restated Indenture required Chugach to seek appropriate adjustment to those rates so that they would generate revenues reasonably expected to yield margins for interest equal to at least 1.10 times interest charges.

The Second Amended and Restated Indenture of Trust, which became effective on January 20, 2011, also requires Chugach, subject to any necessary regulatory approval, to establish and collect rates reasonably expected to yield margins for interest equal to at least 1.10 times total interest expense.  If there occurs any material change in the circumstances contemplated at the time rates were most recently reviewed, the Second Amended and Restated Indenture of Trust requires Chugach to seek appropriate adjustment to those rates so that they would generate revenues reasonably expected to yield margins for interest equal to a least 1.10 times interest charges, provided, however, upon review of rates based on a material change in circumstances, rates are required to be revised in order to comply and there are less than six calendar months remaining in the current fiscal year, Chugach can revise its rates so as to reasonably expect to meet the covenant for the next succeeding twelve-month period after the date of any such revision.

The old CoBank Master Loan Agreement also required Chugach to establish and collect rates reasonably expected to yield margins for interest equal to at least 1.10 times interest expense.  The Amended and Restated Master Loan Agreement with CoBank, which became effective on January 19, 2011, did not change this requirement.

The NRUCFC Revolving Line of Credit Agreement requires Chugach to maintain an average Times Interest Earned Ratio (TIER) of not less than 1.10.

The 2010 Credit Agreement governing the unsecured facility providing liquidity for Chugach’s Commercial paper program requires Chugach to maintain a minimum margins for interest of at least 1.10 times interest charges for each fiscal year.  Margins for interest generally consist of Chugach’s assignable margins plus total interest expense.

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Chugach Electric Association, Inc.

Notes to Financial Statements

December 31, 2010 and 2009

(8) Debt (continued)

Distributions to Members

The Amended and Restated Indenture and the CoBank Master Loan Agreement prohibited Chugach from making any distribution of patronage capital to Chugach’s customers if an event of default under the Amended and Restated Indenture or CoBank Master Loan Agreement exists.  Otherwise, Chugach could make distributions to Chugach’s members in each year equal to the lesser of 5 percent of Chugach’s patronage capital or 50 percent of assignable margins for the prior fiscal year.  This restriction did not apply if, after the distribution, Chugach’s aggregate equities and margins as of the end of the immediately preceding fiscal quarter were equal to at least 30 percent of Chugach’s total liabilities and equities and margins.

The Second Amended and Restated Indenture of Trust, which became effective on January 20, 2011, and the CoBank Amended and Restated Master Loan Agreement, which became effective on January 19, 2011, prohibits Chugach from making any distribution of patronage capital to Chugach’s customers if an event of default under the Second Amended and Restated Indenture of Trust or CoBank Amended and Restated Master Loan Agreement exists.  Otherwise, Chugach may make distributions to Chugach’s members in each year equal to the lesser of 5 percent of Chugach’s patronage capital or 50 percent of assignable margins for the prior fiscal year.  This restriction does not apply if, after the distribution, Chugach’s aggregate equities and margins as of the end of the immediately preceding fiscal quarter are equal to at least 30 percent of Chugach’s total liabilities and equities and margins.

Maturities of Long-term Obligations

Long-term obligations at December 31, 2010, mature as follows:

Year ending December 31	Principal Maturities 2001 Series A Bonds		Principal Maturities 2002 Series A Bonds		Principal Maturities CoBank Note		Total
2011		150,000,000		0		2,851,500		152,851,500
2012		0		120,000,000		2,693,543		122,693,543
2013		0		0		2,076,355		2,076,355
2014		0		0		2,266,145		2,266,145
2015		0		0		2,473,110		2,473,110
Thereafter		0		0		24,941,165		24,941,165
	$	150,000,000	$	120,000,000	$	37,301,818	$	307,301,818

76

Chugach Electric Association, Inc.

Notes to Financial Statements

December 31, 2010 and 2009

(8) Debt (continued)

Lines of credit

Chugach maintained a $7.5 million line of credit with CoBank, ACB (CoBank).  The line of credit expired on October 31, 2009.  Chugach did not renew this line of credit upon its expiration date due to unused carrying costs, its lack of use and the existence of the NRUCFC line of credit and commercial paper borrowing capacity.  The borrowing rate is calculated using the CoBank Base Rate on the first business day of the week plus 3 percent.  The borrowing rate at December 31, 2010 and 2009 was 2.61 percent and 2.24 percent, respectively.

In addition, Chugach had an annual line of credit of $50 million available with NRUCFC until October 9, 2008, when Chugach reduced this line of credit to $45 million.  The reduction to the borrowing limit was temporary in order that a full $300 million commitment on an unsecured credit agreement backstopping Chugach’s Commercial Paper program, could be met.  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 was reduced to $50 million on January 30, 2009.

Chugach did not utilize this line of credit in 2010 and therefore, had no balance at December 31, 2010.  Chugach utilized this line of credit in the first quarter of 2009 and had a balance of $38 million on January 30, 2009, when we repaid $30.0 million by issuing commercial paper under our Commercial Paper program.  In February of 2009, Chugach repaid the balance on this line of credit by issuing additional commercial paper.

The borrowing rate at December 31, 2010 and 2009 was 5.25 percent and 4.95 percent, respectively and 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.  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 NRUCFC line of credit was immediately available for unconditional borrowing.

Commercial Paper

Over the next two years, Chugach anticipates financing increased capital expenditures due to the construction of a natural gas fired generation plant and on-going capital needs and plans to refinance $150 million of 2001 Series A Bonds due March 15, 2011, and $120 million of 2002 Series A Bonds due February 1, 2012.

77

Chugach Electric Association, Inc.

Notes to Financial Statements

December 31, 2010 and 2009

(8) Debt (continued)

Commercial Paper (continued)

On November 17, 2010, Chugach replaced the $300 million unsecured Credit Agreement executed on October 10, 2008, which was due to expire on October 10, 2011.  The 2010 Credit Agreement with National Rural Utilities Cooperative Finance Corporation (NRUCFC), Bank of America, N.A., KeyBank National Association, JPMorgan Chase Bank, N.A., Bank of Montreal, CoBank, ACB, Goldman Sachs Bank USA, Bank of Taiwan, Los Angeles Branch and Chang Hwa Commercial Bank, Ltd., Los Angeles Branch, will expire on November 17, 2013.  The Credit Agreement is used to back Chugach’s Commercial Paper program, which will act as a bridge until Chugach converts commercial paper balances to long-term debt.The 2010 Credit Agreement was priced with an all-in drawn spread of one month LIBOR plus 150 basis points, along with a 25 basis points facility fee (based on an A-/A3 unsecured debt rating).  Chugach had $98.5 and $51.5 million of commercial paper outstanding at December 31, 2010 and 2009, respectively.  Our commercial paper can be repriced between one day and two hundred and seventy days.

The following table provides information regarding monthly average commercial paper balances outstanding (dollars in millions), as well as corresponding weighted average interest rates:

Month	Average Balance	Weighted Average Interest Rate
January 2010	54.2	0.26
February 2010	57.1	0.26
March 2010	60.2	0.27
April 2010	59.8	0.28
May 2010	59.0	0.32
June 2010	58.7	0.37
July 2010	58.6	0.33
August 2010	60.8	0.33
September 2010	67.6	0.31
October 2010	71.4	0.31
November 2010	77.4	0.30
December 2010	87.5	0.31

78

Chugach Electric Association, Inc.

Notes to Financial Statements

December 31, 2010 and 2009

(8) Debt (continued)

Financing

On January 21, 2011, Chugach issued $90,000,000 of First Mortgage Bonds, 2011 Series A, due March 15, 2031 and $185,000,000 of First Mortgage Bonds, 2011 Series A, due March 15, 2041 for the purpose of refinancing the 2001 and 2002 Series A Bonds due March 15, 2011, and February 1, 2012, respectively, and for general corporate purposes.  The 2011 Series A Bonds due March 15, 2031, will bear interest at 4.20% per annum, payable semi-annually on March 15 and September 15 of each year commencing on September 15, 2011.  Principal on the 2011 Series A Bonds due March 15, 2031 will be paid in equal annual installments beginning March 15, 2012, resulting in an average life of approximately 10 years.  The 2011 Series A Bonds due March 15, 2041, will bear interest at 4.75% per annum, payable semi-annually on March 15 and September 15 of each year commencing on September 15, 2011.  Principal on the 2011 Series A Bonds due March 15, 2041 will be paid in equal annual installments beginning March 15, 2012, resulting in an average life of approximately 15.5 years.  The bonds and all other long-term debt obligations are secured by a lien on substantially all of Chugach’s assets.

Chugach had a term loan facility with CoBank.  Loans made under that facility were evidenced by promissory notes governed by the Master Loan Agreement, which was effective January 22, 2003.  On January 19, 2011, Chugach and CoBank amended and restated the existing Master Loan Agreement.  The existing obligations under the existing loan are evidenced by the 2011 CoBank Note, which is governed by the Amended and Restated Master Loan Agreement dated January 19, 2011 and secured by the Second Amended and Restated Indenture.

Fair Value of Debt Instruments

The estimated fair values (in thousands) of the long-term obligations included in the financial statements at December 31 are as follows:

	2010				2009
	Carrying Value		Fair Value		Carrying Value		Fair Value
Long-term obligations (including current installments)	$	307,302	$	315,401	$	311,420	$	330,358

79

Chugach Electric Association, Inc.

Notes to Financial Statements

December 31, 2010 and 2009

(9) Employee Benefit Plans

Pension Plans

Pension benefits for substantially all union employees are provided through the Alaska Electrical Pension Trust Fund and the Alaska Hotel, Restaurant and Camp Employees Health and Welfare and Pension Trust Fund, multi-employer plans.  Chugach pays an hourly amount per eligible union employee pursuant to the collective bargaining unit agreements.  In these master, multi-employer plans, the accumulated benefits and plan assets are not determined or allocated separately to the individual employer.

The costs for the union plans were approximately $3.0 million, $3.0 million, and $2.9 million in 2010, 2009, and 2008, respectively.  Chugach has no responsibility for any unfunded benefit obligation of the Plan at this time.

Pension benefits for non-union employees are provided by the National Rural Electric Cooperative Association (NRECA) Retirement and Security Program, a multi-employer plan.  Chugach makes annual contributions to the pension plan equal to the amounts accrued for pension expense.  Chugach contributed $3.1 million, $2.1 million, and $1.8 million in 2010, 2009, and 2008, respectively, to the NRECA plan.  Chugach has no responsibility for any unfunded benefit obligation of the Plan at this time.

Health and Welfare Plans

Health and welfare benefits for union employees are provided through the Alaska Electrical Health and Welfare Trust and the Alaska Hotel, Restaurant and Camp Employees Health and Welfare and Pension Trust Fund.  Chugach participates in multi-employer plans that provide substantially all union workers with health care and other welfare benefits during their employment with Chugach.  Chugach pays a defined amount per union employee pursuant to collective bargaining unit agreements.  Amounts charged to benefit costs and contributed to the health and welfare plans for these benefits for the years ending December 31, 2010, 2009, and 2008 were $3.7 million, $3.4 million, and $3.5 million respectively.

Chugach participates in a multi-employer plan through the Group Benefits Program of NRECA for non-union employees.  Amounts charged to benefit cost and contributed to this Plan for those benefits for the years ended December 31, 2010, 2009, and 2008 totaled $2.2 million, $2.1 million, and $1.9 million respectively.

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Chugach Electric Association, Inc.

Notes to Financial Statements

December 31, 2010 and 2009

(9) Employee Benefit Plans (continued)

Money Purchase Pension Plan

Chugach participates in a multi-employer defined contribution money purchase pension plan covering some employees who are covered by a collective bargaining agreement.  Contributions to the Plan are made based on a percentage of each employee’s compensation.  Contributions to the money purchase pension plan for the years ending December 31, 2010, 2009, and 2008 were $124.1 thousand, $99.7 thousand, and $91.8 thousand, respectively.

401(k) Plan

Chugach has a defined contribution 401(k) retirement plan which covers substantially all employees who, effective January 1, 2008, can participate immediately.

Employees who elect to participate may contribute up to the Internal Revenue Service’s maximum of $16,500, $16,500, and $15,500 in 2010, 2009, and 2008 respectively, and allowed catch-up contributions for those over 50 years of age of $5,500, $5,500, and $5,000 in 2010, 2009, and 2008 respectively.  Chugach does not make contributions to the plan.

Deferred Compensation

Chugach adopted NRECA’s unfunded Deferred Compensation Program (the Program) to allow highly compensated employees who elect to participate in the Program to defer a portion of their current compensation and avoid paying tax on the deferrals until received.  The program is a non-qualified plan under Internal Revenue Code 457(b).

Deferred compensation accounts are established for the individual employees, however, they are considered to be owned by Chugach until a distribution is made.  The amounts credited to the deferred compensation account, including gains or losses, are retained by Chugach until the entire amount credited to the account has been distributed to the participant or to the participant’s beneficiary.  The balance of the Program for the years ending December 31, 2010, 2009 and 2008 was $395,833, $345,792 and $264,427, respectively.

Potential Termination Payments

Pursuant to a Chugach Operating Policy, non-represented employees, including the executive officers except the Chief Executive Officer, who are terminated by Chugach for reasons unrelated to employee performance are entitled to severance pay for each year or partial year of service as follows:  two weeks for each year of service to a maximum of twenty-six (26) weeks for thirteen (13) years or more of service.

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Chugach Electric Association, Inc.

Notes to Financial Statements

December 31, 2010 and 2009

(10) 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 $166,000,000 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 percent share, or 27.4 megawatts as currently operated, of the project’s capacity.  The share of Bradley Lake indebtedness for which we are responsible is approximately $33 million.  Upon the default of a Bradley Lake participant, and subject to certain other conditions, AEA, through Alaska Industrial Development and Export Authority, 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 percent.  Upon default, Chugach could be faced with annual expenditures of approximately $5.3 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 surcharge ratemaking process.

On July 1, 2010, AEA issued $28,800,000 of Power Revenue Refunding Bonds, Sixth Series, for purposes of refunding $30,640,000 of the Fifth Series Bonds.  The refunded Fifth Series Bonds were called on August 2, 2010.  The refunding resulted in aggregate debt service payments over the next eleven years in a total amount approximately $3.3 million less than the debt service payments which would have been due on the refunded bonds.  Refunding the Fifth Series Bonds resulted in an economic gain of approximately $2.4 million.  Chugach’s share of these savings will be approximately $714,300, which represents the reduction in debt-service costs recorded as purchased power expense.

The following represents information with respect to Bradley Lake at June 30, 2010 (the most recent date for which information is available).  Chugach's share of expenses was $5,120,958 in 2010, $5,152,716 in 2009, and $4,746,965 in 2008 and is included in purchased power in the accompanying financial statements.

(In thousands)	Total		Proportionate Share
Plant in service	$	191,550	$	58,231
Long-term debt		101,424		30,833
Interest expense		6,393		1,943

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

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Chugach Electric Association, Inc.

Notes to Financial Statements

December 31, 2010 and 2009

(11) Eklutna Hydroelectric Project

During October 1997, the ownership of the Eklutna Hydroelectric Project formally transferred from the Alaska Power Administration to the participating utilities.  This group, including their corresponding interest in the project, consists of Chugach (30 percent), MEA (16.7 percent) and Anchorage Municipal Light & Power (AML&P) (53.3 percent).

Plant in service in 2010 includes $2,386,571, net of accumulated depreciation of $996,593, which represents Chugach’s share of the Eklutna Hydroelectric Plant.  In 2009 plant in service included $2,397,677, net of accumulated depreciation of $898,649.  Chugach and AML&P jointly operate the facility.  Each participant contributes their proportionate share for operation, maintenance and capital improvement costs to the plant, as well as to the transmission line between Anchorage and the plant.  Under net billing arrangements, Chugach then reimburses MEA for their share of the costs.  Chugach’s share of expenses was $664,747, $615,060, and $886,261 in 2010, 2009, and 2008, respectively and is included in power production and depreciation expense in the accompanying financial statements.  AML&P performs major maintenance at the plant.  Chugach provides personnel for the daily operation and maintenance of the power plant, who perform daily plant inspections, meter reading, monthly report preparation, and other activities as required.

(12) Commitments, Contingencies and Concentrations

Contingencies

Chugach is a participant in various legal actions, rate disputes, personnel matters and claims both for and against Chugach’s interests.  Management believes the outcome of any such matters will not materially impact Chugach’s financial condition, results of operations or liquidity.

Fuel Supply Contracts

Chugach has long-term fuel supply contracts from various producers at market terms.  These contracts will expire at the end of the currently committed volumes or the contract expiration dates of 2015 and 2025.  The committed 215 billion cubic feet (BCF) for the 2015 contract expired in 2010.  The 180 BCF commitment for the 2025 contracts is expected to run out in early 2011. The RCA approved a gas supply contract between Chugach and ConocoPhillips Alaska, Inc. and ConocoPhillips, Inc. (collectively “COP”), effective August 21, 2009.  The new contract provides gas beginning in 2010 and will terminate December 31, 2016.  The total amount of gas under the contract is now estimated to be 62 BCF.  The RCA approved a new long-term natural gas supply contract with MAP effective May 17, 2010.  The new MAP contract will provide gas beginning April 1, 2011, terminating March 31, 2013.  MAP has two contract extension options that can be exercised during the first year of the initial contract.  MAP extended the contract to December 31, 2013, by exercising the first contract extension on January 12, 2011.  The second contract option could be exercised by December 31, 2011, and would extend the contract through December 31, 2014.  The total amount of gas under contract is estimated at 26 billion cubic feet (BCF) for the initial two year term of the contract with volumetric and delivery terms to be determined for each contract extension period that could provide up to an additional 16 BCF through December 31, 2014. These contracts fill 100 percent of Chugach’s unmet needs through December 2013, approximately 50 percent of Chugach’s unmet needs through December 2014, approximately 60 percent in 2015 and approximately 29 percent in 2016.  In 2010, 89 percent of our power was generated from gas, compared to 90 percent and 91 percent in 2009 and 2008 respectively.  Of that gas-fired power, 78 percent was generated at Chugach’s Beluga Power Plant in 2010 compared with 83 percent in 2009 and 76 percent in 2008.

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Chugach Electric Association, Inc.

Notes to Financial Statements

December 31, 2010 and 2009

(12) Commitments, Contingencies and Concentrations (continued)

Fuel Supply Contracts (continued)

In 2010, fuel was purchased directly primarily from Marathon Oil Company, Chevron/UNOCAL, AML&P and COP.  The following represents the cost of fuel purchased from these vendors as a percentage of total fuel costs for the years ended December 31:

	2010			2009			2008
Marathon Oil Company		24.1	%		44.6	%		49.7	%
Chevron/UNOCAL		26.4	%		20.9	%		19.1	%
AML&P		14.2	%		16.7	%		15.4	%
ConocoPhillips (COP)		35.1	%		17.8	%		15.8	%

Concentrations

Approximately 70 percent of Chugach’s employees are represented by the International Brotherhood of Electrical Workers (IBEW).  Chugach has three Collective Bargaining Unit Agreements (CBA) with the IBEW.  We also have an agreement with the Hotel Employees and Restaurant Employees (HERE).  All agreements were due to expire on June 30, 2010.  On February 24, 2010, the Board of Directors approved three year extensions of all three IBEW CBA’s.  The three extensions provide no wage increase in the first year and wage increases tied to changes in the Consumer Price Index (CPI) in the second and third years, with a floor on the minimum increase and a cap on the maximum increase.  The wage increases also have an indirect connection to Chugach’s financial performance.  The contract extensions expire on June 30, 2013.  On April 28, 2010, the Board of Directors approved a three year extension of the HERE agreement.  The extension contains an increase in the employer health and welfare contribution in each year of the extension but does not provide for a wage or pension increase.  The contract extension expires on June 30, 2013.

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Chugach Electric Association, Inc.

Notes to Financial Statements

December 31, 2010 and 2009

(12)  Commitments, Contingencies and Concentrations (continued)

Concentrations (continued)

Chugach is the principal supplier of power under long-term wholesale power contracts with MEA and HEA.  These contracts represented $89.1 million or 35 percent of sales revenue in 2010, $112.6 million or 39 percent in 2009, and $104.6 million or 37 percent in 2008.  The HEA contract expires January 1, 2014, and the MEA contract expires December 31, 2014.  Non-renewal of these contracts could have a negative impact on the rates charged to other Chugach customers.  Notification was made by MEA and HEA that neither organization intends to renew these contracts, however, MEA has recently advised Chugach that it desires to open discussions regarding power sales possibilities beyond 2014.  All rates are established by the RCA.

Regulatory Cost Charge

In 1992, the State of Alaska Legislature passed legislation authorizing the Department of Revenue to collect a Regulatory Cost Charge from utilities to fund the governing regulatory commission, which is currently the RCA.  The tax is assessed on all retail consumers and is based on kilowatt-hour (kWh) consumption.  The tax is collected monthly and remitted to the State of Alaska quarterly.  The Regulatory Cost Charge has changed since its inception (November 1992) from an initial rate of $0.000626 per kWh to the current rate of $0.000552, effective July 1, 2010. The tax is reported on a net basis and the tax is not included in revenue or expense.

Sales Tax

Chugach collects sales tax on retail electricity sold to Kenai and Whittier consumers.  The tax is collected monthly and remitted to the Kenai Peninsula Borough quarterly.  Sales tax is reported on a net basis and the tax is not included in revenue or expense.

Gross Receipts Tax

Chugach pays to the State of Alaska a gross receipts tax in lieu of state and local ad valorem, income and excise taxes on electricity sold in the retail market.  The tax is accrued monthly and remitted annually.  The tax is reported on a net basis and the tax is not included in revenue.

Excise taxes

Excise taxes on Chugach fuel purchases are paid directly to our gas producers and are recorded under “Fuel” in Chugach’s financial statements.

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Chugach Electric Association, Inc.

Notes to Financial Statements

December 31, 2010 and 2009

(12) Commitments, Contingencies and Concentrations (continued)

Underground Compliance Charge

In 2005 the Anchorage Municipal Assembly adopted an ordinance to require utilities to convert overhead distribution lines to underground.  To comply with the ordinance, Chugach must invest two percent of gross retail revenue in the Municipality of Anchorage annually in moving existing distribution overhead lines underground.  Consistent with State of Alaska undergrounding requirement, Chugach is permitted to amend its rates by adding a 2 percent surcharge to its retail members’ bills to recover the actual costs of the program.  The rate amendments are not subject to RCA review or approval.  Chugach implemented the surcharge in June 2005.  Chugach’s liability was $726,209 and $0 for this surcharge at December 31, 2010 and December 31, 2009, respectively and will use the funds to offset the costs of the projects.

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.

New Clean Air Act regulations impacting electric utilities may result from future events or may result from new regulatory programs.  On October 30, 2009, the EPA published new federal regulations requiring the mandatory reporting of greenhouse gases from all sectors of the economy. Chugach is subject to this new regulation, which is not expected to have a material effect on our results of operations, financial position, and cash flows.  While we cannot predict whether any additional 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 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.

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Chugach Electric Association, Inc.

Notes to Financial Statements

December 31, 2010 and 2009

(12) Commitments, Contingencies and Concentrations (continued)

Generation Commitments

Chugach is in the process of developing a natural gas-fired generation plant on land owned by Chugach near its Anchorage headquarters.  SPP will be developed and owned by Chugach and AML&P as tenants in common.  Chugach will own and take approximately 70 percent of the new plant’s output and AML&P will own and take the remaining output.  Chugach will proportionately account for its ownership in the SPP.  On November 17, 2008, Chugach executed a gas turbine purchase agreement for the purchase of three gas turbines with General Electric Packaged Power (GEPP).  During 2009 Chugach executed several amendments associated with its purchase agreement with GEPP, which included the purchase of a spare engine for maintenance purposes.  Chugach executed an Owner’s Engineer Services Contract on May 12, 2009.  On January 5, 2010, Chugach executed a Services Contract for the shipment of the combustion turbine generators and related accessories.  On February 25, 2010, Chugach purchased land adjacent to its Anchorage headquarters for the laydown of equipment displaced by the new power plant.  On April 13, 2010, Chugach executed a steam turbine generator (STG) purchase agreement.  On June 18, 2010, Chugach executed an Engineering, Procurement, and Construction (EPC) contract with SNC-Lavalin Constructors, Inc. (SLCI).  On August 27, 2010, Chugach executed a Once Through Steam Generator (OTSG) equipment contract with Innovative Steam Technologies (IST).  Chugach amended the contract for transportation of combustion turbine generators on September 28, 2010, to include transportation of the steam turbine generator.  On December 20, 2010, Chugach received a construction permit from the Alaska Department of Environmental Conservation allowing the project to begin construction in spring of 2011 as planned.  On March 15, 2011, Chugach received its initial building permit from the Municipality of Anchorage.  Chugach made payments of $74.3 in 2010 and $25.0 million in 2009, with additional payments of $153.7 million expected in 2011, pursuant to all these contracts.

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Chugach Electric Association, Inc.

Notes to Financial Statements

December 31, 2010 and 2009

(13) Quarterly Results of Operations (unaudited)

2010 Quarter Ended

	Dec. 31		Sept. 30			June 30			March 31
Operating Revenue	$	73,895,221	$	58,274,912		$	59,444,167		$	66,711,045
Operating Expense		65,584,673		55,445,222			55,716,842			57,220,464
Net Interest		5,015,213		4,949,813			5,023,767			5,016,905
Net Operating Margins		3,295,335		(2,120,123	)		(1,296,442	)		4,473,676
Nonoperating Margins		753,600		110,850			98,250			94,863
Assignable Margins	$	4,048,935	$	(2,009,273	)	$	(1,198,192	)	$	4,568,539

2009 Quarter Ended

	Dec. 31		Sept. 30			June 30			March 31
Operating Revenue	$	74,025,693	$	63,565,392		$	69,239,153		$	83,417,070
Operating Expense		64,737,009		60,092,648			65,798,407			74,244,513
Net Interest		5,013,421		5,122,410			5,164,488			5,306,030
Net Operating Margins		4,275,263		(1,649,666	)		(1,723,742	)		3,866,527
Nonoperating Margins		577,889		140,868			61,508			111,701
Assignable Margins	$	4,853,152	$	(1,508,798	)	$	(1,662,234	)	$	3,978,228

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Item 9 - Changes in and Disagreements with

Accountants on Accounting and Financial Disclosure

None

Item 9A – Controls and Procedures

Evaluation of Controls and Procedures

As of the end of the period covered by this Annual Report on Form 10-K, we carried out an evaluation of the effectiveness of the design and operation of our “disclosure controls and procedures” (as defined in the Securities Exchange Act of 1934 (“Exchange Act”) Rule 13a-15(e)) under the supervision and with the participation of our management, including our Chief Executive Officer (CEO) and our Chief Financial Officer (CFO).  Based on this evaluation, our CEO and CFO concluded that our disclosure controls and procedures are effective in timely alerting them to material information required to be disclosed in our periodic reports to the SEC, ensures that such information is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and such information is accumulated and communicated to our management, including our CEO and CFO, to allow timely decisions regarding required disclosure.  The design of any system of controls is based in part upon various assumptions about the likelihood of future events, and there can be no assurance that any of our plans, products, services or procedures will succeed in achieving their intended goals under future conditions.  In addition, there were no changes in Chugach’s internal controls over financial reporting identified in connection with the evaluation that occurred during the fourth quarter that has materially affected, or is reasonably likely to materially affect, Chugach’s internal controls over financial reporting.

           Management’s Annual Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal controls over financial reporting as defined in Rule 13a-15(f) under the Exchange Act.  Our internal controls over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles.  Because of its inherent limitations, internal controls over financial reporting may not prevent or detect misstatements.  Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.  Under the supervision and with the participation of our management, including our CEO and CFO, we assessed the effectiveness of our internal controls over financial reporting as of December 31, 2010, using the criteria set forth in “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).  Based on this assessment, management believes that, as of December 31, 2010, Chugach maintained effective internal controls over financial reporting.  In addition, there were no changes in Chugach’s internal controls over financial reporting (as defined in Rules 13a-15(f) or 15d-15(f) of the Exchange Act) identified in connection with the evaluation that occurred during the fourth quarter that has materially affected, or is reasonably like to materially affect, Chugach’s internal controls over financial reporting.

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Item 9B – Other Information

None

PART III

Item 10 – Directors, Executive Officers and Corporate Governance

Chugach operates under the direction of a Board of Directors that is elected at large by our membership.  Day-to-day business and affairs are administered by the CEO. Our seven-member Board sets policy and provides direction to the CEO.  Each statutory officer must be a member of the Board, but these officers do not participate in the day-to-day management of Chugach.  No member of the Board is an employee of the company nor does any member of the Board have a material relationship with the company.  Therefore, the Chugach Board has determined that all members are independent.  Our Board of Directors oversees Chugach’s risk management, satisfying itself that our risk management practices are consistent with our corporate strategy.

Identification of Directors

The following is a summary of experience and qualifications, if identified by the Nominating Committee, of the current members of Chugach’s Board of Directors.

James Nordlund, 58, Chairman, is currently the director of rural development for the U.S. Department of Agriculture (USDA).  He is also a self-employed homebuilder and general contractor with Nordlund Carpentry, LLC.  He was elected to the board in 2006 and re-elected in 2009.  Nordlund is a former legislator and state Director of Public Assistance.  He currently serves on the board’s Audit, Finance and Operations committees.  He is an NRECA Credentialed Cooperative Director.  His term expires in May of 2012.

Janet Reiser, 55, Vice Chairman, is an engineer and Managing Partner of Salus Management Services and managing member of Jet Enviro De-Icing, LLC.  She was elected to the board in 2008.  She serves as chair of the board’s Operations Committee, serves as a representative to the ARCTEC Board of Directors and is board liaison to the Renewable Energy Committee and the SPP.  She is an NRECA Credentialed Cooperative Director and has earned her Board Leadership Certificate.  Her term expires in May of 2011.  Janet Reiser was nominated by petition.

Susan Reeves, 62, Treasurer, is the managing member of Reeves Amodio LLC, where she practices law.  She has been active on Alaska non-profit boards and commissions for many years.  She was elected to the board in 2010.  She serves as chair of the board’s Finance Committee and is a member of the board’s Audit Committee.  Her term expires in May of 2013.  Susan Reeves’ qualifications to serve on the board include her professional leadership, human resources, non-profit corporate governance and public affairs experience and her civic and community involvement.

P.J. Hill, 66, Secretary, is a retired professor from the School of Business and Public Policy at the University of Alaska Anchorage.  He is also an economic consultant and a commercial fisherman.  He was elected to the board in 2007 and re-elected in 2010.  He chairs the board’s Audit Committee and serves on the Finance Committee.  He is an NRECA Credentialed Cooperative Director.  His term expires in May of 2013.  P.J. Hill’s qualifications to serve on the board include his professional leadership, financial and corporate governance and public affairs experience and his civic and community involvement.

90

Rebecca Logan, 47, Director, is the General Manager for the Alaska Support Industry Alliance.  She was appointed to fill a board vacancy in 2007 and elected to the board in 2008.  She has previously served as Chairman of the Board and currently serves as a representative to the ARCTEC Board of Directors.  She is a board member of the Alaska Power Association and serves on Chugach’s audit and operations committee.  Her term expires in May of 2011.

Elizabeth Vazquez, 59, Director, is a supervising Hearing Examiner (Administrative Law Judge) with the State of Alaska, Department of Health and Social Services and has a Master’s of Business Administration.  She was elected to the board in 2005 and re-elected in 2008.  She serves on the board’s Operations and Finance committees and is board liaison to the Bylaws Committee.  She is an NRECA Credentialed Cooperative Director and has earned her Board Leadership Certificate.  Her term expires in May of 2011.

Doug Robbins, 54, Director, is a retired petroleum geologist and manager with 26 years experience at Marathon Oil Company.  He served as geologic manager and reserves reporting coordinator for Marathon’s Alaska Business Unit in 1993-94 and 2000-02, respectively.  Robbins holds a master’s degree in geology and is currently a volunteer with the Alaska Volcano Observatory.  Robbins was appointed by the board to fill a board vacancy on December 16, 2010.  He serves on the board’s Finance, Audit and Operations committees.  His term expires in May of 2011.  Doug Robbins’ qualifications to serve on the board, as determined by the Board of Directors, include his professional leadership and operational, industry and public company experience.

Identification of Executive Officers

Bradley W. Evans, 56, was appointed Chief Executive Officer on July 1, 2008.  Prior to that appointment, Mr. Evans had served as Interim CEO since December 5, 2007.  Prior to that appointment, he had served as Sr. Vice President, Power Supply since March 20, 2006, General Manager, G&T Division since January 31, 2005, Sr. Vice President, Energy Supply since June 5, 2002 and Director, Energy Supply since February 26, 2001.  Prior to his current Chugach employment, Mr. Evans served as Manager, System Dispatch for Golden Valley Electric Association.

Michael R. Cunningham, 61, was appointed Chief Financial Officer on June 5, 2002.  Upon the retirement of the Sr. Vice President, Administration in January of 2011, Mr. Cunningham assumed the responsibilities of the administration department.  Prior to the CFO appointment he served as Controller since 1986.  Prior to that, he was Budget Analyst and Manager of Accounting since beginning his Chugach employment in 1982.  Prior to his Chugach employment, Mr. Cunningham spent 15 years in various capacities with Pacific Northwest Bell Telephone Company.

91

Edward M. Jenkin, 50, was appointed Vice President, Power Delivery on August 22, 2008.  Prior to that appointment he had served as Acting Sr. Vice President, Power Delivery since January 14, 2008.  Mr. Jenkin has over 20 years utility experience in engineering, system operations, and planning.  He is a Registered Engineer in the State of Alaska.  Mr. Jenkin was promoted from the position of the Director, Engineering Services Division that he held since July of 2004.  Prior to that Mr. Jenkin served as System Operations Supervisor beginning in February of 2000 and was the Senior Planning Engineer starting August of 1995.  Mr. Jenkin began his utility career as an Engineering Technician for Matanuska Electric Association in April of 1982.

Paul R. Risse, 56, was appointed Sr. Vice President, Power Supply on October 27, 2008.  Prior to that appointment, Mr. Risse had served as Acting Sr. Vice President, Power Supply since December 6, 2007.  Prior to that appointment, Mr. Risse had served as Director of Generation Technical Services since March 27, 2006; Manager, Plant Technical Services since January 1, 2003; Project Manager since August 15, 2000; Project Engineer since April 5, 2000; and Manager Substation Operations since January 25, 1995.  Prior to his current Chugach employment, Mr. Risse served in various Transmission and Generation positions at Southern California Edison.

David R. Smith, 64, retired from Chugach Electric Association, Inc. on January 14, 2011, after more than 16 years of service.  Mr. Smith was appointed Sr. Vice President, Administration on October 1, 2008.  Prior to that appointment, Mr. Smith had served as Acting Sr. Vice President, Administration since December 6, 2007.  Mr. Smith was promoted from the position of Director, Information Services that he held since September 2001.  Prior to that he had served as the Manager of Applications and Programming beginning in 1996.  Mr. Smith began his utility career as a Project Manager in 1980, consulting with several utilities.

Lee D. Thibert, 55, was appointed Sr. Vice President, Strategic Planning and Corporate Affairs on June 11, 2008.  Prior to that appointment he had served as Sr. Vice President, Power Delivery from March 20, 2006 to February 1, 2008.  Prior to that appointment he had served as General Manager, Distribution Division since January 31, 2005.  Prior to that appointment he had served as Sr. Vice President, Power Delivery since June 3, 2002.  Prior to that, he served as Executive Manager, Transmission & Distribution Network Services since June 1, 1997.  Prior to that, he was Executive Manager, Operating Divisions from June of 1994. Before moving up to the Executive Manager position, he served as Director of Operations from May 1987.

Tyler E. Andrews, 45, was appointed Vice President, Human Resources on March 17, 2008.  Mr. Andrews has over 15 years of experience in Human Resources and Labor Relations.  Since June of 2008, Mr. Andrews has also served as an appointed board member of the State of Alaska’s labor relations agency.  Prior to his employment with Chugach, Mr. Andrews served as the Sr. Manager of Labor Relations for Alaska Communications Systems.  Prior to that, he served 10 years with the State of Alaska in a wide range of Human Resources and Labor Relations functions including Human Resources Manager and Chief Spokesperson on numerous collective bargaining teams.  Mr. Andrews holds a bachelor’s degree in economics from the University of North Carolina Chapel Hill.

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Code of Ethics

Chugach finalized a code of ethics that applies to its principal executive officer, principal financial officer, principal accounting officer and any person performing similar functions on June 16, 2004.  In February of 2009, Chugach contracted with an outside firm to provide a financial reporting hotline to support the code of ethics.  It is also posted on Chugach’s website at www.chugachelectric.com.

Nominating Committee

Chugach has not made any material changes to the procedures by which our membership may recommend nominees to our Board of Directors.

The Board appoints a nominating committee each year.  The committee consists of members selected from different sections of the service area of Chugach.  No member of the Board may serve on such committee.  The committee reviews the qualifications of the Board candidates and nominates candidates for election at the annual meeting.  The committee considers diversity, skills, and such other factors as it deems appropriate given the current needs of the Board and Chugach.  Any fifty or more members, acting together, may make other nominations by petition.

Five of our current board members were nominated by the Nominating Committee based on a combination of his or her background, experience and answers to questions concerning Chugach’s goals and challenges.  One board member was nominated by petition and one was appointed by the board to fill a board vacancy.

Audit Committee Financial Expert

Chugach is a cooperative and each Board member must be a member of the cooperative.  The Board relies on the advice of all members of the Finance and Audit Committees, therefore the Board has not formally designated an Audit Committee financial expert.

Identification of the Audit Committee

Chugach Board Policy No. 127, “Audit Committee Charter,” defines the Audit Committee as follows:

The Audit Committee shall be comprised of three or more directors as determined by the Board.  Unless otherwise determined by the Board, the members of the Board Finance Committee shall be the members of the Audit Committee.  Committee members may enhance their familiarity with finance and accounting by participating in educational programs conducted by the Association or an outside consultant or other programs.  The Committee may also retain the services of a qualified accounting professional with auditing expertise to assist it in the performance of its responsibilities.

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The Board Chairman shall appoint the Audit Committee chairperson, with the consent of the Board, who need not be the Board Treasurer.  The Audit Committee shall elect from its members a vice chairman, and appoint a recording secretary as needed. Members of the 2011 Audit Committee include Chair P.J. Hill and Directors James Nordlund, Susan Reeves, Rebecca Logan and Doug Robbins.

The disclosure required by Sec.240.10A-3(d) regarding exemption from the listing standards for the audit committees is not applicable to the Chugach Audit Committee.

Item 11 - Executive Compensation

Compensation Discussion and Analysis

In 1986, the NRECA developed the COMPensate wage and salary plan to provide its members with a systematic and standardized method to evaluate jobs in their specific cooperative, grade them, compare wages and salaries with those in similar electric utility systems and in the external marketplace and then create and apply statistically determined, equitable pay scales.  In 1988, the Chugach Board approved implementation of NRECA’s COMPensate wage and salary plan for non-bargaining unit employees with the objective of establishing wages and salaries for non-bargaining unit employees that would attract and retain qualified personnel and encourage their superior performance, growth and development.

Each year the regression analysis/compensation model is updated with current salary survey values to insure that the ranges reflect fair market value.  The overall change to the salary ranges reflects market changes to the midpoint of the salary ranges and creates an opportunity for but not a guarantee of salary increases.  Salary increases are not automatic and are based on performance.  Any changes to the COMPensate wage and salary plan for Chugach are approved by the Chugach Board.

CEO Brad Evans is eligible for performance based bonuses at the discretion of the Board of Directors based on performance standards they develop.  In 2010 and 2011, upon review of the performance of the CEO, Mr. Evans received a discretionary bonus of $12,500 and $20,000, respectively, before taxes.

The salary and bonuses for all other named executive officers are set annually by the CEO within annual budget guidelines approved by the Board of Directors.

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Cash Compensation

The following table sets forth all remuneration paid by us for the last three fiscal years to each of our executive officers, each of whose total cash and cash equivalent compensation exceeded $100,000 for 2010 and for all such executive officers as a group:

Summary Compensation Table

Name	Year	Salary		Bonus		Change in Pension Value and Nonqualified Deferred Compensation Earnings		All Other Compensation1		Total
Bradley W. Evans,	2010	$	251,938	$	12,500	$	108,663	$	3,612	$	376,713
Chief Executive Officer	2009	$	250,029	$	40,000	$	98,704	$	3,612	$	392,345
	2008	$	224,218	$	16,230	$	55,256	$	7,873	$	303,577
Michael R. Cunningham,	2010	$	177,012	$	0	$	147,530	$	16,218	$	340,760
Chief Financial Officer	2009	$	172,263	$	15,000	$	184,648	$	9,027	$	380,938
	2008	$	166,468	$	3,000	$	147,412	$	13,438	$	330,318
Tyler E. Andrews,	2010	$	136,858	$	5,000	$	20,447	$	3,093	$	165,398
Vice President,	2009	$	136,821	$	5,000	$	11,525	$	2,855	$	156,201
Human Resources	2008	$	103,276	$	2,000		N/A	$	1,295	$	106,571
Edward M. Jenkin,	2010	$	163,087	$	0	$	90,446	$	1,202	$	254,735
Vice President,	2009	$	160,570	$	5,000	$	152,802	$	18,641	$	337,013
Power Delivery	2008	$	153,249	$	0	$	64,145	$	721	$	218,115
Paul R. Risse,	2010	$	163,970	$	0	$	86,543	$	2,281	$	252,794
Sr. Vice President,	2009	$	163,660	$	10,000	$	84,645	$	7,083	$	265,388
Power Supply	2008	$	155,791	$	3,000	$	54,445	$	2,554	$	215,790
David R. Smith,	2010	$	161,162	$	0	$	45,407	$	20,243	$	226,812
Former Sr. Vice President,	2009	$	160,949	$	10,000	$	38,558	$	17,154	$	226,661
Administration	2008	$	152,717	$	2,000	$	82,657	$	4,129	$	241,503
Lee D. Thibert,	2010	$	186,121	$	10,000	$	108,314	$	6,218	$	310,653
Sr. Vice President, Strategic	2009	$	185,786	$	15,000	$	127,212	$	7,288	$	335,286
Planning & Corporate Affairs	2008	$	119,951	$	0	$	99,323	$	3,830	$	223,104

1Includes costs for life insurance premiums, tax withholdings on bonuses and payment for unused vacation days.

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Pension Benefits

We have elected to participate in the NRECA Retirement Security Plan (the “Plan”), a multiple employer defined benefit master pension plan maintained and administered by the NRECA for the benefit of its members and their employees. Under ASC 960, the plan is a multi employer plan, in which the accumulated benefits and plan assets are not determined or allocated separately to individual employers.  The Plan is intended to be a qualified pension plan under Section 401(a) of the Code.  All our employees not covered by a union agreement become participants in the Plan on the first day of the month following completion of one year of eligibility service.  An employee is credited with one year of eligibility service if he or she completes 1,000 hours of service either in his or her first twelve consecutive months of employment or in any calendar year for us or certain other employers in rural electrification (related employers). Pension benefits vest at the rate of 10 percent for each of the first four years of vesting service and become fully vested and nonforfeitable on the earlier of the date a participant has five years of vesting service or the date the participant attains age fifty-five while employed by us or a related employer. A participant is credited with one year of vesting service for each calendar year in which he or she performs at least one hour of service for us or a related employer.  Pension benefits are generally paid upon the participant's retirement or death.  A participant may also elect to receive pension benefits while still employed by us if he or she has reached his normal retirement date by completing thirty years of benefit service (defined below) or, if earlier, by attaining age sixty-two. A participant may elect to receive actuarially reduced early retirement pension benefits before his or her normal retirement date provided he or she has attained age fifty-five.

Pension benefits paid in normal form are paid monthly for the remaining lifetime of the participant.  Unless an actuarially equivalent optional form of benefit payment to the participant is elected, upon the death of a participant the participant's surviving spouse will receive pension benefits for life equal to 50 percent of the participant's benefit. The annual amount of a participant's pension benefit and the resulting monthly payments the participant receives under the normal form of payment are based on the number of his or her years of participation in the Plan (benefit service) and the highest five-year average of the annual rate of his or her base salary during the last ten years of his or her participation in the Plan (final average salary).  Annual compensation in excess of $200,000, as adjusted by the Internal Revenue Service for cost of living increases, is disregarded after January 1, 1989. The participant's annual pension benefit at his or her normal retirement date is equal to the product of his or her years of benefit service times final average salary times 2 percent. In 1998, NRECA notified us that there were employees whose pension benefits from NRECA's Retirement & Security Program would be reduced because of limitations on retirement benefits payable under Section 401(a)(17) or 415 of the Code. NRECA made available a Pension Restoration Severance Pay Plan and a Pension Restoration Deferred Compensation Plan for cooperatives to adopt in order to make employees whole for their lost benefits. In May 1998, we adopted both of these plans to protect the benefits of current and future employees whose pension benefits would be reduced because of these limitations.

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On October 16, 2002, the Board authorized an amendment to the Plan with an effective date of November 1, 2002.  Under the amended Plan, the retirement benefit payable to any Participant whose retirement is postponed beyond his or her Normal Retirement Date shall be computed as of the Participant’s actual retirement date.  The retirement benefit payable to any Participant under the 30-Year Plan shall be computed as of the first day of the month in which the Participant’s actual retirement date occurs.

Benefit service as of December 31, 2010 that is taken into account under the Plan for the executive officers is shown below with the assumptions for calculation of the present value of accumulated benefits.

Pension Benefits Table

Name	Plan	Credited Years of Service		Present Value of Accumulated Benefit		Payments During Last Fiscal Year
Bradley W. Evans,	Retirement		9.83	$	442,289	$	0
Chief Executive Officer	Security
	Pension		9.83	$	4,656
	Restoration
Michael R. Cunningham,	Retirement		27.08	$	1,283,459	$	0
Chief Financial Officer	Security
Lee D. Thibert,	Retirement		22.33	$	873,170	$	0
Sr. Vice President,	Security
Strategic Planning & Corporate Affairs
Paul R. Risse,	Retirement		14.92	$	471,073	$	0
Sr. Vice President, Power Supply	Security
David R. Smith,1	Retirement		2.5	$	103,298	$	0
Former Sr. Vice President, Administration	Security
Edward M. Jenkin,	Retirement		20.08	$	565,985	$	0
Vice President, Power Delivery	Security
Tyler E. Andrews,	Retirement		1.8	$	31,972	$	0
Vice President, Human Resources	Security

1Mr. Smith was paid the value of all of his pension benefits attributable to service prior to July 1, 2008.

It is assumed that participants retire at the earlier of age 62 or 30 years of benefit service and elect a lump sum benefit.

Lump sum amounts are calculated using the 30-year Treasury rate (4.31 percent for 2010 and 4.00 percent for 2009) and the Pension Protection Act (PPA) three-segment yield rates (3.13 percent, 5.07 percent, and 5.50 percent for 2010 and 5.24 percent, 5.69 percent, and 5.37 percent for 2009) and the required IRS mortality table for lump sum payments (1994 Guaranteed Annuity Rate (GAR), projected to 2002, blended 50 percent/50 percent for unisex mortality in combination with the 30-year Treasury rates and Retirement Plan (RP) 2000 PPA at 2010 and 2009, respectively, combined unisex 50 percent/50 percent mortality in combination with the PPA rates). The lump sum is then discounted at 5.15 percent interest only (no mortality is assumed) from assumed retirement date back to December 31, 2010, and 5.50 percent interest only (no mortality is assumed) from assumed retirement date back to December 31, 2009, to determine the present value for the appropriate year.

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Deferred Compensation

Chugach adopted NRECA’s unfunded Deferred Compensation Program (the Program) to allow highly compensated employees who elect to participate in the Program to defer a portion of their current compensation and avoid paying tax on the deferrals until received.  As a non-qualified plan under Internal Revenue Code 457(b), NRECA’s Deferred Compensation Plan is not subject to non-discrimination testing.  The Program is designed to help decrease current taxable income, take advantage of tax deferred compounding and set aside additional money for retirement.  The money is accessible only upon separation of service, disability or death (in which case it is paid to the designated beneficiary).  The distribution is taxable as income in the year received.

Deferred compensation accounts are established for the individual employees, however, they are considered to be owned by Chugach until a distribution is made.  Deferred compensation plan assets would be subject to creditors’ demands in the case of bankruptcy.  Deferred compensation assets are invested with Homestead Funds, a family of no-load mutual funds.  Homestead Funds’ investment managers, RE Advisers, is a wholly-owned subsidiary of NRECA. Each participant in the Program determines the investment fund or funds into which their accounts are invested.  The amounts credited to the deferred compensation account, including gains and losses, are retained by Chugach until the entire amount credited to the account has been distributed to the Participant or to the Participant’s beneficiary.

Deferred Compensation Table

Name	Executive Contributions in last FY		Registrant Contributions in last FY		Aggregate Earnings in last FY		Aggregate Withdrawals/ Distributions		Aggregate balance at FYE
Bradley W. Evans,	$	16,500	$	0	$	11,883	$	0	$	136,069
Chief Executive Officer
Michael R. Cunningham,	$	16,500	$	0	$	3	$	0	$	48,596
Chief Financial Officer

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Potential Termination Payments

Pursuant to a Chugach Operating Policy, non-represented employees, including the executive officers except the Chief Executive Officer, who are terminated by Chugach for reasons unrelated to employee performance are entitled to severance pay for each year or partial year of service as follows:  two weeks for each year of service to a maximum of twenty-six (26) weeks for thirteen (13) years or more of service.  If Mr. Evans is terminated by Chugach without cause, he will receive one year’s salary and benefits, or the amounts left to be paid under the remaining term of the contract, whichever is less.

The following is a list of the estimated severance payments, including the payment of accrued vacation that would be made to each of the executive officers in the case of termination not related to employee performance:

Potential Termination Payments Table

Name	Estimated Severance Payment
Bradley W. Evans, Chief Executive Officer	$	193,052
Michael R. Cunningham, Chief Financial Officer	$	129,246
Tyler E. Andrews, Vice President, Human Resources	$	33,407
Edward M. Jenkin, Vice President, Power Delivery	$	108,705
Paul R. Risse, Sr. Vice President, Power Supply	$	171,461
David R. Smith, Former Sr. Vice President, Administration	$	101,443
Lee D. Thibert, Sr. Vice President, Strategic Planning & Corporate Affairs	$	120,877

Director Compensation

Directors are compensated for their services at the rate of $200 per Board meeting or other meeting at which they are representing the Association in an official capacity within the State of Alaska, and $250 per day when attending meetings or training outside of the State, including each day of travel, plus reimbursement of reasonable out of pocket expenses, up to a maximum of 70 meetings per year for a director and 85 meetings per year for the Chairman.

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The following table sets forth the dollar amounts of all fees paid in cash by us for the fiscal year ending December 31, 2010 to each of our current and former Board members:

Director Compensation Table

Name	Fees Paid In Cash
James Nordlund, Chairman and Director	$	10,300
Janet Reiser, Vice-Chairman and Director	$	14,850
Susan Reeves, Treasurer and Director	$	7,600
P.J. Hill, Secretary and Director	$	13,700
Rebecca Logan, Director	$	16,400
Doug Robbins, Director	$	0
Elizabeth Vazquez, Director	$	12,200
Elizabeth “Pat” Kennedy, Former Director	$	11,850
Alex Gimarc, Former Director	$	5,000

One new board member was elected, while one current board member was re-elected at Chugach’s annual membership meeting held on April 29, 2010.  Susan Reeves was elected to a three-year term, replacing Alex Gimarc, and P.J. Hill was re-elected to a three-year term.

Item 12 - Security Ownership of Certain Beneficial Owners and Management

and Related Stockholder Matters

Not Applicable

Item 13 - Certain Relationships and Related Transactions, and Director Independence

Not Applicable

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Item 14 – Principal Accounting Fees and Services

The Audit Committee of the Board retained KPMG LLP as the independent registered public accounting firm for Chugach during the fiscal year ended December 31, 2010.

Fees and Services

KPMG LLP has provided certain audit, audit-related, tax and non-audit services, the fees for which are as follows:

	2010		2009
Audit and audit-related services:
Audit and quarterly reviews	$	141,950	$	211,165
Audit-related services (Single audit and employee benefit plans)		17,000		30,465
Non-audit services:
Tax consulting and return preparation		14,430		20,305
Other services1		23,725		3,431
Total	$	197,105	$	265,366

1 Other services in 2010 included Sarbanes-Oxley implementation and contract reviews

Other services in 2009 included Sarbanes-Oxley procedure reviews

The Audit Committee of the Board has a policy to pre-approve all services to be provided by Chugach’s independent public accountants.  All services from Chugach’s independent registered public accounting firm for fiscal years ended December 31, 2010 and 2009 were approved by the Audit Committee.

PART IV

Item 15 – Exhibits and Financial Statement Schedules

	Page
Financial Statements
Included in Part II of this Report:
Report of Independent Registered Public Accounting Firm	51
Balance Sheets, December 31, 2010 and 2009	52-53
Statements of Operations, Years ended December 31, 2010, 2009 and 2008	54
Statements of Changes in Equities and Margins, Years ended December 31, 2010, 2009 and 2008	55
Statements of Cash Flows, Years ended December 31, 2010, 2009 and 2008	56
Notes to Financial Statements	57-88

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Financial Statement Schedules
Included in Part IV of this Report:
Report of Independent Registered Public Accounting Firm	103
Schedule II - Valuation and Qualifying Accounts, Years ended December 31, 2010, 2009 and 2008	104

Other schedules are omitted as they are not required or are not applicable, or the required information is shown in the applicable financial statements or notes thereto.

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Report of Independent Registered Public Accounting Firm

The Board of Directors

Chugach Electric Association, Inc.

Under date of March 30, 2011, we reported on the balance sheets of Chugach Electric Association, Inc. as of December 31, 2010 and 2009, and the related statements of operations, changes in equities and margins and cash flows for each of the years in the three-year period ended December 31, 2010, which are included in the 2010 Annual Report on Form 10-K.  In connection with our audits of the aforementioned financial statements, we also audited the related financial statement schedule in the 2010 Annual Report on Form 10-K.  This financial statement schedule is the responsibility of the Company’s management.  Our responsibility is to express an opinion on this financial statement schedule based on our audit.

In our opinion, the financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

/s/ KPMG, LLP

March 30, 2011

Anchorage, Alaska

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Schedule II

CHUGACH ELECTRIC ASSOCIATION, INC.

Valuation and Qualifying Accounts

	Balance at Beginning Of year			Charged To costs And expenses			Deductions		Balance at end of year
Allowance for doubtful accounts:
Activity for year ended:
December 31, 2010		(397,815	)		(205,402	)		296,048		(307,169	)
December 31, 2009		(408,632	)		(245,157	)		255,974		(397,815	)
December 31, 2008		(541,368	)		(295,313	)		428,049		(408,632	)

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EXHIBITS

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

Exhibit Number	Description
3.1	Articles of Incorporation of the Registrant.  Previously filed as an exhibit to the Registrant’s Quarterly Report on Form 10-Q dated June 30, 2001, SEC File No. 033-42125.
3.2	Bylaws of the Registrant. Previously filed as an exhibit to the Registrant’s Current Report on Form 8-K dated April 30, 2009, SEC File No. 033-42125.
4.11	Tenth Supplemental Indenture of Trust between the Registrant and U.S. Bank Trust National Association dated April 1, 2001. Previously filed as an exhibit to the Registrant’s Registration Statement on Form S-1 dated March 22, 2001, SEC File No. 333-57400.
4.12	Eleventh Supplemental Indenture of Trust between the Registrant and U.S. Bank Trust National Association. Previously filed as an exhibit to the Registrant’s Registration Statement on Form S-1 dated December 21, 2001, SEC File No. 333-75840.
4.13	Amended and Restated Indenture between the Registrant and U.S. Bank Trust National Association dated April 1, 2001. Previously filed as an exhibit to the Registrant’s Registration Statement on Form S-1 dated March 22, 2001, SEC File No. 333-57400.
4.14	Form of 2001 Series A Bond due 2011. Previously filed as an exhibit to the Registrant’s Amendment No. 1 to Registration Statement on Form S-1 dated April 10, 2001, SEC File No. 333-57400.
4.15	Form of 2002 Series A Bond due 2012. Previously filed as an exhibit to the Registrant’s Registration Statement on Form S-1 dated December 21, 2001, SEC File No. 333-75840.
4.17	First Supplemental Indenture to the Amended and Restated Indenture dated April 1, 2001 between the Registrant and U.S. Bank National Association dated January 19, 2011.  Filed Herewith.
4.18	Second Amended and Restated Indenture of Trust between the Registrant and U.S. Bank National Association dated January 20, 2011.  Filed Herewith.
4.19	First Supplemental Indenture to the Second Amended and Restated Indenture of Trust between the Registrant and U.S. Bank National Association dated January 20, 2011.  Filed Herewith.
4.20	Bond Purchase Agreement between the Registrant and the 2011 Series A Bond Purchasers dated January 21, 2011.  Filed Herewith.
4.21	Form of 2011 Series A Bond (Tranche A) due March 15, 2031.  Filed Herewith.
4.22	Form of 2011 Series A Bond (Tranche B) due March 15, 2041.  Filed Herewith.

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10.2	Joint Use Agreement between the Registrant and the City of Seward dated effective as of September 11, 1998. Previously filed as an exhibit to the Registrant’s Registration Statement on Form S-1 dated September 19, 1991, SEC File No. 33-42125.
10.3	Net Billing Agreement among the Registrant and the City of Seward dated effective as of September 11, 1998. Previously filed as an exhibit to the Registrant’s Annual Report on Form 10-K dated December 31, 1991, SEC File No. 033-42125.
10.4.2	2006 Agreement for the Sale and Purchase of Electric Power and Energy between the Registrant and the City of Seward dated effective February 27, 2007. Previously filed as an exhibit to the Registrant’s Annual Report on Form 10-K dated December 31, 2007, SEC File No. 033-42125.
10.5	Agreement for Sale of Electric Power and Energy by and among the Registrant, Homer Electric Association, Inc. and Alaska Electric Generation and Transmission Cooperative, Inc. dated September 27, 1985. Previously filed as an exhibit to the Registrant’s Registration Statement on Form S-1 dated September 19, 1991, SEC File No. 33-42125.
10.5.1	Assignment of Agreement for Sale of Electric Power and Energy by and among the Registrant, Homer Electric Association, Inc. and Alaska Electric Generation and Transmission Cooperative, Inc. dated June 30, 2003.  Previously filed as an exhibit to the Registrant’s Annual Report on Form 10-K dated December 31, 2003, SEC File No. 033-42125.
10.6	Modified Agreement for the Sale and Purchase of Electric Power and Energy by and among the Registrant, Matanuska Electric Association, Inc. and Alaska Electric Generation and Transmission Cooperative, Inc. dated effective as of January 30, 1989. Previously filed as an exhibit to the Registrant’s Registration Statement on Form S-1 dated September 19, 1991, SEC File No. 33-42125.
10.6.1	First Amendment to Modified Agreement for the Sale and Purchase of Electric Power and Energy by and among the Registrant, Matanuska Electric Association, Inc. and Alaska Electric Generation and Transmission Cooperative, Inc. dated effective as of February 10, 1995. Previously filed as an exhibit to the Registrant’s Quarterly Report on Form 10-Q dated June 30, 1994, SEC File No. 033-42125.
10.6.2	Net Billing Agreement by and among the Registrant, Matanuska Electric Association, Inc. and Alaska Electric Generation and Transmission Cooperative, Inc. dated December 16, 1987. Previously filed as an exhibit to the Registrant’s Registration Statement on Form S-1 dated September 19, 1991, SEC File No. 33-42125.
10.8	Agreement for the Sale and Purchase of Natural Gas between the Registrant and ARCO Alaska, Inc. dated April 21, 1989. Previously filed as an exhibit to the Registrant’s Registration Statement on Form S-1 dated September 19, 1991, SEC File No. 33-42125.

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10.8.1	Amendment No. 1 to Agreement for the Sale and Purchase of Natural Gas between the Registrant and ARCO Alaska, Inc., dated August 1, 1990. Previously filed as an exhibit to the Registrant’s Registration Statement on Form S-1 dated September 19, 1991, SEC File No. 33-42125.
10.8.2	Letter Agreement dated April 23, 1999, regarding the Registrant’s consent to the assignment to ARCO Beluga, Inc. of the Agreement for the Sale and Purchase of Natural Gas between the Registrant and ARCO Alaska, Inc. Previously filed as an exhibit to the Registrant’s Registration Statement on Form S-1 dated March 22, 2001, SEC File No. 333-57400.
10.8.3	Amendment No. 2 to Agreement for the Sale and Purchase of Natural Gas between the Registrant and ARCO Beluga, Inc., dated May 6, 1999. Previously filed as an exhibit to the Registrant’s Quarterly Report on Form 10-Q dated June 30, 1999, SEC File No. 033-42125.
10.9	Agreement for the Sale and Purchase of Supplemental Natural Gas between the Registrant and ARCO Alaska, Inc. dated October 3, 1991. Previously filed as an exhibit to the Registrant’s Registration Statement on Form S-1 dated September 19, 1991, SEC File No. 33-42125.
10.10	Agreement for the Sale and Purchase of Natural Gas between the Registrant and Marathon Oil Company dated September 26, 1988. (Previously filed as an exhibit to the Registrant’s Registration Statement on Form S-1 dated September 19, 1991, SEC File No. 33-42125.
10.10.1	Letter Agreement dated September 26, 1988 between the Registrant and Marathon Oil Company, amending the Agreement for the Sale and Purchase of Natural Gas between the Registrant and Marathon Oil Company. Previously filed as an exhibit to the Registrant’s Registration Statement on Form S-1 dated September 19, 1991, SEC File No. 33-42125.
10.10.2	Amendatory Agreement No. 1 to Agreement for the Sale and Purchase of Natural Gas between the Registrant and Marathon Oil Company, dated effective as of February 21, 1990. Previously filed as an exhibit to the Registrant’s Registration Statement on Form S-1 dated September 19, 1991, SEC File No. 33-42125.
10.10.3	Amendatory Agreement No. 2 to Agreement for the Sale and Purchase of Natural Gas between the Registrant and Marathon Oil Company, dated effective as of February 21, 1990. Previously filed as an exhibit to the Registrant’s Registration Statement on Form S-1 dated September 19, 1991, SEC File No. 33-42125.
10.10.4	Amendatory Agreement No. 3 to Agreement for the Sale and Purchase of Natural Gas between the Registrant and Marathon Oil Company, dated January 28, 1991. Previously filed as an exhibit to the Registrant’s Registration Statement on Form S-1 dated September 19, 1991, SEC File No. 33-42125.
10.10.5	Amendatory Agreement No. 4 to Agreement for the Sale and Purchase of Natural Gas between the Registrant and Marathon Oil Company, dated October 6, 1993. Previously filed as an exhibit to the Registrant’s Registration Statement on Form S-1 dated March 22, 2001, SEC File No. 333-57400.

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10.10.6	Letter Agreement dated January 18, 1996 between the Registrant and Marathon Oil Company, amending the Agreement for the Sale and Purchase of Natural Gas between the Registrant and Marathon Oil Company. Previously filed as an exhibit to the Registrant’s Registration Statement on Form S-1 dated March 22, 2001, SEC File No. 333-57400.
10.10.7	Amendatory Agreement No. 5 to Agreement for the Sale and Purchase of Natural Gas between the Registrant and Marathon Oil Company, dated May 24, 1999. Previously filed as an exhibit to the Registrant’s Quarterly Report on Form 10-Q dated June 30, 1999, SEC File No. 033-42125.
10.11	Agreement for the Sale and Purchase of Natural Gas between the Registrant and Shell Western E&P Inc. dated April 25, 1989. Previously filed as an exhibit to the Registrant’s Registration Statement on Form S-1 dated September 19, 1991, SEC File No. 33-42125.
10.11.1	Amendatory Agreement No. 1 to the Agreement for the Sale of Natural Gas between the Registrant and Shell Western E&P Inc., dated October 1, 1989. Previously filed as an exhibit to the Registrant’s Registration Statement on Form S-1 dated September 19, 1991, SEC File No. 33-42125.
10.11.2	Amendment No. 2 to the Agreement for the Sale of Natural Gas between the Registrant and Shell Western E&P Inc., dated June 20, 1990. Previously filed as an exhibit to the Registrant’s Registration Statement on Form S-1 dated September 19, 1991, SEC File No. 33-42125.
10.11.3	Amendatory Agreement No. 3 to the Agreement for the Sale of Natural Gas between the Registrant and Shell Western E&P Inc. dated October 14, 1996. Previously filed as an exhibit to the Registrant’s Annual Report on Form 10-K dated December 31, 1996, SEC File No. 033-42125.
10.12	Agreement for the Sale and Purchase of Supplemental Natural Gas between the Registrant and Shell Western E&P Inc. dated November 2, 1990. Previously filed as an exhibit to the Registrant’s Registration Statement on Form S-1 dated September 19, 1991, SEC File No. 33-42125.
10.13	Agreement for the Sale and Purchase of Natural Gas between the Registrant and Chevron USA Inc. dated April 27, 1989 (including Attachment No. 1 thereto dated December 20, 1989). Previously filed as an exhibit to the Registrant’s Registration Statement on Form S-1 dated September 19, 1991, SEC File No. 33-42125.
10.13.2	Amendment No. 2 to Agreement for the Sale and Purchase of Natural Gas between the Registrant and Chevron USA Inc., dated June 7, 1990. Previously filed as an exhibit to the Registrant’s Registration Statement on Form S-1 dated September 19, 1991, SEC File No. 33-42125.
10.13.3	Amendment No. 3 to Agreement for the Sale and Purchase of Natural Gas between the Registrant and Chevron U.S.A. Inc., dated May 26, 1999. Previously filed as an exhibit to the Registrant’s Quarterly Report on Form 10-Q dated June 30, 1999, SEC File No. 33-42125.

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10.14	Agreement for the Sale and Purchase of Supplemental Natural Gas between the Registrant and Chevron USA, Inc. dated September 25, 1990. Previously filed as an exhibit to the Registrant’s Registration Statement on Form S-1 dated September 19, 1991, SEC File No. 33-42125.
10.15	Alaska Intertie Agreement between Alaska Power Authority, Municipality of Anchorage, the Registrant, City of Fairbanks, Alaska Municipal Utilities System, Golden Valley Electric Association, Inc. and Alaska Electric Generation and Transmission Cooperative, Inc. dated December 23, 1985. Previously filed as an exhibit to the Registrant’s Registration Statement on Form S-1 dated September 19, 1991, SEC File No. 33-42125.
10.16	Addendum No. 1 to the Alaska Intertie Agreement-Reserve Capacity and Operating Reserve Responsibility dated December 23, 1985. Previously filed as an exhibit to the Registrant’s Registration Statement on Form S-1 dated September 19, 1991, SEC File No. 33-42125.
10.17	Memorandum of Understanding Regarding Intertie Upgrades among Alaska Energy Authority, the Registrant, Golden Valley Electric Association, Inc., Homer Electric Association, Inc., Matanuska Electric Association, Inc., Municipality of Anchorage d/b/a Municipal Light and Power, and the City of Seward d/b/a Seward Electric System dated March 21, 1990. Previously filed as an exhibit to the Registrant’s Registration Statement on Form S-1 dated September 19, 1991, SEC File No. 33-42125.
10.18	Amendment No. 1 to the Alaska Intertie Agreement-Insurance and Liability dated March 28, 1991. Previously filed as an exhibit to the Registrant’s Registration Statement on Form S-1 dated March 22, 2001, SEC File No. 333-57400.
10.19	Intertie Grant Agreement between the Registrant, Golden Valley Electric Association, Inc., Fairbanks Municipal Utility System, Anchorage Municipal Light and Power, Alaska Electric Generation and Transmission Cooperative, Inc. (on behalf of Matanuska Electric Association, Inc. and Homer Electric Association, Inc.), City of Seward, the State of Alaska, Department of Administration and Alaska Industrial Development and Export Authority dated August 17, 1993. Previously filed as an exhibit to the Registrant’s Annual Report on Form 10-K dated December 31, 1993, SEC File No. 033-42125.
10.20	Grant Transfer and Delegation Agreement between the Registrant and Golden Valley Electric Association, Inc., Fairbanks Municipal Utility System, Anchorage Municipal Light and Power, Alaska Electric Generation and Transmission Cooperative, Inc., Matanuska Electric Association, Inc., Homer Electric Association, Inc., Seward, the State of Alaska, Department of Administration, and AMEA dated November 5, 1993. Previously filed as an exhibit to the Registrant’s Annual Report on Form 10-K dated December 31, 1993, SEC File No. 033-42125.
10.21	1993 Alaska Intertie Project Participants Agreement by and among Alaska Power Authority, Municipality of Anchorage, the Registrant, City of Fairbanks, Alaska Municipal Utilities System, Golden Valley Electric Association, Inc., Alaska Electric Generation and Transmission Cooperative, Inc., City of Seward d/b/a Seward Electric System, Homer Electric Association, Inc. and Matanuska Electric Association, Inc. dated January 24, 1994. Previously filed as an exhibit to the Registrant’s Registration Statement on Form S-1 dated March 22, 2001, SEC File No. 333-57400.

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10.22	Amendment No. 1 to the 1993 Alaska Intertie Project Participants Agreement dated December 10, 1999. Previously filed as an exhibit to the Registrant’s Registration Statement on Form S-1 dated March 22, 2001, SEC File No. 333-57400.
10.23	Grant Administration Agreement by and among the Registrant, Alaska Industrial Development and Export Authority, Golden Valley Electric Association, Inc., Fairbanks Municipal Utilities System, Anchorage Municipal Light & Power, Alaska Electric Generation and Transmission Cooperative, Inc. (on behalf of Homer Electric Association, Inc. and Matanuska Electric Association, Inc.) and City of Seward dated August 30, 1994. Previously filed as an exhibit to the Registrant’s Registration Statement on Form S-1 dated March 22, 2001, SEC File No. 333-57400.
10.24	Bradley Lake Agreement for the Sale and Purchase of Electric Power by and among the Registrant, the Alaska Power Authority, Golden Valley Electric Association, Inc., the Municipality of Anchorage, the City of Seward, the Alaska Electric Generation and Transmission Cooperative, Inc., Homer Electric Association, Inc. and Matanuska Electric Association Inc. dated December 8, 1987. Previously filed as an exhibit to the Registrant’s Registration Statement on Form S-1 dated September 19, 1991, SEC File No. 33-42125.
10.24.1	Partial Assignment of Bradley Lake Hydroelectric Project Agreement for the Sale and Purchase of Electric Power by and among the Registrant, the Alaska Power Authority, Golden Valley Electric Association, Inc., the Municipality of Anchorage, the City of Seward, the Alaska Electric Generation and Transmission Cooperative, Inc., Homer Electric Association, Inc. and Matanuska Electric Association Inc. dated June 30, 2003. Previously filed as an exhibit to the Registrant’s Annual Report on Form 10-K dated December 31, 2003, SEC File No. 033-42125.
10.25	Agreement for the Wheeling of Electric Power and for Related Services by and among the Registrant, Homer Electric Association, Inc., Golden Valley Electric Association, Inc., Matanuska Electric Association, Inc., the Municipality of Anchorage, Inc. d/b/a Municipal Light and Power, the City of Seward d/b/a Seward Electric System and Alaska Electric Generation and Transmission Cooperative, Inc. dated December 8, 1987. Previously filed as an exhibit to the Registrant’s Registration Statement on Form S-1 dated September 19, 1991, SEC File No. 33-42125.
10.25.1	Partial Assignment of Bradley Lake Hydroelectric Project Agreement for the Wheeling of Electric Power and for Related Services by and among the Registrant, Homer Electric Association, Inc., Golden Valley Electric Association, Inc., Matanuska Electric Association, Inc., the Municipality of Anchorage, Inc. d/b/a Municipal Light and Power, the City of Seward d/b/a Seward Electric System and Alaska Electric Generation and Transmission Cooperative, Inc. dated June 30, 2003. Previously filed as an exhibit to the Registrant’s Annual Report on Form 10-K dated December 31, 2003, SEC File No. 033-42125.
10.26	Transmission Sharing Agreement by and among the Registrant, Homer Electric Association, Inc., Golden Valley Electric Association, Inc. and the Municipality of Anchorage d/b/a Municipal Light and Power. Previously filed as an exhibit to the Registrant’s Registration Statement on Form S-1 dated September 19, 1991, SEC File No. 33-42125.

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10.27	Amendment to Agreement for Sale of Transmission Capability by and among the Registrant, Homer Electric Association, Inc., Alaska Electric Generation and Transmission Cooperative, Inc., Golden Valley Electric Association, Inc. and the Municipality of Anchorage d/b/a Municipal Light and Power dated March 7, 1989. Previously filed as an exhibit to the Registrant’s Registration Statement on Form S-1 dated September 19, 1991, SEC File No. 33-42125.
10.28	Bradley Lake Hydroelectric Agreement for the Dispatch of Electric Power and for Related Services between the Registrant and the Alaska Energy Authority dated February 19, 1992. Previously filed as an exhibit to the Registrant’s Annual Report on Form 10-K dated December 31, 1991, SEC File No. 033-42125.
10.29	Agreement for Bradley Lake Resource Scheduling by and among the Registrant, Homer Electric Association, Inc. and the Alaska Electric Generation and Transmission Cooperative, Inc. dated September 29, 1992. Previously filed as an exhibit to the Registrant’s Annual Report on Form 10-K dated December 31, 1992, SEC File No. 033-42125.
10.29.1	Assignment of Agreement for Bradley Lake Resource Scheduling by and among the Registrant, Homer Electric Association, Inc. and the Alaska Electric Generation and Transmission Cooperative, Inc. dated June 30, 2003. Previously filed as an exhibit to the Registrant’s Annual Report on Form 10-K dated December 31, 2003, SEC File No. 033-42125.
10.30	Interconnection Agreement between the Registrant and Municipality of Anchorage Municipal Light and Power dated December 2, 1983. Previously filed as an exhibit to the Registrant’s Registration Statement on Form S-1 dated September 19, 1991, SEC File No. 33-42125.
10.30.1	Addendum No. 1 to Interconnection Agreement between the Registrant and Municipality of Anchorage Municipal Light and Power dated August 8, 1984. Previously filed as an exhibit to the Registrant’s Registration Statement on Form S-1 dated September 19, 1991, SEC File No. 33-42125.
10.30.2	Amendment No. 1 to Interconnection Agreement between the Registrant and Municipality of Anchorage Municipal Light and Power dated November 28, 1984. Previously filed as an exhibit to the Registrant’s Registration Statement on Form S-1 dated September 19, 1991, SEC File No. 33-42125.
10.31	Gas Transportation Agreement by and among the Registrant, Alaska Pipeline Company and ENSTAR Natural Gas Company dated December 7, 1992. Previously filed as an exhibit to the Registrant’s Annual Report on Form 10-K dated December 31, 1992, SEC File No. 033-42125.
10.32	Eklutna Purchase Agreement by and among the Registrant, Matanuska Electric Association, Inc., Municipality of Anchorage d/b/a Municipal Light and Power and Alaska Power Administration. Previously filed as an exhibit to the Registrant’s Registration Statement on Form S-1 dated September 19, 1991, SEC File No. 33-42125.

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10.33	Eklutna Hydroelectric Project Closing Documents dated October 2, 1997. Previously reported as an exhibit to the Registrant’s Annual Report on Form 10-K dated December 31, 1997, SEC File No. 033-42125.
10.36	Agreement by and among the Registrant, Municipality of Anchorage d/b/a Anchorage Municipal Light and Power, Matanuska Electric Association, Inc., U.S. Fish and Wildlife Service, National Marine Fisheries Service, Alaska Energy Authority and the State of Alaska re: the Eklutna and Snettisham Hydroelectric Projects. Previously filed as an exhibit to the Registrant’s Annual Report on Form 10-K dated December 31, 1991, SEC File No. 033-42125.
10.37	Daves Creek Substation Agreement between the Registrant and the Alaska Energy Authority dated March 13, 1992. Previously filed as an exhibit to the Registrant’s Annual Report on Form 10-K dated December 31, 1992, SEC File No. 033-42125.
10.39	Nikiski Cogeneration Plant System Use and Dispatch Agreement between the Registrant and Alaska Electric Generation and Transmission Cooperative, Inc. dated February 12, 1999. Previously filed as an exhibit to the Registrant’s Quarterly Report on Form 10-Q dated June 30, 1999, SEC File No. 033-42125.
10.39.1	Second Amendment to the Nikiski Cogeneration Plant System Use and Dispatch Agreement between the Registrant and Alaska Electric Generation and Transmission Cooperative, Inc. dated June 1, 2001. Previously filed as an exhibit to the Registrant’s Quarterly Report on Form 10-Q dated June 30, 2001, SEC File No. 033-42125.
10.39.2	Assignment of Nikiski Cogeneration Plant System Use and Dispatch Agreement between the Registrant and Alaska Electric Generation and Transmission Cooperative, Inc. dated June 30, 2003. Previously filed as an exhibit to the Registrant’s Annual Report on Form 10-K dated December 31, 2003, SEC File No. 033-42125.
10.39.3	Settlement of Dispute Over Nikiski Cogeneration Plant System Use and Dispatch Agreement and Premium Demand Charges Under HEA PSA between the Registrant and Alaska Electric and Energy Cooperative, Inc. and Homer Electric Association, Inc. dated January 15, 2008. Previously filed as an exhibit to the Registrant’s Annual Report on Form 10-K dated December 31, 2007, SEC File No. 033-42125.
10.39.4	Third Amendment to the Nikiski Cogeneration Plant System Use and Dispatch Agreement between the Registrant and Homer Electric Association, Inc. dated effective November 6, 2009.  Previously filed as an exhibit to the Registrant’s Quarterly Report on Form 10-Q dated September 30, 2009, SEC File No. 033-42125.
10.40	Lease Amendment between the Registrant and Standard Oil Company of California dated June 1, 1975. Previously filed as an exhibit to the Registrant’s Registration Statement on Form S-1 dated September 19, 1991, SEC File No. 33-42125.
10.41	Lease Amendment between the Registrant and Chevron USA, Inc. dated September 1, 1985. Previously filed as an exhibit to the Registrant’s Registration Statement on Form S-1 dated September 19, 1991, SEC File No. 33-42125.

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10.45.8	Amended and Restated Master Loan Agreement between the Registrant and CoBank, ACB dated January 19, 2011.  Filed Herewith.
10.45.9	Second Amended and Restated Supplement between the Registrant and CoBank, ACB, dated January 19, 2011.  Filed Herewith.
10.45.10	Form of 2011 CoBank Note dated January 19, 2011.  Filed Herewith.
10.47.1	Line of Credit Agreement between the Registrant and the National Rural Utilities Cooperative Finance Corporation dated October 14, 2007. Previously filed as an exhibit to the Registrant’s Quarterly Report on Form 10-Q dated September 30, 2007, SEC File No. 033-42125.
10.47.2	Amendment to Revolving Line of Credit Agreement between the Registrant and the National Rural Utilities Cooperative Finance Corporation dated effective December 22, 2008. Previously filed as an exhibit to the Registrant’s Annual Report on Form 10-K dated December 31, 2008, SEC File No. 033-42125.
10.49	2010 Credit Agreement between the Registrant and the National Rural Utilities Cooperative Finance Corporation (NRUCFC), Bank of America, N.A., KeyBank National Association, JPMorgan Chase Bank, N.A., Bank of Montreal, CoBank, ACB, Goldman Sachs Bank USA, Bank of Taiwan, Los Angeles Branch and Chang Hwa Commercial Bank, Ltd., Los Angeles Branch dated November 17, 2010.  Filed Herewith.
10.56	Order On Offer Of Settlement And Issuing New License between the Registrant and the Federal Energy Regulatory Commission dated effective August 24, 2007. Previously filed as an exhibit to the Registrant’s Annual Report on Form 10-K dated December 31, 2007, SEC File No. 033-42125.
10.58	Agreement Covering Terms and Conditions of Employment for Beluga Power Plant Culinary Employees between the Registrant and the Hotel Employees & Restaurant Employees Union Local 878 dated effective December 13, 2007. Previously filed as an exhibit to the Registrant’s Annual Report on Form 10-K dated December 31, 2007, SEC File No. 033-42125.
10.59	Agreement Covering Terms and Conditions of Employment for Office and Engineering Personnel between the Registrant and the International Brotherhood of Electrical Workers Local 1547 dated effective September 13, 2007. Previously filed as an exhibit to the Registrant’s Annual Report on Form 10-K dated December 31, 2007, SEC File No. 033-42125.
10.59.1	Letter of Agreement By and Between the Registrant and the International Brotherhood of Electrical Workers Local 1547 for Office and Engineering Personnel dated effective July 1, 2010.  Previously filed as an exhibit to the Registrant’s Annual Report on Form 10-K dated December 31, 2009, SEC File No. 033-42125.
10.60	Agreement Covering Terms and Conditions of Employment for Generation Plant Personnel between the Registrant and the International Brotherhood of Electrical Workers Local 1547 dated effective November 9, 2007. Previously filed as an exhibit to the Registrant’s Annual Report on Form 10-K dated December 31, 2007, SEC File No. 033-42125.

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10.60.1	Letter of Agreement By and Between the Registrant and the International Brotherhood of Electrical Workers Local 1547 for Generation Plant Personnel dated effective July 1, 2010.  Previously filed as an exhibit to the Registrant’s Annual Report on Form 10-K dated December 31, 2009, SEC File No. 033-42125.
10.61	Agreement Covering Terms and Conditions of Employment for Outside Plant Personnel between the Registrant and the International Brotherhood of Electrical Workers Local 1547 dated effective December 12, 2007. Previously filed as an exhibit to the Registrant’s Annual Report on Form 10-K dated December 31, 2007, SEC File No. 033-42125.
10.61.1	Letter of Agreement By and Between the Registrant and the International Brotherhood of Electrical Workers Local 1547 for Outside Plant Personnel dated effective July 1, 2010.  Previously filed as an exhibit to the Registrant’s Annual Report on Form 10-K dated December 31, 2009, SEC File No. 033-42125.
10.62	Memorandum of Understanding Regarding Joint Development of South Anchorage Power Project between the Registrant and Anchorage Municipal Light and Power dated effective February 28, 2008. Previously filed as an exhibit to the Registrant’s Annual Report on Form 10-K dated December 31, 2007, SEC File No. 033-42125.
10.64	Employment Agreement between the Registrant and Bradley W. Evans dated effective July 1, 2008.  Previously filed as an exhibit to the Registrant’s Current Report on Form 8-K dated August 27, 2008, SEC File No. 033-42125.
10.65	Agreement for the Sale and Purchase of Natural Gas between the Registrant and ConocoPhillips Alaska, Inc. and ConocoPhillips, Inc. (collectively, ConocoPhillips) effective August 21, 2009.  Previously filed as an exhibit to the Registrant’s Current Report on Form 8-K dated August 21, 2009, SEC File No. 033-42125.
10.66	Agreement for the Sale and Purchase of Natural Gas between the Registrant and Marathon Alaska Production, LLC (MAP) effective May 17, 2010.  Previously filed as an exhibit to the Registrant’s Current Report on Form 8-K dated May 17, 2010, SEC File No. 033-42125.
10.67	Engineering, Procurement and Construction Contract between the Registrant and SNC-Lavalin Constructors, Inc. dated effective June 18, 2010.  Confidential portions have been omitted and filed separately with the Commission on a Confidential Treatment Request.  Previously filed as an exhibit to the Registrant’s Quarterly Report on Form 10-Q dated June 30, 2010, SEC File No. 033-42125.
10.68	Transportation Agreement between the Registrant and Beluga Pipeline Company dated effective October 1, 2010.  Previously filed as an exhibit to the Registrant’s Quarterly Report on Form 10-Q dated September 30, 2010, SEC File No. 033-42125.
10.69	Transportation Agreement For Interruptible Transportation Of Natural Gas between the Registrant and Kenai Nikiski Pipeline dated effective October 1, 2010.  Previously filed as an exhibit to the Registrant’s Quarterly Report on Form 10-Q dated September 30, 2010, SEC File No. 033-42125.

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10.70	Gas Exchange Contract between the Registrant and Union Oil Company of California dated effective October 1, 2010.  Previously filed as an exhibit to the Registrant’s Quarterly Report on Form 10-Q dated September 30, 2010, SEC File No. 033-42125.
10.71	Gas Transportation Agreement between the Registrant and Alaska Pipeline Company and ENSTAR Natural Gas Company effective November 17, 2010.  Filed Herewith.
14	Code of Ethics for Senior Financial Officers of the Registrant dated effective June 16, 2004. Previously filed as an exhibit to the Registrant’s Quarterly Report on Form 10-Q dated June 30, 2004, SEC File No. 033-42125.
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.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on March 28, 2011.

CHUGACH ELECTRIC ASSOCIATION, INC.
By:	/s/ Bradley W. Evans
	Bradley W. Evans, Chief Executive Officer
Date:	March 28, 2011

116

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below on March 28, 2011, by the following persons on behalf of the registrant and in the capacities indicated:

/s/ Bradley W. Evans
Bradley W. Evans	Chief Executive Officer
	(Principal Executive Officer)
/s/ Michael R. Cunningham
Michael R. Cunningham	Chief Financial Officer
	(Principal Financial Officer)
	(Principal Accounting Officer)
/s/ Paul R. Risse
Paul R. Risse	Sr. Vice President, Power Supply
/s/ Lee D. Thibert
Lee D. Thibert	Sr. Vice President, Strategic Planning &
	Corporate Affairs
/s/ Luke Sliman
Luke Sliman acting for
Edward M. Jenkin	Vice President, Power Delivery
/s/ Tyler E. Andrews
Tyler E. Andrews	Vice President, Human Resources
/s/ James Nordlund
James Nordlund	Director & Chairman of the Board
/s/ Janet Reiser
Janet Reiser	Director & Vice-Chairman of the Board
/s/ Susan Reeves
Susan Reeves	Director & Treasurer of the Board
/s/ P. J. Hill
P. J. Hill	Director & Secretary of the Board

117

/s/ Rebecca Logan
Rebecca Logan	Director
/s/ Elizabeth Vazquez
Elizabeth Vazquez	Director
/s/ Doug Robbins
Doug Robbins	Director

Supplemental Information to be Furnished With Reports Filed

Pursuant to Section 15(d) of the Act by Registrants

Which Have Not Registered Securities Pursuant to Section 12 of the Act

Chugach has not made an Annual Report to securities holders for 2010 and will not make such a report after the filing of this Form 10-K.  As a consequence, no copies of any such report will be furnished to the Securities and Exchange Commission.

118

EX-4.17

Exhibit 4.17

FIRST SUPPLEMENTAL INDENTURE

(to that certain Amended and Restated Indenture of Trust,

dated as of April 1, 2001)

Dated as of January 19, 2011

between

CHUGACH ELECTRIC ASSOCIATION, INC.,

5601 Electron Drive, Anchorage, Alaska 99519,

TRUSTOR

AND

U.S. BANK NATIONAL ASSOCIATION,

1420 Fifth Avenue, 7th Floor, Seattle, Washington 98101,

Attn: Corporate Trust Services

TRUSTEE

SENIOR OBLIGATIONS

FIRST SUPPLEMENTAL INDENTURE OF TRUST

THIS FIRST SUPPLEMENTAL INDENTURE OF TRUST, dated as of January 19, 2011, is amendatory and supplemental to that certain Amended and Restated Indenture of Trust, dated April 1, 2001 (the “2001 Indenture”), by and between CHUGACH ELECTRIC ASSOCIATION, INC., an Alaska electric cooperative (the “Company”), and U.S. BANK NATIONAL ASSOCIATION, a national banking association and successor by merger to U.S. Bank Trust National Association, as trustee under the 2001 Indenture (the “Trustee”).

RECITALS OF THE COMPANY

WHEREAS, the Company is entering into the Amended and Restated Master Loan Agreement, dated as of January 19, 2011 (MLA No. 00976A), with CoBank (as amended, modified, supplemented, extended or restated from time to time, the “Master Loan Agreement”), as supplemented by the Second Amended and Restated Supplement, dated as of January 19, 2011, between the Company and CoBank, ACB (“CoBank”) (as amended, modified, supplemented, amended or restated from time to time, the “Second Supplement”; the Master Loan Agreement, as supplemented by the Second Supplement, the “Loan Agreement”), pursuant to which CoBank provided a multiple-advance term loan to the Company, the outstanding principal amount of which is $37,301,818.50as of the date hereof;

WHEREAS, the Company’s obligations under the Loan Agreement are evidenced by that certain Promissory Note (ML0976-T1B), dated the date of its authentication, made by the Company to CoBank (the “2011CoBank Note”);

WHEREAS, the Company desires to execute and deliver this First Supplemental Indenture, in accordance with the provisions of the 2001 Indenture, for the purpose of providing for (i) the establishment and designation of the 2011 CoBank Note and the authentication of the 2011 CoBank Note as an Additional Obligation, and (ii) the amendment and restatement of the 2001 Indenture as described herein;

WHEREAS, the Outstanding Debt Obligations under the 2001 Indenture currently consist of (i) $150,000,000 aggregate principal amount of New Bonds, 2001 Series A; and (ii) $120,000,000 aggregate principal amount of New Bonds, 2002 Series A (the “Existing Obligations”);

WHEREAS, Section 10.1 of the 2001 Indenture provides that, without the consent of the Holders of any of the Obligations, the Company, when authorized by a Board Resolution, and the Trustee may enter into Supplemental Indentures for the purposes and subject to the conditions set forth in such Section 10.1, including to create additional series of Obligations under the 2001 Indenture and to make any change in the Indenture that, in the reasonable judgment of the Trustee, will not materially and adversely affect the rights of Holders;

WHEREAS, the Company has complied or will comply with all provisions required to issue Additional Obligations provided for in the 2001 Indenture and, as provided in Section 4 herein, to amend and restate the 2001 Indenture, as amended by this First Supplemental Indenture of Trust (the 2001 Indenture, as hereby amended by this First Supplemental Indenture of Trust, and as amended and restated by the Second Amended and Restated Indenture (as hereinafter defined) and in effect from time to time, the “Indenture”);

1

WHEREAS, all acts and proceedings required by law and by the Articles of Incorporation and Bylaws of the Company in connection herewith have been done and taken, and the execution and delivery of this First Supplemental Indenture have been in all respects duly authorized by the Company;

AND IT IS HEREBY COVENANTED AND DECLARED that all the Obligations (including the 2011 CoBank Note) are to be authenticated and delivered, subject to the further covenants, conditions and trusts hereinafter set forth, and the Company does hereby covenant and agree to and with the Trustee, for the equal and proportionate benefit of all Holders of the Outstanding Debt Obligations as follows:

Section 1.           Defined Terms.   All capitalized terms used and not otherwise defined in this First Supplemental Indenture shall have the meanings assigned to those terms in the Indenture, except where the context clearly indicates otherwise.

Section 2.           Authentication of Additional Obligations.  There shall be created and established an Additional Obligation in the form of a promissory note to be known as and entitled the “2011 CoBank Note,” the form, terms and conditions of which shall be substantially as set forth in or prescribed pursuant to this Section and Section 3 hereof.  The aggregate stated principal amount of the 2011 CoBank Note is limited to $37,301,818.50.  The 2011 CoBank Note, when duly executed and issued by the Company and authenticated and delivered by the Trustee, will be entitled to the benefits of the Indenture equally and proportionately with all other Outstanding Debt Obligations.

The 2011 CoBank Note shall be dated the date of its authentication and shall be made payable to CoBank, as Holder.  The 2011 CoBank Note shall mature on June 15, 2022 or such later maturity date as provided in the Loan Agreement.  The 2011 CoBank Note shall bear interest as provided in the Loan Agreement, and interest shall be calculated as specified in the Loan Agreement and shall be payable at the times provided therein.  In the event any day on which any payment required to be made under the Loan Agreement or under the 2011 CoBank Note is not a “Business Day” (as defined in the Loan Agreement), then such payment shall be due and payable on the next Business Day (as defined in the Loan Agreement) subject to accrual of interest and fees for the period of such extension.

All payments, including prepayments, made on the 2011 CoBank Note shall be made as provided in, and pursuant to the terms and conditions of, such 2011 CoBank Note and the Loan Agreement (and shall not be governed by the provisions of Section 1.14 of the Indenture or Article 12 of the 2001 Indenture or Article 15 of the Second Amended and Restated Indenture, as applicable), and shall be made in lawful money of the of the United States of America which will be immediately available on the date payment is due.

2

Section 3.           Form of the 2011 CoBank Note.  The 2011 CoBank Note and the Trustee's certificate of authentication for the 2011 CoBank Note shall be in the form set forth in or prescribed in an Officers' Certificate to be delivered to the Trustee by the Company, which shall establish the terms and conditions of the 2011 CoBank Note pursuant to Sections 2.1 and 3.3 of the Indenture, with such appropriate insertions, omissions, substitutions and other variances as a required or permitted in the Indenture.

Section 4.           Second Amended and Restated Indenture of Trust.  Pursuant to Section 10.1 of the Indenture, all covenants, terms, conditions and other provisions of the Indenture shall be amended and superseded in their entirety by the covenants, terms, conditions and other provisions of the Second Amended and Restated Indenture of Trust, dated as of January 20, 2011 (“Second Amended and Restated Indenture”), a copy of which is attached as Exhibit A to this First Supplemental Indenture, upon execution and delivery thereof by the Company and the Trustee.

Section 5.           Counterparts.  This First Supplemental Indenture may be executed in any number of counterparts, each of such counterparts shall for all purposes be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument.

Section 6.           Execution Date.  Although this First Supplemental Indenture is dated for convenience and for the purpose of reference as of the date set forth in the first paragraph hereof, the actual date or dates of execution by the Company and by the Trustee are as indicated by their respective acknowledgments hereto annexed.

3

IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed as of the day and year first above written.

CHUGACH ELECTRIC ASSOCIATION, INC.,
an Alaska electric cooperative
By:	/s/ Michael R. Cunningham
	Name:	Michael R. Cunningham
	Title:	Sr. Vice President and
		Chief Financial Officer
U.S. BANK NATIONAL ASSOCIATION,
a national banking association,
as Trustee
By:	/s/ Thomas Zrust
	Name:	Thomas Zrust
	Title:	Vice President

First Supplemental Indenture to 2011 Indenture – Signature Page

EXHIBIT A

SECOND AMENDED AND RESTATED INDENTURE OF TRUST

See Second Amended and Restated Indenture of Trust dated as of January 20, 2011, between Chugach Electric Association, Inc. and U.S. Bank National Association filed as Exhibit 4.18 to this 2010 Form 10-K Annual Report

EX-4.18

Exhibit 4.18

After Recording Return to:

Davis Wright Tremaine, LLP

1201 Third Avenue, Suite 2200

Seattle, WA  98101

Attention:  Donald E. Percival

SECOND AMENDED AND RESTATED

INDENTURE OF TRUST

Dated as of January 20, 2011

between

CHUGACH ELECTRIC ASSOCIATION, INC.,

5601 Electron Drive, Anchorage, Alaska 99519,

TRUSTOR

AND

U.S. BANK NATIONAL ASSOCIATION,

1420 Fifth Avenue, 7th Floor, Seattle, Washington 98101

Attn: Corporate Trust Services,

TRUSTEE

FIRST MORTGAGE OBLIGATIONS

THIS INSTRUMENT CONSTITUTES A DEED OF TRUST,

SECURITY AGREEMENT AND FIXTURE FILING

COVERING REAL AND PERSONAL PROPERTY

(INCLUDING AFTER-ACQUIRED PROPERTY) OF A

TRANSMITTING UTILITY, AND

CONTAINS A FUTURE ADVANCE PROVISION

TABLE OF CONTENTS

RECITALS OF THE COMPANY	1
GRANTING CLAUSES	2
GRANTING CLAUSE FIRST	2
GRANTING CLAUSE SECOND	2
GRANTING CLAUSE THIRD	3
GRANTING CLAUSE FOURTH	3
EXCEPTED PROPERTY	3
EXCLUDABLE PROPERTY	6

1.DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION		7
1.1.	Definitions	7
1.2.	Acts of Holders	31
1.3.	Notices, etc., to Trustee and Company	32
1.4.	Notices to Holders; Waiver	33
1.5.	Form and Contents of Documents Delivered to Trustee	33
1.6.	Compliance Certificates and Opinions	35
1.7.	Conflict With Trust Indenture Act	35
1.8.	Effect Headings and Table of Contents	35
1.9.	Successors and Assigns	36
1.10.	Severability clause	36
1.11.	Benefits of Indenture	36
1.12.	Governing Law	36
1.13.	Action by Credit Enhancer When Action by Holders Required	36
1.14.	Bank Holidays	36
1.15.	Maturity of Obligations and Indenture	37
1.16.	Acceptance of Trust by Trustee	37
1.17.	Investment of Cash Held by Trustee	37
1.18.	Principal Amount of Certain Obligations	38
1.19.	Security Agreement and Financing Statement	38
2.FORMS OF OBLIGATIONS		39
2.1.	Forms Generally	39
2.2.	Form of Trustee’s Certificate of Authentication for Obligations	39
3.THE OBLIGATIONS		39
3.1.	Terms and Forms of Pre-Existing Obligations	39
3.2.	General Title; General Limitations; Issuable in Series	40
3.3.	Terms of Particular Series	40
3.4.	Form and Denominations	42
3.5.	Execution, Authentication, Delivery and Dating	42
3.6.	Temporary Obligations	43
3.7.	Registration; Registration of Transfer and Exchange	43
3.8.	Mutilated, Destroyed, Lost and Stolen Obligations	44

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3.9.	Payment of Interest; Interest Rights Preserved	45
3.10.	Persons Deemed Owners	46
3.11.	Cancellation	47
4.EXISTING OBLIGATIONS		47
4.1.	Effect of Amendment and Restatement; Terms	47
5.AUTHENTICATION AND DELIVERY OF ADDITIONAL OBLIGATIONS		47
5.1.	General Provisions	47
5.2.	Authentication and Delivery of Additional Obligations Upon Basis of Bondable Additions	49
5.3.	Authentication and Delivery of Additional Obligations Upon Basis of Retirement or Defeasance of Obligations or Principal Payments on Obligations	58
5.4.	Authentication and Delivery of Additional Obligations Upon Deposit of Cash With Trustee	60
5.5.	Authentication and Delivery of Obligations Upon Basis of Designated Qualifying Securities	61
5.6.	Authentication and Delivery of Conditional Obligations; Loans or Advances Thereunder	63
5.7.	Authentication and Delivery of Credit Enhancement Obligations	64
5.8.	Withdrawal of Deposited Cash	65
5.9.	Authentication and Delivery of Additional Obligations Upon Basis of Certified Progress Payments	67
5.10.	Conversion of Additional Obligations	68
6.RELEASES		69
6.1.	Right of Company to Possess and Operate Trust Estate; Dispositions Without Release	69
6.2.	Releases	72
6.3.	Eminent Domain	77
6.4.	Written Disclaimer of Trustee	78
6.5.	Powers Exercisable Notwithstanding Event of Default	78
6.6.	Powers Exercisable by Trustee or Receiver	78
6.7.	Purchaser Protected	79
6.8.	Disposition of Collateral On Discharge of Prior Liens	79
6.9.	Disposition of Obligations Received	79
6.10.	Excludable Property	80
7.APPLICATION OF TRUST MONEYS		80
7.1.	“Trust Moneys” Defined	80
7.2.	Withdrawal on Basis of Bondable Additions	80
7.3.	Withdrawal on Basis of Retirement or Defeasance of Obligations or Principal Payments on Obligations	81
7.4.	Withdrawal on Basis of Designated Qualifying Securities	82
7.5.	Withdrawal on Basis of Certified Progress Payments	82
7.6.	Retirement of Obligations or Payments on Obligations	83
7.7.	Withdrawal of Insurance Proceeds	85
7.8.	Amounts under $100,000	88
7.9.	Powers Exercisable Notwithstanding Default	88
7.10.	Powers Exercisable by Trustee or Receiver	88
7.11.	Disposition of Obligations Retired	89
8.DEFEASANCE		89
8.1.	Termination of Company’s Obligations	89

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8.2.	Application of Deposited Money and Money From Defeasance Securities	91
8.3.	Repayment to Company	92
8.4.	Reinstatement	92
9.EVENTS OF DEFAULT AND REMEDIES		93
9.1.	Events of Default	93
9.2.	Acceleration of Maturity Rescission and Annulment	95
9.3.	Entry	96
9.4.	Power of Sale; Suits for Enforcement	96
9.5.	Incidents of Sale	97
9.6.	Covenant to Pay Trustee Amounts Due on Obligations and Right of Trustee to Judgment	98
9.7.	Application of Money Collected	99
9.8.	Receiver	101
9.9.	Trustee May File Proofs of Claim	101
9.10.	Trustee May Enforce Claims Without Possession of Obligations	102
9.11.	Limitation on Suits	102
9.12.	Unconditional Right of Holders to Receive Principal, Premium and Interest	103
9.13.	Restoration of Positions	103
9.14.	Rights and Remedies Cumulative	103
9.15.	Delay or Omission Not Waiver	103
9.16.	Control by Holders	104
9.17.	Waiver of Past Defaults	104
9.18.	Undertaking for Costs	105
9.19.	Waiver of Appraisement and Other Laws	105
9.20.	Suits to Protect the Trust Estate	106
9.21.	Remedies Subject to Applicable Law	106
9.22.	Principal Amount of Original Issue Discount Obligation	106
9.23.	Default Not Affecting All Series of Obligations	106
9.24.	Defaults Under Qualifying Securities Indentures	107
10.THE TRUSTEE		107
10.1.	Certain Duties and Responsibilities	107
10.2.	Notice of Defaults	108
10.3.	Certain Rights of Trustee	108
10.4.	Not Responsible for Recitals Application of Proceeds or Contents of Disclosure Materials	109
10.5.	May Hold Obligations	110
10.6.	Money Held in Trust	110
10.7.	Compensation and Reimbursement	110
10.8.	Disqualification; Conflicting Interests	111
10.9.	Corporate Trustee Required; Eligibility	116
10.10.	Resignation and Removal; Appointment of Successor	117
10.11.	Acceptance of Appointment by Successor	119
10.12.	Merger, Conversion, Consolidation or Succession to Business	119
10.13.	Preferential Collection of Claims against Company	119
10.14.	Co-trustees and Separate Trustees	123
10.15.	Authenticating Agent	125
11.HOLDERS’ LISTS AND REPORTS BY TRUSTEE AND COMPANY		126
11.1.	Company to Furnish Trustee Semi-Annual Lists of Holders	126
11.2.	Preservation of Information; Communications to Holders	126
11.3.	Reports by Trustee	128
11.4.	Reports by Company	130

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12.CONSOLIDATION, MERGER, CONVEYANCE OR TRANSFER		131
12.1.	Consolidation, Merger, Conveyance or Transfer only on Certain Terms	131
12.2.	Successor Person Substituted	132
13.SUPPLEMENTAL INDENTURES		132
13.1.	Supplemental Indentures Without Consent of Holders	132
13.2.	Supplemental Indentures With Consent of Holders	134
13.3.	Execution of Supplemental Indentures	136
13.4.	Effect of Supplemental Indentures	136
13.5.	Conformity With Trust Indenture Act	136
13.6.	Reference in Obligations to Supplemental Indentures	136
14.COVENANTS		136
14.1.	Payment of Principal, Premium and Interest	136
14.2.	Maintenance of Office or Agency	137
14.3.	Money for Obligation Payments to be Held in Trust; Repayment of Unclaimed Money	137
14.4.	Warranty of Title	138
14.5.	After-Acquired Property; Further Assurances; Recording	139
14.6.	Limitations on Liens; Payment of Taxes	140
14.7.	Maintenance of Properties	141
14.8.	To Insure	142
14.9.	Corporate Existence	143
14.10.	To Keep Books; Inspection by Trustee	143
14.11.	Use of Trust Moneys and Advances by Trustee	143
14.12.	Statement as to Compliance	144
14.13.	Waiver of Certain Covenants	144
14.14.	Rate Covenant	144
14.15.	Distributions to Members	145
15.REDEMPTION OF OBLIGATIONS; SINKING FUNDS		145
15.1.	General Applicability of Sections 15.01 through 15.07	145
15.2.	Election to Redeem; Notice to Trustee	145
15.3.	Selection by Trustee of Obligations to be Redeemed	146
15.4.	Notice of Redemption	147
15.5.	Deposit of Redemption Price	148
15.6.	Obligations Payable on Redemption Date	149
15.7.	Obligations Redeemed in Part	149
15.8.	Applicability of Sections  15.08 through 15.10	150
15.9.	Satisfaction of Sinking Fund Payments with Obligations	150
15.10.	Redemption of Obligations for Sinking Fund	150
16.CONTROL OF PLEDGED SECURITIES		151
16.1.	Pledged Securities Deposited With Trustee	151
16.2.	Form of Holding	151
16.3.	Right of Trustee to Preserve Issuers; Directors’ Qualifying Shares	151
16.4.	Income Before Event of Default	152
16.5.	Income After Event of Default	152
16.6.	Principal and Other Payments	153
16.7.	Voting	154
16.8.	Limitations on Issuance of Voting Stock or Grant Membership Interests of Pledged Subsidiaries	154

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16.9.	Increase, Reduction or Reclassification of Stock; Dissolution; Consolidation, Etc	155
16.10.	Enforcement	156
16.11.	Acquisition of Property of Issuers of Pledged Securities	156
16.12.	Reorganization	156
16.13.	Renewal and Refunding	157
16.14.	Expenses	157
16.15.	Opinion of Counsel	158
17.QUALIFYING SECURITIES; QUALIFYING SECURITIES INDENTURES		158
17.1.	Registration and Ownership of Designated Qualifying Securities	158
17.2.	Payments on Qualifying Securities	158
17.3.	Surrender or Redesignation of Designated Qualifying Securities	159
17.4.	No Transfer of Qualifying Securities	160
17.5.	Reorganization	160

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THIS SECOND AMENDED AND RESTATED INDENTUREOF TRUST, dated as of January 20, 2011, is between CHUGACH ELECTRIC ASSOCIATION, INC., an Alaska electric cooperative, as Trustor (hereinafter called the “Company”), and U.S. BANK NATIONAL ASSOCIATION, a national banking association organized under the laws of the United States of America, as Trustee (hereinafter called the “Trustee”).

1. RECITALS OF THE COMPANY

The Company has previously entered into the Amended and Restated Indenture, dated as of April 1, 2001, with U.S. Bank Trust National Association (as amended and supplemented, the “Existing Indenture”), pursuant to which the Company has issued obligations of various series (the “Pre-Existing Obligations”).  The Pre-Existing Obligations Outstanding as of the date hereof consist of $150,000,000 aggregate principal amount of New Bonds, 2001 Series A, $120,000,000 aggregate principal amount of New Bonds, 2002 Series A, and a 2011 CoBank Note in the aggregate principal amount of $37,301,818.50 issued to CoBank, ACB.  The Trustee is the successor by merger to U.S. Bank Trust National Association as the trustee under the Existing Indenture.

The Company may from time to time execute and deliver the Pre-Existing Obligations and may authorize the creation, execution and delivery from time-to-time of new bonds, notes and other obligations for the payment of money as hereinafter provided issued on or after the date hereof in one or more series (hereinafter called the “Additional Obligations”; the Pre-Existing Obligations and the Additional Obligations hereinafter called, collectively, the “Obligations”), that, together with all Pre-Existing Obligations Outstanding, shall become governed by and subject to the terms and conditions stated in this Second Amended and Restated Indenture as of the date set forth above.

All things have been done which are necessary to amend and restate the Existing Indenture on the terms and conditions set forth herein and to make Obligations executed by the Company and authenticated and delivered by the Trustee and duly issued by the Company, the valid obligations of the Company, and to constitute this Indenture a valid mortgage and deed of trust, security agreement and financing statement and contract for the security of the Obligations, in accordance with the terms of the Obligations and this Indenture.

Should the indebtedness subject to this Indenture be paid according to the tenor and effect thereof when the same shall become due and payable and should the Company perform all covenants herein contained in a timely manner, then this Indenture shall, upon the request of the Company, be cancelled and surrendered, and appropriate reconveyances and termination statements shall be recorded and filed in the relevant public records.

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GRANTING CLAUSES

NOW, THEREFORE, THIS INDENTURE WITNESSETH, that, to secure the payment of the principal of (and premium, if any) and interest on the Outstanding Secured Obligations (as hereinafter defined) and the performance of the covenants therein and herein contained and to declare the terms and conditions on which the Outstanding Secured Obligations are secured, and in consideration of the premises and the purchase of Obligations by the Holders (as hereinafter defined) of, or loans and other obligations evidenced by, the Obligations, the Company by these presents does grant, bargain, sell, alienate, remise, release, convey, assign, transfer, mortgage, hypothecate, pledge, set over and confirm to the Trustee, in trust, all property, rights, privileges and franchises of the Company of every kind and description, real, personal or mixed, tangible or intangible, whether now owned or hereafter acquired by the Company, wherever located, and grants a security interest therein for the purposes herein expressed, except any Excepted Property and Excludable Property (each as hereinafter defined) hereinafter expressly excepted from the lien hereof, and including all and singular the following described property, subject in all cases to the rights of the Company under this Indenture:

GRANTING CLAUSE FIRST

(a)           all of those fee and leasehold interests in real property set forth in Exhibit A attached hereto, subject in each case to those matters set forth in such Exhibit;

(b)           all of the Company’s interest in fixtures, easements, permits, licenses and rights-of-way comprising real property, and all other interests in real property of the Company’s System; and

(c)           all right, title and interest of the Company in and to those contracts of the Company (i) relating to the ownership, operation or maintenance of any generation, transmission or distribution facility owned, whether solely or jointly, by the Company, (ii) for the sale of electric power and energy by the Company to a member of the Company and having an original term in excess of three years, (iii) for purchase or sale of services for the transmission of electric power and energy by or on behalf of the Company and having an original term in excess of three years, (iv) Qualified EPC Contracts (as hereinafter defined), and (v) the agreements referred to on Exhibit B attached hereto, including in respect of any of the foregoing, any amendments, supplements and replacements thereto;

(d)           but excluding any such property relating solely to Excepted Property and Excludable Property.

GRANTING CLAUSE SECOND

All other property, real, personal or mixed, of whatever kind and description and wheresoever situated, including without limitation all goods, buildings, improvements, plants, systems, works, structures, electric power plants, stations and substations, powerhouses, electric transmission and distribution lines and systems, conduits, towers, poles, wires, cables, office buildings, warehouses, garages, stables, sheds, shops, and all other structures and buildings, machinery, engines, boilers, dynamos, generators, transformers, electric and mechanical appliances, tools and other equipment, apparatus, appurtenances, and all other property of any nature appertaining to any of the plants, systems, business or operations of the Company, whether or not affixed to the realty, used in the operation of any of the premises or the Company’s electric generation, transmission or distribution facilities, or otherwise, which are now owned or acquired by the Company, and all the estate, right, title and interest of every nature whatsoever, at law as well as in equity, of the Company in and to the same and every part thereof, Trust Moneys (as hereafter defined), Designated Qualifying Securities and, with respect to contracts subjected to the lien of this Indenture by paragraph (c) of Granting Clause First, general intangibles and accounts in each case now owned or which may be hereafter acquired by the Company, it being the intention hereof that all property, rights, privileges and franchises now owned by the Company or acquired by the Company after the date hereof shall be as fully embraced within and subjected to the lien hereof as if such property were specifically described herein, but excluding in all cases Excepted Property and Excludable Property, now owned or which may be hereafter acquired by the Company.

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GRANTING CLAUSE THIRD

Also any Excepted Property or Excludable Property that may, from time to time hereafter, by delivery or by writing of any kind, be subjected to the lien hereof by the Company or by anyone on its behalf; and the Trustee is hereby authorized to receive the same at any time as additional security hereunder.  Such subjection to the lien hereof of any Excepted Property or Excludable Property as additional security may be made subject to any reservations, limitations or conditions which shall be set forth in a written instrument executed by the Company or the person so acting on its behalf or by the Trustee respecting the ownership, use and disposition of such property or the proceeds thereof.

GRANTING CLAUSE FOURTH

Together with all and singular the tenements, hereditaments and appurtenances belonging or in anywise appertaining to the aforesaid property or any part thereof, with the reversion and reversions, remainder and remainders and all the rents, issues, profits, revenues and other income, products and proceeds of the property subjected or required to be subjected to the lien of this Indenture.

EXCEPTED PROPERTY

There is, however, expressly excepted and excluded from the lien and operation of this Indenture the following described property of the Company, now owned or hereafter acquired (herein sometimes referred to as “Excepted Property”):

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(a)           all cash on hand or in banks or other financial institutions (excluding (i) such cash to the extent it constitutes proceeds of the Trust Estate in which the security interest created by this Indenture is perfected pursuant to the Uniform Commercial Code, for so long as such perfection continues, and (ii) such cash deposited or required to be deposited with the Trustee pursuant to this Indenture), claims, choses in action and judgments, accounts and general intangibles (except with respect to contracts referred to in Granting Clause First), contracts and contract rights and associated general intangibles (except with respect to contracts referred to in Granting Clause First), shares of Stock (including without limitation any interest of the Company in National Rural Utilities Cooperative Finance Corporation or in CoBank, ACB, but excluding Stock in any Subsidiary then issuing Designated Qualifying Securities), Undesignated Qualifying Securities, bonds, notes, repurchase agreements, evidences of indebtedness and other securities and instruments, attributes of an environmental or similar nature that are created or otherwise arise from the generation, purchase or sale of electricity or that result from the avoidance or reduction of the emission of any gas, chemical or other substance (including any and all environmental air quality credits, green credits, renewable energy credits or certificates, carbon credits, emissions reduction credits, certificates, tags, offsets, tax credits, emission allowances, or similar products or rights as well as reporting rights, however entitled, currently existing or later arising under local, state, regional, federal, or international legislation or regulation or voluntary program), bills, patents, patent licenses and other patent rights, patent applications, trade names and trademarks, and service marks other than (i) ”Pledged Securities” (as defined in Article 16), (ii) Designated Qualifying Securities, and (iii) any other property referred to in this  paragraph (a) which is specifically described in Granting Clause First or is by the express provisions of this Indenture subjected or required to be subjected to the lien hereof;

(b)           all automobiles, buses, trucks, truck cranes, tractors, trailers, rolling stock, railcars and similar vehicles and movable equipment and all parts, tools, accessories and supplies used in connection with any of the foregoing;

(c)           all vessels, boats, barges and other marine equipment, all airplanes, airplane engines and other flight equipment, and all parts, tools, accessories and supplies used in connection with any of the foregoing;

(d)           all goods, inventory, wares and merchandise acquired or produced for the purpose of resale in the ordinary course of business (including electricity), all materials and supplies and other personal property which are consumable (otherwise than by ordinary wear and tear) in their use in the operation of the business of the Company, and all hand and other portable tools, equipment and fuel;

(e)           all office furniture, equipment and supplies and all data processing, accounting and other computer equipment, software and supplies;

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(f)            all leasehold interests of the Company (for other than office purposes) under leases for an original term (including any period for which the Company shall have a right of renewal) of less than five years;

(g)           all leasehold interests for office purposes;

(h)           all timber separated from the land included in the Trust Estate and all coal, ore, gas, oil and other minerals, mined, extracted or otherwise separated from the land included in the Trust Estate and all electric energy, gas, steam, water and other products generated, produced or purchased;

(i)            the last day of the term of each leasehold estate (oral or written) and any agreement therefor, now or hereafter enjoyed by the Company and whether falling within a general or specific description of property herein; PROVIDED, HOWEVER, that the Company covenants and agrees that it will hold each such last day in trust for the use and benefit of the Holders of the Outstanding Secured Obligations;

(j)            all permits, licenses, franchises, contracts, agreements, contract rights and other rights not specifically subjected or required to be subjected to the lien hereof by the express provisions of this Indenture, whether now owned or hereafter acquired by the Company, which by their terms or by reason of applicable law would become void or voidable if mortgaged or pledged hereunder by the Company or which cannot be granted, conveyed, mortgaged, transferred or assigned by this Indenture without the consent of other parties whose consent is not secured, or without subjecting the Trustee to a liability not otherwise contemplated by the provisions of this Indenture, or which otherwise may not be, hereby lawfully and effectively granted, conveyed, mortgaged, transferred and assigned by the Company;

(k)           any personal property in which a security interest cannot be lawfully perfected under the laws of the United States or of any state in each case by the filing of a Uniform Commercial Code financing statement;

(l)            all property, real, mixed or personal, located outside of the State of Alaska which is not specifically described in the Granting Clauses, not specifically subjected or required to be subjected to the lien of this Indenture by any provision hereof, and not part of or used or for use in connection with any property specifically subjected or required to be subjected to the lien hereof by the express provisions hereof;

(m)           the property identified in Exhibit C attached hereto; and

(n)           all property released from the lien of this Indenture without being sold, exchanged or otherwise disposed of by the Company, as provided in Section 6.2.

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PROVIDED, HOWEVER, that (i) if, upon the occurrence of an Event of Default, the Trustee, or any separate trustee or co-trustee appointed under Section 10.14 or any receiver appointed pursuant to statutory provision or order of court, shall have entered into possession of all or substantially all of the Trust Estate, all the Excepted Property described or referred to in the foregoing paragraph (a) through (g), inclusive, then owned or thereafter acquired by the Company shall immediately, and, in the case of any Excepted Property described or referred to in paragraphs (h) through (k), inclusive, upon demand of the Trustee or such other trustee or receiver, become subject to the lien hereof to the extent permitted by law, and the Trustee or such other trustee or receiver may, to the extent permitted by law, at the same time likewise take possession thereof, and (ii) whenever all Events of Default shall have been cured and the possession of all or substantially all of the Trust Estate shall have been restored to the Company, such Excepted Property shall again be excepted and excluded from the lien hereof to the extent and otherwise as hereinabove set forth.

EXCLUDABLE PROPERTY

There is also, however, expressly excepted and excluded from the foregoing Granting Clauses and the lien and operation of this Indenture all Excludable Property, now owned or hereafter acquired.

The Company may, however, pursuant to Granting Clause Third, subject to the lien of this Indenture any Excepted Property or Excludable Property, whereupon the same shall cease to be Excepted Property or Excludable Property.

TO HAVE AND TO HOLD all said property, rights, privileges and franchises of every kind and description, real, mixed or personal hereby and hereafter (by Supplemental Indenture or otherwise) granted, bargained, sold, alienated, remised, released, conveyed, assigned, transferred, mortgaged, hypothecated, pledged, set over or confirmed as aforesaid, or agreed or covenanted so to be, together with all the appurtenances thereto appertaining (said properties, rights, privileges and franchises, including any cash and securities hereafter deposited or required to be deposited with the Trustee (other than any such cash which is specifically stated herein not to be deemed part of the Trust Estate) being herein collectively called the “Trust Estate”) unto the Trustee and its successors and assigns forever.

SUBJECT, HOWEVER, to (i) Permitted Encumbrances, (ii) to the extent permitted by Section 14.6, as to property hereafter acquired, (a) any duly recorded or perfected Prior Lien that may exist thereon at the date of the acquisition thereof by the Company, and (b) purchase money mortgages, other purchase money liens, chattel mortgages, security agreements, conditional sales agreements or other title retention agreements created by the Company at the time of acquisition thereof, and (iii) defects of title to and encumbrances on property as shown on Exhibit A and existing on the date hereof.

BUT IN TRUST, NEVERTHELESS, with power of sale, for the equal and proportionate benefit and security of the Holders from time to time of all the Outstanding Secured Obligations without any priority of any Outstanding Secured Obligations over any other Outstanding Secured Obligations and for the enforcement of the payment of Outstanding Secured Obligations in accordance with their terms.

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UPON CONDITION that, until the happening of an Event of Default and subject to the provisions of Article 6 and not in limitation of the rights elsewhere provided in this Indenture, the Company shall be permitted and have the right to possess, use, operate and enjoy the Trust Estate, except cash, securities and other personal property deposited, or required to be deposited, with the Trustee and to explore for, mine, extract, produce and dispose of coal, ore, gas, oil and other minerals or natural resources, to harvest standing timber and to collect, receive and use the rents, issues, profits, revenues and other income, products and proceeds of the Trust Estate or the operation of the property constituting part of the Trust Estate.

AND IT IS HEREBY COVENANTED AND DECLARED that all Pre-Existing Obligations are to be authenticated and delivered, the Additional Obligations are to be authenticated and delivered and the Trust Estate is to be held and applied by the Trustee, subject to the further covenants, conditions and trusts hereinafter set forth, and the Company does hereby covenant and agree to and with the Trustee, for the equal and proportionate benefit of all Holders of the Outstanding Secured Obligations as follows:

1. DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION

1.1. Definitions.

For all purposes of this Indenture, except as otherwise expressly provided orunless the context otherwise requires:

(a)           The terms defined in this Article have the meanings assigned to them in this Article and include the plural as well as the singular.

(b)           At any time at which this Indenture is qualified or required to be qualified under the Trust Indenture Act, all other terms used herein which are defined therein either directly or by reference therein, have the meanings assigned to them therein.

(c)           All accounting terms not otherwise defined herein have the meanings assigned to them, and all determinations and computations herein provided for shall be made, in accordance with Accounting Requirements (as hereinafter defined), and the express reference to “Accounting Requirements” with respect to certain terms, determinations or computations shall not imply that other terms, determinations and computations shall not be defined or made in accordance with “Accounting Requirements”; PROVIDED, HOWEVER, for purposes of all determinations and computations hereunder (i) if the Company elects to adopt Financial Accounting Standards Board Accounting Standards Codification 825, Financial Instruments (or any successor accounting standard) with respect to any indebtedness, such adoption shall be disregarded; and (ii) the assets, liabilities, equities, revenues, expenses or margins of any variable interest entity that is consolidated for accounting purposes with the Company but which is not a Subsidiary of the Company shall be disregarded.

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(d)           All references herein to “Accounting Requirements” refer to such requirements as are in use in the United States at the time of the determination of any computation required or permitted hereunder, or, at the option of the Company, such requirements in use at the date of the execution and delivery of this Indenture.

(e)           The words “herein,” “hereof” and “hereunder” and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision.

(f)            The words “include” and “including” shall not be terms of limitation, and shall in all cases, whether or not expressly provided, be read to be “include, without limitation,” and “including, without limitation,” respectively.

(g)           When used herein the terms “corporation” and “company” or other equivalent terms shall include any legal entity whether in the form of a corporation, cooperative, general partnership, limited partnership, joint venture, association, joint-stock company, limited liability company, limited liability partnership, trust or unincorporated organization.

(h)           All references in this instrument to designated “Articles,” “Sections” and other subdivisions are to the designated Articles, Sections and other subdivisions of this instrument as originally executed, unless such Article, Section or other subdivision of this instrument shall have been amended, in which case the reference shall be to such Article, Section or other subdivision as so amended.

(i)            The terms in Granting Clause Second shall have the meaning assigned to them in the Uniform Commercial Code to the extent not otherwise defined herein.

(j) The word “or” shall not be exclusive.

(k)           Certain terms used principally in Article 10 are defined in that Article.

(l)            Reference to a Person means that Person and its successors and permitted assigns.

“Accountant” means a Person regularly engaged in the practice of accounting who (except as otherwise expressly provided in this Indenture) may be employed by or affiliated with the Company and who need not be independent, certified, licensed or public.

“Accounting Requirements” means the requirements of the system of accounts prescribed by any regulatory authority having jurisdiction over the Company or, in the absence thereof, the requirements of generally accepted accounting principles applicable to similar Persons conducting business similar to that of the Company.  Generally accepted accounting principles refers to a common set of accounting standards and procedures that are either promulgated by an authoritative accounting rulemaking body or accepted as appropriate due to wide-spread application in the United States.

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“acquired” means to acquire by lease, purchase, exchange, construction, merger, consolidation, conveyance, transfer or otherwise.  The terms “acquired,” “acquiring” and “acquisition” have meanings correlative to the foregoing.

“Acquired Facility” means any property which, within six months prior to the date of its acquisition by the Company, has been used or operated by a Person or Persons other than the Company in a business similar to that in which such property has been or is to be used or operated by the Company.

“Act” when used with respect to any Holder or Holders has the meaning stated in Section 1.2.

“Additional Obligations” has the meaning stated in the first recital of this Indenture and includes any Obligation authenticated and delivered hereunder after the date hereof.

“Affiliate” of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person.  For purposes of this definition, “control” of any specified Person means the power to direct the management and policies of such specified Person, directly or indirectly, whether through the ownership of Voting Stock, by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing.

“Amount of Property Additions” or “Amount” as applied to any Property Additions means the Cost to the Company of such Property Additions or the Fair Value to the Company (at the time determined in accordance with the definition of Fair Value to the Company) of such Property Additions, whichever is less.

“Application” means an application for the authentication and delivery of Additional Obligations, the advance or issuance of any unadvanced or unissued amount or portion of any Conditional Obligation or series of Conditional Obligations, the release of any part of the Trust Estate, the withdrawal of Deposited Cash or Trust Moneys or the surrender or redesignation of Designated Qualifying Securities under any provision of this Indenture and shall consist of, and shall not be deemed complete until there shall have been delivered to the Trustee, such cash, Obligations, Designated Qualifying Securities, securities and documents as are required by such provision to establish the right of the Company to the action applied for.  The date of a particular Application shall be deemed to be the date of completion of all such deliveries to the Trustee and not the date on which any particular document is so delivered.

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“Appraiser” means a Person engaged in the business of appraising property or otherwise qualified to pass upon the Fair Value to the Company of property or any other valuation of property that may be required pursuant to the provisions of this Indenture who (except as otherwise expressly provided in this Indenture) may be employed by or affiliated with the Company and who need not be independent or licensed.

“Authenticating Agent” when used with respect to any particular series of Obligations means any Person named as Authenticating Agent for said series in the provisions of this Indenture creating said series until a successor Authenticating Agent therefor becomes such pursuant thereto, and thereafter “Authenticating Agent” shall mean such successor.

“Available Margins Certificate” means an Officers’ Certificate, dated not more than 30 days prior to the date of the related Application, and signed, in addition to the two Officers signing the same, by a Person who may be one of such Officers, signing as an Accountant, stating that:

(a)           the Margins for Interest for either (i) the fiscal year of the Company immediately preceding the fiscal year in which the relevant Application is made; PROVIDED, HOWEVER, that if such Application is made within 90 days of the end of the immediately preceding fiscal year for purposes of the Application the Company may use the fiscal year of the Company immediately preceding such immediately preceding fiscal year of the Company, or (ii) any twelve consecutive calendar months during the period of 18 calendar months immediately preceding the first day of the calendar month in which the relevant Application is made, are not less than 1.10 times the Interest Charges during such fiscal year or other twelve-month period; and

(b)           the Margins for Interest have been calculated in accordance with the definitions contained in this Section.

“Board of Directors” means either the board of directors of the Company or any duly authorized committee of such board.

“Board Resolution” means a copy of a resolution certified by the Secretary or an Assistant Secretary of the Company to have been duly adopted by the Board of Directors and to be in full force and effect on the date of such certification, and delivered to the Trustee.

“Bondable Additions” means the excess of (1) the Amount of Property Additions over (2) the amount of Retirements (less credits thereto), computed in accordance with Section 5.2 and certified as Bondable Additions in the Summary of Certificate as to Bondable Additions then being delivered in accordance with Section 5.2.

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“Bondable Property” means all Property Additions, and all property owned by the Company on the Cut-Off Date which would constitute Property Additions if acquired after that date (except for the requirement to deliver Title Evidence with respect to such property), but Bondable Property shall not include any Excepted Property or Excludable Property .

“Book-Entry System” means that system whereby the clearance and settlement of transactions in Obligations held in such system is made through electronic book-entry changes, thereby eliminating the need for physical movement of Obligations, certificates or other instruments.

“Capital Assets Lease” has the meaning stated in Section 7.7.

“Cede & Co.” means Cede & Co., as nominee for DTC, and any successor nominee of DTC with respect to the Obligations.

“Certificate as to Bondable Additions” means an Officers’ Certificate, dated not more than 30 days prior to the date of the related Application, complying with the requirements of Section 5.2 and signed, in addition to the two Officers signing the same as officers, by a Person, who may be one of such officers, signing as an Engineer or an Appraiser and a Person, who may be one of such officers, signing as an Accountant.

“Certified Progress Payments” means payments, made by the Company under a Qualified EPC Contract, for generation and related facilities that will constitute Property Additions upon the performance of such Qualified EPC Contract, that are certified by the Company to the Trustee as the basis for (1) loans or advances under Conditional Obligations under Section 5.6, (2) the withdrawal and payment of Deposited Cash under Section 5.8, (3) the authentication and delivery of Additional Obligations under Section 5.9, or (4) the withdrawal and payment of Trust Moneys under Section 7.5.

“Commission” means the Securities and Exchange Commission, as from time to time constituted, created under the Securities Exchange Act of 1934, or if at any time after the execution of this instrument such Commission is not existing and performing the duties theretofore assigned to it under the TIA, then the body performing such duties at such time.

“Company” means the Person named as the “Company” in the first paragraph of this instrument until a successor corporation shall have become such pursuant to the applicable provisions of this Indenture, and thereafter, except to the extent otherwise contemplated by the last paragraph of Section 12.2, “Company” shall mean such successor Person.

“Company Consent” “Company Order” and “Company Request”  mean, respectively, a written consent, order or request signed in the name of the Company by an Officer of the Company, and delivered to the Trustee.

“Conditional Obligations” has the meaning stated in Section 5.6.

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“Cost to the Company” of Property Additions means the actual cost of acquisition or construction thereof by the Company determined in accordance with Accounting Requirements.  Such cost of acquisition or construction shall include capitalized interest and other expenses (including, without limitation, taxes, engineering costs, allocated administrative charges, and expenses, legal costs and expenses, insurance, casualties and supervisory fees and expenses) relating to such acquisition or construction and properly chargeable to the Company’s property accounts in accordance with Accounting Requirements.  When the consideration for Property Additions consists (in whole or in part) of property or securities, the fair market value in cash of such consideration (as of the date of the transfer and delivery thereof) shall be deemed the equivalent of cash in the determination of cost.  The Cost to the Company of any Property Additions acquired as an Acquired Facility shall include the cost to the Company of any franchises, contracts, operating agreements and other rights and Non-Bondable Property simultaneously acquired with, and related to, such Property Additions, for which no separate or distinct consideration shall have been paid or apportioned; and, except in such case, the Cost to the Company of any property, only part of which constitutes Property Additions and all of which is acquired for a single consideration, shall be properly allocated in the Certificate as to Bondable Additions in which such Property Additions are certified to the Trustee. In the case of Property Additions consisting of property owned by a successor corporation at the time it shall have become such by consolidation, merger, conveyance or transfer as provided in Article 12, or acquired by it by such consolidation, merger, conveyance or transfer, the Cost to the Company shall be the gross amount at which such property is recorded in the plant or property accounts (exclusive of any amounts carried in plant or property adjustment accounts) on the books of such successor corporation, or the constituent or predecessor corporation from which such property was acquired, immediately prior to such consolidation, merger, conveyance or transfer, less related reserves for depreciation, depletion, obsolescence, retirements and amortization as of that date.

“Credit Enhancement” means, with respect to any Obligation, the provision of an insurance policy, letter of credit, surety bond or any other similar undertaking, whereby the provider thereof becomes unconditionally obligated to pay when due, to the extent not paid by the Company or otherwise, the principal of and interest on such Obligation or on another obligation the payment on which is (i) secured by such Obligation or (ii) credited against the principal and interest due on such Obligation.

“Credit Enhancement Obligations” has the meaning stated in Section 5.7.

“Credit Enhancer” means any Person that, pursuant to this Indenture or a Supplemental Indenture, is designated as a Credit Enhancer and which provides Credit Enhancement.

“Cut-Off Date” means September 30, 2010.

“Defaulted Interest” has the meaning stated in Section 3.9.

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“Defeasance Securities” means and includes any of the following securities, if and to the extent the same are not subject to redemption or call prior to maturity by anyone other than the holder thereof and are at the time legal for investment of the Company’s funds:

(a)            any bonds or other obligations which as to principal and interest constitute direct obligations of, or are unconditionally guaranteed by, the United States of America;

(b) cash; and

(c)            any certificates or any other evidences of an ownership interest in obligations or in specified portions thereof (which may consist of specified portions of the interest thereon) of the character described in paragraph (a) or (b) above.

“Deposited Cash” has the meaning stated in Section 5.4.

“Designated Qualifying Securities” means, as of the date of determination, such Qualifying Securities held by the Trustee which have been designated by the Company (1) pursuant to Section 5.5 as the basis for the issuance and delivery of Obligations, (2) pursuant to Section 5.6 as the basis for the advance or issuance of any unadvanced or unissued portion of any Conditional Obligation or series of Conditional Obligations, (3) pursuant to Section 5.8 as the basis for the withdrawal of Deposited Cash, (4) pursuant to Section 6.2 as the basis for the release of any part of the Trust Estate, (5) pursuant to Section 7.4 as the basis for the withdrawal of Trust Moneys, or (6) pursuant to Section 17.3(b) as the basis for surrender or redesignation of other Designated Qualifying Securities; subject in all such cases to redesignation or surrender thereof pursuant to Section 17.3.

“Distribution” has the meaning stated in Section 14.15.

“DTC” means The Depository Trust Company, a limited purpose trust company organized under the laws of the State of New York, and its successors and assigns.

“DTC Participant” means a broker-dealer, bank or other financial institution for which DTC holds Obligations.

“Engineer” means a Person engaged in the engineering profession or otherwise qualified to pass upon engineering matters who (except as otherwise expressly provided in this Indenture) may be employed by or affiliated with the Company and who need not be independent, certified or licensed.

“Event of Default” has the meaning stated in Section 9.1 or in any Supplemental Indenture.  An Event of Default shall “exist” if an Event of Default shall have occurred and be continuing.

“Excepted Property” has the meaning stated in the Granting Clauses hereof.

“Excludable Property” means property with respect to which an Officers’ Certificate has been delivered to the Trustee, prior to or in connection with the Company’s acquisition of such property, identifying such property and stating that (1) such property is not to become subject to the lien of this Indenture, and (2) should the Company not have the use of such property it would remain capable of complying with the requirements of Section 14.14.  “Excludable Property” shall include the energy or other output of such certified property, and all property, rights, privileges and franchises of the Company of every kind and description, real, personal or mixed, tangible or intangible, whether now owned or hereafter acquired by the Company, wherever located, including goods (including equipment, materials and supplies), accounts and general intangibles, relating solely to such certified property or the energy or other output of such property.

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“Existing Indenture” has the meaning stated in the Recitals of this instrument.

“Fair Value to the Company” when used with respect to any particular Property Additions, means the fair value thereof to the Company, determined as of the date of the Company’s acquisition of such Property Additions and in accordance with the provisions of this Indenture; PROVIDED, HOWEVER, that the “Fair Value to the Company” of Property Additions that would not constitute Property Additions but for satisfaction of the conditions set forth in clauses (i) and (ii) of paragraph (d) of the definition of “Property Additions” set forth below shall not exceed the product obtained by multiplying the Fair Value to the Company of such Property Additions (determined as if the remaining term of the leasehold interest to which such property relates were equal to the economic life of such property) by a fraction, the numerator of which shall be the remaining term of the leasehold interest to which such property relates (including any periods for which the Company has the option to extend or renew such leasehold interest) as of the date of the Application and the denominator of which is the useful economic life of such Property Additions; and PROVIDED, FURTHER, that the “Fair Value to the Company” of Property Additions that would not constitute Property Additions but for satisfaction of the conditions set forth in clause (ii) of paragraph (3) of the definition of “Property Additions” shall take into account any irrevocable deposit by the Company of cash or securities (which securities must be rated by any nationally recognized statistical rating organization the higher of (1) “A” or (2) as high as any series of Obligations are rated) in a fund or funds for the exclusive purposes of discharging or securing the Company’s obligations to make rental payments and payments of a fixed price purchase option under any such lease.  The Fair Value to the Company of any particular Property Additions subject to a lien constituting a Permitted Encumbrance or permitted by the proviso to Section 6.2(d)(ii), shall be determined as if such property were free of such lien.

“Holder” when used with respect to any Obligation means the Person in whose name such Obligation is registered in the Obligation Register.

“Indenture” means this instrument as originally executed or as it may from time to time be supplemented, modified or amended by one or more indentures or other instruments supplemental hereto (including Supplemental Indentures) entered into pursuant to the applicable provisions hereof.

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“Independent” when used with respect to any specified Person means such a Person who (i) is in fact independent, (ii) does not have any direct financial interest or any material indirect financial interest in the Company or in any other obligor upon the Obligations or in any Affiliate of the Company or of such other obligor and (iii) is not connected with the Company or such other obligor as an officer, employee, promoter, underwriter, trustee, partner, director or person performing similar functions.  Whenever it is herein provided that any Independent Person’s opinion, report or certificate shall be furnished to the Trustee, such opinion, report or certificate shall state that the signer has read this definition and that the signer is Independent within the meaning thereof.

“Interest Charges” for any period means the total interest charges (other than capitalized interest charges) of the Company for such period (determined in accordance with Accounting Requirements) related to (1) all Outstanding Secured Obligations, (2) outstanding Prior Lien Obligations and (iii) outstanding indebtedness secured by liens described in paragraph (y) of the definition of “Permitted Encumbrances” in all cases including amortization of debt discount and expense or premium, but excluding all interest charges related to (a) Obligations authenticated and delivered on the basis of Qualifying Securities issued by a wholly owned Subsidiary of the Company under a Qualifying Securities Indenture that has a rate covenant substantially identical in substance to Section 14.14 with a requirement of Margins for Interest of not less than 1.10 times Interest Charges, so long as such Subsidiary complies with such rate covenant, and (b) Obligations that have actually been paid by another Person that has agreed to be primarily liable for such Obligation pursuant to an assumption agreement or similar undertaking, PROVIDED, HOWEVER, such assumption agreement or similar undertaking is not a mechanism by which the Company continues to make payments to such Person based on payments made by such Person on account of its assumed liability or by which the Company otherwise seeks to avoid having interest related to such Obligations included in the definition of Interest Charges without the economic substance of an assumption of liability on the part of such Person).

“Interest Payment Date” means the Stated Maturity of an installment of interest on the Obligations.

“Investment Securities” means any of the following obligations or investment property on which neither the Company, any other obligor on the Obligations nor any Affiliate of either is the obligor: (a) Defeasance Securities; (b) interest bearing deposit accounts (which may be represented by certificates of deposit) in any national or state bank (which may include the Trustee or any Paying Agent) or savings association which has outstanding securities rated in either of the two highest rating categories (without regard to modifiers) for short-term securities or in any of the three highest rating categories (without regard to modifiers) for long-term securities; (c) bankers’ acceptances drawn on and accepted by any commercial bank (which may include the Trustee or any Paying Agent) which has outstanding securities rated in either of the two highest rating categories (without regard to modifiers) for short-term securities or in any of the three highest rating categories (without regard to modifiers) for long-term securities; (d) direct obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by, any state or territory of the United States or the District of Columbia, or any political subdivision of any of the foregoing, which are rated in either of the two highest rating categories (without regard to modifiers) for short-term securities or in any of the three highest rating categories (without regard to modifiers) for long-term securities; (e) corporate debt securities which are rated in either of the two highest rating categories (without regard to modifiers) for short-term securities or in any of the three highest rating categories (without regard to modifiers) for long-term securities; (f) repurchase agreements with respect to any of the foregoing obligations or securities with any banking or financial institution (which may include the Trustee or any Paying Agent) which has outstanding securities rated in either of the two highest rating categories (without regard to modifiers) for short-term securities or in any of the three highest rating categories (without regard to modifiers) for long-term securities; and (g) securities issued by any regulated investment company (including any investment company for which the Trustee or any Paying Agent is the advisor), as defined in Section 851 of the Internal Revenue Code or any such successor section of the Internal Revenue Code, PROVIDED, HOWEVER, that the portfolio of such investment company is limited to obligations or securities of the character and investment quality contemplated in clauses (a) through (e) above and repurchase agreements which are fully collateralized by any of such obligations or securities.  References to the rating of any such obligations or investment property shall refer to a rating by a nationally recognized statistical rating organization (as designated by the Commission).

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“Leased Assets” has the meaning stated in Section 7.7.

“Margins for Interest” means, for any period, the assignable margins of the Company for such period, which shall include revenues of the Company, if any, subject to possible refund at a later date; PROVIDED, HOWEVER, no deductions shall be made as a result of refunds ordered in a subsequent period; adjusted by:

(a) adding:

(i) Interest Charges;

(ii)           the amount, if any, deducted in arriving at assignable margins on account of accruals of Federal income and other taxes imposed on income after deduction of Interest Charges for such period;

(iii)           the amount, if any, deducted in arriving at assignable margins on account of any losses incurred by any Subsidiary or Affiliate of the Company other than amounts deducted pursuant to clause (b)(ii) below;

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(iv)           the amount, if any, the Company actually receives in such period as a dividend or other distribution of earnings of any Subsidiary or Affiliate (whether or not such earnings were for such period or any earlier period or periods) which amount has not otherwise been reflected as an increase in assignable margins in such period or any earlier period or periods; and

(v)           the amount of any expenses or provisions for any non-recurring charge to income or margins or retained earnings of whatever kind or nature (including, without limitation, (A) the recognition of expense due to the non-recoverability of assets or expenses and (B) the accelerated portion of the amortization of any deferred charges or regulatory assets carried on the books of the Company) that has been deducted or otherwise taken into account in arriving at assignable margins whether or not recorded as a non-recurring charge in the Company’s books of account; and

(b) subtracting:

(i)           the amount, if any, added in arriving at assignable margins on account of any income, gain, earnings or profits of any Subsidiary or Affiliate of the Company other than amounts added pursuant to clause (a)(iv) above; and

(ii)           the amount, if any, the Company actually contributes to the capital of, or actually pays under a guarantee or like agreement by the Company of an obligation of, any Subsidiary or Affiliate in such period, to the extent of any accumulated losses incurred by such Subsidiary or Affiliate (whether or not such losses were for such period or any earlier periods), but only to the extent (A) such losses have not otherwise caused other contributions or payments to be subtracted from assignable margins for purposes of computing Margins for Interest for a prior period and (B) such amount has not otherwise been subtracted from assignable margins.

Margins for Interest shall be determined in accordance with Accounting Requirements; PROVIDED, HOWEVER, that such determination shall be made on a Company only and not on a consolidated basis.

“Maturity” means, when used with respect to any Obligation, the date on which the principal of such Obligation, or any installment thereof, becomes due and payable as therein or herein provided, whether at the Stated Maturity or by declaration of acceleration or call for redemption or purchase or prepayment or otherwise; PROVIDED, HOWEVER, that any obligation to purchase or otherwise acquire any Additional Obligation from its Holder shall not constitute an undertaking to pay the principal of such Obligation if so provided in the Supplemental Indenture creating such Additional Obligation.

“Non-Bondable Property” means any property owned by the Company other than Bondable Property.

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“Obligation Register” and “Obligation Registrar” have the respective meanings stated in Section 3.7.

“Obligations” has the meaning stated in the recitals of this Indenture.

“Officer” for purposes of any consent, order, certificate, opinion, request or other action hereunder means the President, the General Manager, any Executive Manager or any other officer or employee of the Company authorized by a Board Resolution to give such consent, order, certificate or opinion, or make such request or perform such action.

“Officers’ Certificate” means a certificate signed by any two Officers of the Company.  Wherever this Indenture requires that an Officers’ Certificate be signed also by an Accountant, an Engineer or other expert, such Accountant, Engineer or other expert may (except as otherwise expressly provided in this Indenture) be employed by the Company.

“Opinion of Counsel” means a written opinion (or, in the case of matters relating to title, real or personal property records or the existence or priority of liens, a written certificate) of counsel who may (except as otherwise expressly provided in this Indenture) be employed by, or be outside counsel to, the Company and who shall be reasonably acceptable to the Trustee.  The acceptance by the Trustee of such opinion shall be sufficient evidence that such counsel is reasonably acceptable to the Trustee.

“Original Issue Discount Obligation” means any Obligation declared to be an “Original Issue Discount Obligation” in the Supplemental Indenture establishing the series to which such Obligation belongs.

“Outstanding” when used with respect to Obligations means, as of the date of determination, all Pre-Existing Obligations and all Additional Obligations authenticated and delivered under this Indenture, except:

(a)           Obligations, or any portion thereof, theretofore cancelled by the Trustee or delivered to the Trustee for cancellation or delivered to the Trustee marked surrendered, cancelled, satisfied or otherwise evidenced to the Trustee’s satisfaction as paid or tendered for payment pursuant to any Supplemental Indenture (and which amount may not be re-advanced);

(b)           Obligations for whose payment or redemption money or Defeasance Securities in the necessary amount has been theretofore deposited with the Trustee or any Paying Agent (other than the Company) or any other bank, trust company or financial institution in trust, or set aside and segregated in trust by the Company (if the Company shall act as its own Paying Agent), for the Holders of such Obligations, PROVIDED, HOWEVER that, if such Obligations are to be redeemed, or prepaid, notice of such redemption or prepayment has been duly given or other provision therefor satisfactory to the Trustee has been made;

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(c)           Obligations which have been paid pursuant to Section 3.8 or in exchange for or in lieu of which other Obligations have been authenticated and delivered pursuant to this Indenture, other than any such Obligations in respect of which there shall have been presented to the Trustee proof satisfactory to it that such Obligations are held by a bona fide purchaser in whose hands such Obligations are valid obligations of the Company; and

(d)           Additional Obligations which have not been sold, pledged or subjected to a security interest and have been surrendered to the Trustee, or which a portion thereof has not been advanced and with respect to such portion any commitment to advance thereunder has terminated, as provided in the last paragraph of Section 5.1;

PROVIDED, HOWEVER, that in determining whether the Holders of the requisite principal amount of Obligations Outstanding or the Obligations Outstanding of a series, as the case may be, have given any request, demand, authorization, direction, notice, consent or waiver hereunder, Obligations owned by the Company or any other obligor upon the Obligations or any Affiliate of the Company or of such other obligor (unless the Company, such obligor and such Affiliate or Affiliates own all Obligations Outstanding under this Indenture or, as to matters relating solely to a particular series, all Obligations Outstanding of such series, as the case may be, determined without regard to this proviso) shall be disregarded and deemed not to be Outstanding, except that, in determining whether the Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Obligations which are registered in the name of the Company, an Affiliate of the Company, another obligor on such Obligations (other than a Credit Enhancer) or an Affiliate of such obligor of which the Trustee has been given written notice shall be so disregarded.  Obligations so owned which have been pledged in good faith may be regarded as Outstanding for such purposes if the pledgee establishes to the satisfaction of the Trustee the pledgee’s right so to act with respect to such Obligations and that the pledgee is not the Company or any other obligor upon the Obligations or any Affiliate of the Company or of such other obligor.  For purposes of the definition of “Outstanding,” any Credit Enhancer shall not be an obligor upon any Obligation.

“Outstanding” when used with respect to Qualifying Securities, has the meaning contained in the related Qualifying Securities Indenture.

“Outstanding Secured Obligations” means, as of the date of determination, (i) all Obligations then Outstanding other than Obligations then owned by the Company or any wholly owned Subsidiary and held in its treasury and (ii) all Obligations, if any, alleged to have been destroyed, lost or stolen which have been replaced or paid as provided in Section 3.8 but whose ownership and enforceability by the Holder thereof have been established by a court of competent jurisdiction or other competent tribunal or otherwise established to the satisfaction of the Company and the Trustee.

“Paying Agent” means the Company and any bank or trust company organized under the laws of the United States or any state of the United States and having a combined capital and surplus of not less than $100 million which is authorized by the Company to pay the principal of (and premium, if any) or interest on any Obligations on behalf of the Company.

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“Periodic Offering” means an offering of Additional Obligations of a series from time to time any or all of the specific terms of which Additional Obligations, including the rate or rates of interest, if any, thereon, the Stated Maturity or Maturities thereof and the redemption provision, if any, with respect thereto, are to be determined by the Company or its agents at or about the time of the issuance of such Additional Obligations.

“Permitted Encumbrances” means:

(a)           as to the property specifically described in Granting Clause First, the restrictions, exceptions, reservations, terms, conditions, limitations, interests and other matters which are set forth or referred to in such descriptions or of record on the date hereof, PROVIDED, that such matters do not evidence any mortgage, lien, security, title, charge or encumbrance on or pledge of or security interest in such property that secures indebtedness for borrowed money and is prior to or upon a parity with the lien of this Indenture;

(b)           as to property which the Company may hereafter acquire, any restriction, exception, reservation, term, condition, agreement, lease, sublease, covenant, limitation, interest or other matter which is of record on the date of such acquisition or expressed or provided in the deeds or other instruments under which the Company shall acquire the same, PROVIDED, that such matters do not evidence any mortgage, lien security title, charge or encumbrance on or pledge of or security interest in such property that secures indebtedness for borrowed money and is prior to or upon a parity with the lien of this Indenture;

(c)           liens for taxes, assessments and other governmental charges not delinquent, and ordinances establishing sewer, lighting or other local improvement districts and assessments therefor;

(d)           liens for taxes, assessments and other governmental charges already delinquent which are currently being contested in good faith by appropriate proceedings, PROVIDED the Company shall have set aside on its books adequate reserves, with respect thereto if such reserves are required by Accounting Requirements;

(e)           mechanics’, workmen’s, repairmen’s, materialmen’s, warehousemen’s, contractors, subcontractors and carriers’ liens and other similar liens arising in the ordinary course of business or incident to current construction for charges which are not delinquent, or which are being contested in good faith and have not proceeded to judgment and as to which the Company shall have set aside on its books adequate reserves with respect thereto if such reserves are required by Accounting Requirements;

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(f)            liens in respect of judgments or awards (i) with respect to which the Company shall in good faith currently be prosecuting  an appeal or proceedings for review and with respect to which the Company shall have secured a stay of execution pending such appeal or proceedings for review, PROVIDED the Company shall have set aside on its books adequate reserves with respect thereto if such reserves are required by Accounting Requirements, or (ii) which are fully covered by insurance;

(g)           easements and rights granted by the Company under Section 6.1(d) and similar rights granted by any predecessor in title of the Company;

(h)           easements, leases, restrictions, rights of way, exceptions, reservations or other rights of others in any property of the Company for streets, roads, bridges, pipes, pipe lines, railroads, towers, poles, wires, conduits, mains, metering stations, electric, electronic, optical or other power or electric transmission and distribution lines, telecommunications and telephone lines, the removal of oil, gas, coal, minerals or other natural resources and other similar purposes, flood rights, river control and development rights, sewage and drainage rights, restrictions against pollution and zoning laws and defects and irregularities in the record evidence of title, PROVIDED that such easements, leases, restrictions, rights of way, exceptions, reservations or other rights of others do not in the aggregate materially impair the use of the Trust Estate taken as a whole for the purposes for which it is held by the Company;

(i)            liens upon lands over which easements, licenses, permits or rights-of-way are acquired by the Company for any of the purposes specified in paragraph (h) of this definition, securing indebtedness neither created, assumed nor guaranteed by the Company nor on account of which it customarily pays interest;

(j)             leases to, or permits for occupancy by, other Persons existing at the date of this instrument affecting property owned by the Company at said date (and future modifications, renewals and extensions thereof);

(k)            leases to, and permits for occupancy by, other Persons entered into after the date of this instrument affecting property owned by the Company, whether acquired before or after the date of this instrument, (i) for a term of not more than ten years (including any extensions or renewals) or (ii) if for a term of more than ten years which do not materially impair the Company’s use of the property in the conduct of its business;

(l)             any lien or privilege vested in any lessor, landlord, licenser or permittor or other Person for rent to become due from, or for other obligations or acts to be performed by, the Company, the payment of which rent or the performance of which other obligations or acts is required under leases, subleases, licenses or permits, so long as the payment of such rent or the performance of such other obligations or acts is not delinquent or being contested in good faith and has not proceeded to judgment and with respect to which the Company shall have set aside on its books adequate reserves if required by Accounting Requirements;

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(m)           liens or privileges of any employees of the Company for salary or wages earned but not yet payable;

(n)           the burdens of any law or governmental regulation, license or permit requiring the Company to maintain certain facilities or perform certain acts as a condition of the carrying on of the Company’s business or its occupancy of or interference with any public lands or any river or stream or navigable waters;

(o)           any restrictions, covenants, defects or irregularities in or other deficiencies of title to any easement or rights-of-way of or used by the Company for pipe lines, telephone lines, telecommunications lines, power lines, towers, poles, wires, conduits, mains, electric transmission lines and distribution lines, substations, metering stations, signal transmission and distribution lines or for similar purposes or appurtenances thereto, or other improvements  thereon, and to any real estate used or to be used primarily for such easement or right-of-way purposes, PROVIDED that (i) the Company shall have obtained from the apparent owner of the lands or estates therein covered by any such easement or right-of-way a sufficient right, by the terms of the instrument granting such right-of-way, to the use thereof for the construction, operation or maintenance of the lines, appurtenances or improvements for which the same are used or are to be used, (ii) the Company has power under eminent domain, or similar statutes, to remove such irregularities or deficiencies, or (iii) such deficiencies may be otherwise remedied without undue effort or expense;

(p)           rights reserved to, or vested in, any municipality or governmental or other public authority to control or regulate any property of the Company or the use thereof, or to use such property in any manner, which rights do not materially impair the use of such property, for the purposes for which it is held by the Company;

(q)           any obligations or duties, affecting the property of the Company, to any municipality or governmental or other public authority with respect to any franchise, grant, license or permit;

(r)           any right which any municipal or governmental authority may have by virtue of any franchise, license, contract or statute;

(s)           any restrictions, including restrictions on transfer, liens or other matters arising from, permitted by, or required by, any law or governmental regulation relating to environmental matters, PROVIDED that such restrictions, liens or other matters do not materially impair the use of such property for the purposes for which it is held and as to any liquidated liens, the Company shall have set aside on its books adequate reserves with respect thereto if such reserves are required by Accounting Requirements;

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(t)            reservations contained in U. S. patents;

(u)           slope or drainage reservations;

(v)           the pledge of current assets, in the ordinary course of business, to secure current liabilities;

(w)           deposits to secure duties or public or statutory obligations, deposits to secure, or in lieu of, surety, stay, performance or appeal bonds, and deposits as security for the payment of taxes or assessments or similar charges;

(x)            any lien or other matter required by law or governmental regulation as a condition to the transaction of any business or the exercise of any privilege or license, or to enable the Company to maintain self-insurance or to participate in any funds established to cover any insurance risks or in connection with worker’s compensation, unemployment insurance, retirement pensions or other social security, or to share in the privileges or benefits required for companies participating in such arrangements;

(y)           any lien or other encumbrance created or assumed by the Company in connection with the issuance of debt securities the interest on which is excludable from gross income of the holder of such security pursuant to the Internal Revenue Code, as amended, for the purposes of financing or refinancing, in whole or in part, the acquisition or construction of property used or to be used by the Company;

(z)            liens or other encumbrances securing indebtedness for the payment of which money or Defeasance Securities, maturing as to principal and interest in such amounts and at such times, as are sufficient to provide for the full and timely payment of such indebtedness shall have been irrevocably deposited in trust or escrow with the trustee or other holder of such lien, and liens on such deposited money or Defeasance Securities, PROVIDED, that if such indebtedness is to be redeemed or otherwise prepaid prior to the stated maturity thereof, any notice requisite to such redemption or prepayment shall have been irrevocably given in accordance with the mortgage or other instrument creating such lien or other encumbrance or irrevocable instructions to give such notice shall have been given to such trustee or other holder;

(aa)          liens arising out of any defeased indenture of the Company;

(bb)          the undivided or other interests of other owners, and liens on such interests, in property owned in common or jointly with the Company or in which the Company has an executory or future interest, and rights of such other owners, co-owners or joint owners in such property, including the rights of such owners in and to such property pursuant to ownership contracts or otherwise;

(cc)          any lien or other encumbrances of any Person arising on account of the ownership in common or jointly with the Company of an undivided or other interest in property which relate to amounts which are not due and payable, or which are being contested by the Company in good faith, and with respect to which the Company shall have set aside on its books adequate reserves; or

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(dd)         liens which have been bonded for the full amount of the obligations secured by such lien or for the payment of which the Company has deposited with the Trustee or with an escrow agent cash or other property with a value equal to the full amount of the obligations secured by such lien.

“Person” means any individual, corporation, cooperative, joint venture, association, joint-stock company, limited liability company, general partnership, limited liability partnership, limited partnership, limited liability limited partnership, trust, unincorporated organization or government or any agency or political subdivision thereof.

“Place of Payment” when used with respect to the Obligations of any series means a city or any political subdivision thereof in which the Company is by this Indenture required to maintain an office or agency for the payment of the principal of or interest on the Obligations of such series.

“Pledged Securities” has the meaning stated in Section 16.1.

“Pledged Subsidiary” means a Subsidiary of the Company at least a majority of whose outstanding Voting Stock shall at the time be deposited and pledged or required to be deposited and pledged with the Trustee.

“Pledged Wholly-Owned Subsidiary” means any Subsidiary of the Company all the shares of stock of all classes of which (other than directors’ qualifying shares required to be owned by directors under any applicable law) shall at the time be owned directly by the Company and deposited and pledged or required to be deposited and pledged with the Trustee.

“Predecessor Obligations” of any particular Obligation means every previous Obligation evidencing all or a portion of the same debt as that evidenced by such particular Obligation; and, for purposes of this definition, any Obligation authenticated and delivered under Section 3.8 in lieu of a lost, destroyed or stolen Obligation shall be deemed to evidence the same debt as the lost, destroyed or stolen Obligation.

“Pre-Existing Obligations” has the meaning set forth in the recitals to this Indenture.

“Prior Lien” means any mortgage, lien, security title, charge or encumbrance on or pledge of or security interest in any of the Trust Estate prior to or upon a parity with the lien of this Indenture, other than Permitted Encumbrances.

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“Prior Lien Obligation” means any indebtedness and the evidence thereof, if any, secured by a Prior Lien.

“Property Additions” means property as to which the Company shall provide Title Evidence (which, as to Retired property, may be dated as of a date immediately prior to the Retirement) and which shall be (or, if Retired, shall have been) subject to the lien of this Indenture, which shall be properly chargeable to the Company’s fixed plant accounts under Accounting Requirements (including property acquired to replace property Retired and credited to such accounts) and which shall be:

(A)          acquired (including acquisition by merger, consolidation, conveyance or transfer) by the Company after the Cut-Off Date, including property in the process of construction, insofar as not reflected on the books of the Company with respect to periods on or prior to the Cut-Off Date, and

(B)           used or useful in the business of the Company conducted with the properties described in the Granting Clauses of this Indenture, even though separate from and not physically connected with such properties.

Property Additions need not consist of a specific or completed development, plan, betterment, addition, extension, improvement or enlargement, but may include construction work in progress and property in the process of purchase insofar as the Company owns such property.

“Property Additions” shall also include:

(1)           easements and rights-of-way that are useful for the conduct of the business of the Company, and

(2)           property located or constructed on, over or under public highways, rivers or other public property if the Company has the lawful right under easements, permits, licenses or franchises granted by a governmental body having jurisdiction in the premises or by the law of the state in which such property is located to maintain and operate such property for an unlimited, indeterminate or indefinite period or for the period, if any, specified in such permit, license or franchise or law and to remove such property at the expiration of the period covered by such permit, license or franchise or law, or if the terms of such permit, license franchise or law require any public authority having the right to take over such property to pay fair consideration therefor; and

(3)           tangible property, which would be properly chargeable to the Company’s fixed plant accounts under Accounting Requirements (including property acquired to replace property Retired and credited to such accounts) if title were vested in the Company, if (i) such property itself (in addition to the Company’s leasehold interest in such property) is subject to the lien of this Indenture and (ii) such property is leased to the Company.

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“Property Additions” shall not include:

(a)           good will, going concern value, contracts, agreements, franchises, licenses or permits, whether acquired as such, separate and distinct from the property operated in connection therewith, or acquired as an incident thereto;

(b)           any Stock or indebtedness or certificates or evidences of interest therein or other securities;

(c)           any property that is to remain subject to a Prior Lien (except to the extent permitted by the proviso to Section 6.2(d)(ii)) after the granting of the related Application, or subject to the Permitted Encumbrance described in paragraph (y) of the definition of “Permitted Encumbrances”;

(d)           any plant or system or other property in which the Company shall acquire only a leasehold interest, or any betterments, extensions, improvements or additions (other than movable physical personal property which the Company has the right to remove), of, upon or to any plant or system or other property in which the Company shall own only a leasehold interest unless, with respect to any betterment, extension, improvement or addition to a leasehold interest, (i) the term of the leasehold interest in the property to which such betterment, extension, improvement or addition relates shall extend for at least 75% of the useful life of such betterment, extension, improvement or addition and (ii) the lessor shall have agreed to give the Trustee reasonable notice and opportunity to cure any default by the Company under such lease and not to disturb the Trustee’s possession of such leasehold estate in the event the Trustee succeeds to the Company’s interest in such lease upon the Trustee’s exercise of any remedies under this Indenture so long as there is no default in the performance of the tenant’s covenants contained therein; or

(e)           Excludable Property.

“Qualified EPC Contract” means any contract providing for the engineering, procurement or construction of generation or related facilities (including electric transmission and fuel supply facilities) intended to be owned by the Company, progress payments under which are used as the basis for (1) loans or advances under Conditional Obligations under Section 5.6, (2) the withdrawal and payment of Deposited Cash under Section 5.8, (3) the authentication and delivery of Additional Obligations under Section 5.9, or (4) the withdrawal and payment of Trust Moneys under Section 7.5.

“Qualifying Securities” means bonds or other instruments evidencing indebtedness for borrowed money or purchase money indebtedness issued and Outstanding under a Qualifying Securities Indenture and on deposit with the Trustee.

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“Qualifying Securities Indenture” means any indenture, mortgage, deed to secure debt, deed of trust or similar instrument entered into by any Subsidiary of the Company or, in the case of a transaction described in the last sentence hereof, by any Person, (1) which contains provisions (and related definitions) substantially identical in substance to the provisions (and related definitions) contained in this Indenture (with such variations and omissions as are appropriate in view of the fact that the Subsidiary and not the Company is a party thereto), except that it may omit or have different provisions (and related definitions) relating to (a) the need to deliver an Available Margins Certificate upon the authentication and delivery of Qualifying Securities issued thereunder, (b) the requirement to establish and collect the rates, rents, charges, fees and other compensation of such Subsidiary expected to yield any particular amount of Margins for Interest, (c) limiting distributions or dividends, (d) provision for cancellation of the Qualifying Securities upon the acquisition by the Company of the property subject to the Qualifying Securities Indenture and (e) such other matters as the Trustee shall determine, in its sole discretion, do not, taken as a whole, materially impair the value of the Qualifying Securities issued thereunder as security for the Obligations; PROVIDED, HOWEVER, that in making any such determination, the Trustee may rely upon certificates of investment bankers or other financial professionals or consultants, and (2) under which Qualifying Securities are issued.  A Qualifying Securities Indenture may be entered into by any Person that succeeds to the Company’s interest in any property constituting part of the Trust Estate prior to such transaction where either (i) the property transferred from the Company is more than 50% of the property owned by the Person immediately after the completion of the transfer or (ii) after the transfer the Person will be engaged in providing utility services to the Company and/or to entities that were direct or indirect customers of the Company immediately prior to the transfer and the Company delivers a certificate to the Trustee, simultaneously with the issuance of the Qualifying Securities, that certifies that the property constituting part of the Trust Estate was transferred to the Person as part of a plan of the Company to restructure in order to be more competitive, deal with regulatory requirements or respond to changes in the utility industry generally (collectively, referred to hereinafter as a “Restructuring Transaction”).

“Rates” has the meaning stated in Section 14.14 hereof.

“Redemption Date” when used with respect to any Obligation to be prepaid means the date of such prepayment and when used with respect to any Obligation to be redeemed means the date fixed for such redemption pursuant to this Indenture.

“Redemption Price” when used with respect to any Obligation to be prepaid means the  amount of the indebtedness to be prepaid and when used with respect to any Obligation to be redeemed means the price at which it is to be redeemed pursuant to this Indenture.  It includes the applicable premium, if any, including any prepayment surcharge, fee or penalty but does not include installments of interest whose Stated Maturity is on or before the Redemption Date.

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“Regular Record Date” for the interest payable on any Interest Payment Date on the Obligations of any series means the date specified for such purpose in a Supplemental Indenture creating such series.

“Responsible Officer” when used with respect to the Trustee means the chairman or vice-chairman of the board of directors of the Trustee, the chairman or vice-chairman of the executive committee of such board, the president, any vice-president, the secretary, any assistant secretary, the treasurer, any assistant treasurer, the cashier, any assistant cashier, any trust officer or assistant trust officer, the controller, any assistant controller or any other officer of the Trustee customarily performing functions similar to those performed by any of the above designated officers and also means, with respect to a particular corporate trust matter, any other officer of the Trustee to whom such matter is referred because of his knowledge of and familiarity with the particular subject.

“Restructuring Transaction” has the meaning set forth in the definition of “Qualifying Securities Indenture.”

“Retired” when used with respect to property, means Bondable Property that, since the Cut-Off Date, has been retired, abandoned, destroyed, worn out, removed, sold, permanently discontinued, lost through the enforcement of any liens or released or otherwise disposed of free of the lien of this Indenture or taken by eminent domain or under the exercise of a right of a government authority to purchase or take the same or recorded as retired on the books of the Company or permanently retired from service for any reason, whether or not replaced, or has become no longer used or useful in the business of the Company, including as a consequence of the termination of any lease, whether or not recorded as retired on the books of the Company, except that, when a minor item of property has been replaced by other property of equal value and efficiency and the cost of such replacement has been charged to other than fixed property accounts such as maintenance, repairs or other similar account, the property replaced shall not be considered as a Retirement.

“Retirements” means Bondable Property that has been Retired.  The “amount” of Retirements shall be computed as follows:

(a)           as to property owned by the Company on the Cut-Off Date, 75% of the Cost to the Company of such property as recorded on the books of the Company as of the Cut-Off Date (without taking into account depreciation); and

(b)           as to Property Additions, the Cost to the Company thereof or the Fair Value to the Company thereof, whichever is less, as certified to the Trustee at the time such Property Additions were certified in a Certificate as to Bondable Additions filed in accordance with Section 5.2 (estimated, if necessary, as to particular property), or if not theretofore so certified, then the Cost to the Company of such Property Additions.

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In determining the amount of Retirements for any purpose under this Indenture, neither any reduction in book values of property recorded in the Company’s fixed plant accounts nor the transfer of any amount appearing in any such accounts to intangible or adjustment accounts, required or arising from adjustments required to be made by any regulatory body or otherwise, nor the elimination of any amount so transferred, otherwise than in connection with the actual retirement of physical property, shall be taken into account.

“Special Record Date” for the payment of any Defaulted Interest on Obligations means a date fixed by the Trustee pursuant to Section 3.9.

“Stated Maturity” when used with respect to any Obligation, any installment of principal thereof, or any installment of interest thereon means the date specified in such Obligation as the date on which the principal of such Obligation or any installment thereof, or such installment of interest, is due and payable (without regard to any provisions for redemption, prepayment, acceleration, purchase or extension).

“Stock” means and includes all stock, shares, interests, membership interests, participations or other similar ownership, voting or other interests (however designated) in corporations, cooperatives, partnerships, joint-ventures, associations, joint-stock companies, limited liability companies, partnerships, trusts, unincorporated organizations or other types of legal entities.

“Subsidiary” of any specified Person means any corporation, cooperative, partnership, joint-venture, association, joint-stock company, limited liability company, partnership, trust, unincorporated organization or any other type of legal entity at least a majority of whose outstanding Voting Stock shall at the time be owned or held, directly or indirectly, by the specified Person or by one or more of its Subsidiaries.

“Supplemental Indenture” means any indenture supplemental hereto and duly authorized in the manner provided herein (and a supplemental indenture to the Existing Indenture shall be deemed to be a Supplemental Indenture hereto with respect to any series of Pre-Existing Obligations created thereby).

“System” means all properties and interest in properties of the Company, including but not limited to the Company’s interests in all electric production, transmission, distribution, conservation, load management, general plant and other related facilities, equipment or property and in any mine, well, pipeline, plant, structure or other facility for the development, production, manufacture, storage, fabrication or processing of fossil, nuclear or other fuel of any kind or in any facility or rights with respect to the supply of water, in each case for use, in whole or in major part, in any of the Company’s generating plants, now existing or hereafter acquired by lease, contract, purchase or otherwise or constructed by the Company, including any interest or participation of the Company in any such facilities or any rights to the output or capacity thereof, together with all additions, betterments, extensions and improvements to any of the foregoing or any part thereof hereafter made and together with all lands, easements and rights of way of the Company and all other works, property or structures of the Company and contract rights and other tangible and intangible assets of the Company used or useful in connection with or related to any of the foregoing, including, without limitation, a contract right or other contractual arrangement for the long-term or short-term interconnection, interchange, exchange, pooling, wheeling, transmission, purchase or sale of electric power and energy and other similar arrangements with entities having generation and transmission capabilities.

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“TIA” or “Trust Indenture Act” means, as of any time, the Trust Indenture Act of 1939, or any successor statute, as amended and in force at such time.

“Title Evidence” with respect to any property, means:

(1)           an Opinion of Counsel to the effect that the Company, or the owner-lessor of the property in the case of real property described in paragraph (3) of the definition of “Property Additions”, has title, whether fairly deducible of record or based upon prescriptive rights (or, as to personal property, based on such evidence as counsel shall determine to be sufficient), as in the opinion of counsel is satisfactory for the use thereof in connection with the operations of the Company, and counsel in giving such opinion may disregard any irregularity or deficiency in the record evidence of title which, in the opinion of such counsel, can be cured by proceedings within the power of the Company or does not substantially impair the usefulness of such property for the purpose of the Company and may base such opinion upon his own investigation or upon affidavits, certificates, abstracts of title, statements or investigations made by Persons in whom such counsel has confidence or upon examination of a certificate or guaranty of title or policy of title insurance in which he has confidence; or

(2)           a mortgagee’s policy of title insurance (or a commitment to issue a mortgagee’s policy of title insurance containing only customary or standard conditions to issuance) in the aggregate amount of $10,000,000 with respect to property owned on the Cut-Off Date, and thereafter in the amount of the Cost to the Company of the land (on the date of acquisition) included in Property Additions, as such cost is determined by the Company, issued in favor of the Trustee by an entity authorized to insure title in any jurisdiction in which the property is located, showing the Company (or such owner-lessor) as the owner of such land and insuring the lien of this Indenture; or

(3)           with respect to any personal property, or any other property that may constitute fixtures or real property solely as a consequence of being affixed to or erected on either (a) real property that was owned by the Company prior to the Cut-Off Date, (b) real property that was acquired by the Company after the Cut-Off Date and as to which the Company has previously provided Title Evidence to the Trustee as described in either paragraph (1) or (2) above, or (c) real property as to which the Company has obtained a valid easement, right-of-way or similar right of use over the real property of another Person, an Officers’ Certificate stating that the Company owns title to such personal property satisfactory for the use thereof in connection with the operations of the Company, and (if such property constitutes fixtures or real property) that the Company continues to have title (satisfactory for the use thereof in connection with the operations of the Company) to the real property to which such property is affixed or, if such real property is described in paragraph (3) of the definition of “Property Additions,” an Officers’ Certificate stating that the Company has a valid leasehold interest in, and is possessed of, such property.

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“Trust Estate” has the meaning stated in the habendum to the Granting Clauses.

“Trust Moneys” has the meaning stated in  Section 7.1.

“Trustee” means the Person named as the “Trustee” in the first paragraph of this Indenture until a successor Trustee shall have become such pursuant to the applicable provisions of this Indenture,  and thereafter “Trustee” means such successor Trustee.

“Undesignated Qualifying Securities” means, as of the date of determination, all Qualifying Securities deposited with the Trustee and held by the Trustee which are not Designated Qualifying Securities.

“Uniform Commercial Code” with respect to any of the Trust Estate, means the Uniform Commercial Code as enacted and in effect from time to time in the state in which such part of the Trust Estate is located.

“vice president” means, when used with respect to the Company or the Trustee, any vice president, whether or not designated by a number or a word added to the title.

“Voting Stock” means Stock of any class or classes (however designated) having ordinary voting power for the election of a majority of the members of the board of directors (or other governing body) of such corporation or other Person, other than Stock having such power only by reason of the happening of a contingency.

1.2. Acts of Holders.

(a)           Any request, demand, authorization, direction, notice, approval, consent, waiver or other action provided by this Indenture to be given or taken by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by an agent duly appointed in writing; and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Trustee, and, where it is hereby expressly required, to the Company.  Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the “Act” of the Holders signing such instrument or instruments.  Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and conclusive in favor of the Company and (subject to Section 10.1) in favor of the Trustee, if made in the manner provided in this Section.

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(b)           The fact and date of the execution by any Person of any such instrument or writing may be proved by the affidavit of a witness of such execution or by the certificate of any notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual signing such instrument or writing acknowledged to him the execution thereof.  Whenever such execution is by a signer acting in a capacity other than his individual capacity, such certificate or affidavit shall also constitute sufficient proof of his authority.  The fact and date of the execution of any such instrument or writing, and the authority of the Person executing the same, may also be proved in any manner which the Trustee deems sufficient.

(c)           The ownership of Obligations shall be proved by the Obligation Register.

(d)           Any request, demand, authorization, direction, notice, approval, consent, waiver or other Act of the Holder of any Obligation shall bind every future Holder of the same Obligation and the Holder of every Obligation issued upon the transfer thereof or in exchange therefor or in lieu thereof, in respect of anything done, omitted or suffered to be done by the Trustee or the Company in reliance thereon, whether or not notation of such action is made upon such Obligation.  However, unless such Obligation is held in the Book-Entry System and the DTC letter of representations executed by the Company in connection therewith, as amended from time to time, does not permit such revocation, any such Holder or subsequent Holder may revoke by written instrument any such instrument as to his Obligation or portion of an Obligation until such time as written instruments have been received by the Trustee with respect to the requisite percentage of principal amount of Obligations for the action contemplated by such instruments; PROVIDED, HOWEVER, that such revocation shall be effective only if the Trustee receives written notice of revocation before the earlier of (i) the date the amendment, supplement or waiver becomes effective and (ii) the date the Trustee or the Company does or suffers to be done anything in reliance on such instrument.

1.3. Notices, etc., to Trustee and Company.

Any request, demand, authorization, direction, notice, consent, waiver or other Act of the Holders or other document provided or permitted by this Indenture to be made upon, given or furnished to, or filed with,

(a)           the Trustee by any Holder or by the Company shall be sufficient for every purpose hereunder if made, given, furnished or filed in writing to or with the Trustee at its principal corporate trust office, or

(b)           the Company by the Trustee or by any Holder shall be sufficient for every purpose hereunder (except as otherwise expressly provided in  Sections 9.1(c) and 9.1(e) if in writing and mailed, first-class postage prepaid, hand-delivered or delivered by express courier with all charges paid with proof of delivery, to the Company addressed to it at 5601 Electron Drive, Anchorage, AK  99519, Attention: Chief Financial Officer, or at any other address specified for such purpose in a notice previously given by the Company to the Trustee.

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1.4. Notices to Holders; Waiver.

Where this Indenture provides for notice to Holders of any event, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, first-class postage prepaid or express courier with all charges paid, to each Holder of such Obligations, at the address of such Holder as it appears in the Obligation Register not later than the latest date, and not earlier than the earliest date, prescribed for such notice.

In any case where notice to Holders is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Holder shall affect the sufficiency of such notice with respect to other Holders.  Where this Indenture provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice.  Waivers of notice by Holders shall be filed with the Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver.

In case, by reason of the suspension of mail service or by reason of any other cause, it shall be impossible to give such notice by mail, then notification to any Holder as otherwise provided for in Section 1.3(b) for notices to the Company, or as shall be specified by the Company and satisfactory to the Trustee, shall constitute a sufficient notification for every purpose hereunder.

1.5. Form and Contents of Documents Delivered to Trustee.

In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents.

Any certificate or opinion of an Officer of the Company may be based, insofar as it relates to legal matters, upon a certificate or opinion of, advice of or representations by, counsel, unless such Officer knows, or in the exercise of reasonable care should know, that the certificate, opinion, advice or representations with respect to the matters upon which his certificate or opinion is based are erroneous.  Any Opinion of Counsel may be based, insofar as it relates to factual matters or matters of business judgment, upon a certificate or opinion of, advice, statements or representations by, an Officer or Officers of the Company stating that the information with respect to such factual matters is in the possession of the Officers, unless such counsel knows that the certificate, opinion, advice, statements or representations with respect to such matters are erroneous.  Any Opinion of Counsel may be based upon such assumptions, be subject to such qualifications and be stated in such language as at the time delivered is considered in the jurisdiction whose laws are covered by such opinion to be standard practice with respect to opinions relating to such matters.  In addition, in giving any Opinion of Counsel, counsel may rely upon legal opinions addressed to the Company or such counsel as appropriate and consistent with standard practice with respect to reliance on legal opinions of other counsel. Without limiting the foregoing, in giving any Opinion of Counsel with respect to matters involving title or lien priority, counsel may rely upon (i) prior opinions or certificates of counsel for the Company, regardless of to whom such opinions are addressed, and whether delivered by general counsel, special counsel or in-house counsel for the Company provided such counsel has no reason to believe such reliance is unwarranted, and (ii) title insurance policies, title insurance commitments and reports, record search certificates, abstracts and other similar evidences of matters reflected in public records and of the existence of liens.

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Whenever any Person is required to make, give or execute two or more Applications, requests, consents, certificates, statements, opinions or other instruments under this Indenture, they may, but need not, be consolidated and form one document.

Wherever in this Indenture, in connection with any Application, certificate or report to the Trustee, it is provided that the Company shall deliver any document as a condition of the granting of such Application, or as evidence of the Company’s compliance with any term hereof, it is intended that the truth and accuracy, at the time of the granting of such Application or at the effective date of such certificate or report (as the case may be), of the facts and opinions stated in such document shall in such case be conditions precedent to the right of the Company to have such Application granted or to the sufficiency of such certificate or report.  Notwithstanding anything else herein to the contrary, the validity of any action taken or Obligation issued hereunder based upon any Application, certificate or report shall not be affected by the truth and accuracy of such Application, certification or report.  Nothing in the immediately preceding sentence shall, however, limit any rights or remedies available to the Trustee or the Holders under this Indenture or at law or equity against the Company, any officer thereof or any Person with respect to a false or inaccurate Application, certification or report other than any remedy seeking to invalidate the action so taken or Obligation issued.

Whenever a clerical, typographical, inadvertent or unintentional error or omission shall be discovered in any document filed with the Trustee, a new document in corrected form, executed as prescribed herein for that originally filed and which may bear the same date as the document originally filed, may be substituted therefor with the same force and effect as if the document originally filed had been filed in the corrected form, or in lieu of such substitution an appropriate adjustment may be made in a like document filed with the Trustee after such discovery.  To the extent that action has been taken hereunder which could not have been taken had the original document been filed in corrected form, such action shall be validated and rendered effective if the substituted or adjusting document shall indicate that any deficiency has been fully satisfied since the filing of the original document.

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1.6. Compliance Certificates and Opinions.

Except as otherwise expressly provided in this Indenture, upon any Application or request by the Company to the Trustee to take any action under any provision of this Indenture, the Company shall furnish to the Trustee an Officers’ Certificate identifying the relevant provisions of this Indenture and stating that all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with and, if requested by the Trustee, an Opinion of Counsel stating that in the opinion of such counsel all such conditions precedent, if any, have been complied with, except that in the case of any such Application or request as to which the furnishing of such documents is specifically required by any provision of this Indenture relating to such particular Application or request, no additional certificate or opinion need be furnished.

Every certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture (other than statements provided pursuant to Section 14.12 hereof) shall include

(a)           a statement that each individual signing such certificate or opinion has read such condition or covenant and the definitions herein relating thereto;

(b)           a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based;

(c)           a statement that, in the opinion of each such individual, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such condition or covenant has been complied with; and

(d)           a statement as to whether, in the opinion of each such individual, such condition or covenant has been complied with.

1.7. Conflict With Trust Indenture Act.

At any time at which this Indenture is qualified or required to be qualified under the TIA, if any provision hereof limits, qualifies or conflicts with another provision hereof which is required to be included in this Indenture by any of the provisions of the TIA, such required provision shall control.

1.8. Effect Headings and Table of Contents.

The Article and Section headings herein and in the Table of Contents are for convenience only and shall not affect the construction hereof.

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1.9. Successors and Assigns.

All covenants and agreements in this Indenture by the Company shall, subject to the last paragraph of Section 12.2, bind its successors and assigns, whether so expressed or not.

1.10. Severability Clause.

In case any provision in this Indenture or in any Obligation shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

1.11. Benefits of Indenture.

Nothing in this Indenture or in the Obligations, express or implied, shall give to any Person, other than the parties hereto, their successors hereunder, any separate trustee or co-trustee appointed under Section 10.14 and the Holders of Outstanding Secured Obligations, any benefit or any legal or equitable right, remedy or claim under this Indenture.

1.12. Governing Law.

This Indenture and the Obligations shall be governed by and construed in accordance with the laws of the State of Alaska, without giving effect to its laws and rules relating to conflicts of laws.

1.13. Action by Credit Enhancer When Action by Holders Required.

Notwithstanding anything herein to the contrary, except as otherwise provided in a Supplemental Indenture authorizing Obligations of any series or maturity within a series for which Credit Enhancement is being provided, if not in default in respect of any of its obligations with respect to Credit Enhancement for such Obligations, the Credit Enhancer for, and not the actual Holders of, such Obligations, shall be deemed to be the Holder of such Obligations at all times for the purpose of (i) giving any approval or consent to the effectiveness of any Supplemental Indenture or to any amendment, change or modification of this Indenture which requires the written approval or consent of Holders of such Obligations; PROVIDED, HOWEVER, that the provisions of this clause (i) shall not apply to any change which could not be made pursuant to Section 13.2 without the consent of each Holder of Obligations affected thereby, and (ii) giving any other approval or consent, giving any notice, effecting any waiver or authorization, exercising any remedies, giving any direction or taking any other action in accordance with the provisions of this Indenture.

1.14. Bank Holidays.

Except as specified in a Pre-Existing Obligation or a Supplemental Indenture, if the specified date for the making of any payment or the last date for performance of any act or the exercising of any right, as provided in this Indenture, shall be a Saturday, Sunday or legal holiday or a day on which banking institutions in the city in which is located the office from which the Trustee performs the functions to which such act or right relates are authorized by law to remain closed, such payment may be made or act performed or right exercised on the next succeeding day which is not one of the foregoing days without additional interest and with the same force and effect as if made, performed or exercised on the specified date for such payment.

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1.15. Maturity of Obligations and Indenture.

The Stated Maturity of the Pre-Existing Obligations is set forth in the Pre-Existing Obligations or the Supplemental Indenture establishing the series to which such Pre-Existing Obligations belong.  The Stated Maturity of Additional Obligations authorized pursuant to Article 5 and governed by this Indenture shall be as provided in Supplemental Indentures adopted in accordance with and pursuant to Sections 3.3 and Article 13.  For purposes of Alaska Statutes 34.20.150, the date of maturity of this Indenture is the later of (i) December 31, 2060 or (ii) the date that is five years after the latest Stated Maturity of any Obligation issued under this Indenture.

1.16. Acceptance of Trust by Trustee.

The Trustee accepts the trusts in this Indenture declared and provided, upon the terms and conditions herein set forth.

1.17. Investment of Cash Held by Trustee.

Any cash held by the Trustee or any Paying Agent under any provision of this Indenture shall, except as otherwise provided in Article 8 and Section 9.7, at the request of the Company evidenced by a Company Request be invested or reinvested in Investment Securities as designated by the Company, and, unless an Event of Default shall exist, any interest or other earnings on such Investment Securities shall be promptly paid over to the Company as received free and clear of any lien, including the lien of this Indenture.  Such Investment Securities shall be held subject to the same provisions hereof as was the cash used to purchase the same, but upon a like request of the Company shall be sold, in whole or in designated part, and the proceeds of such sale shall be held subject to the same provisions hereof as was the cash used to purchase the Investment Securities so sold.  If such sale shall produce a net sum less than the cost of the Investment Securities so sold, the Company shall pay promptly to the Trustee or any such Paying Agent, as the case may be, such amount in cash as, together with the net proceeds from such sale, shall equal the cost of the Investment Securities so sold, and if such sale shall produce a net sum greater than the cost of the Investment Securities so sold, the Trustee or any such Paying Agent, as the case may be, shall pay over promptly to the Company an amount in cash equal to such excess, free and clear of any lien, including the lien of this Indenture, unless an Event of Default shall exist.  Except as otherwise contemplated by the TIA, the Trustee shall have no liability for losses on Investment Securities made at the request of the Company.

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1.18. Principal Amount of Certain Obligations.

(a)           At any point in time, the principal amount of an Obligation in any form other than a bond shall not include any amount not then advanced and outstanding thereunder.  The principal amount of any Obligation evidencing an assumption by the Company of all or a part of another obligation shall be the principal amount outstanding under such other obligation, or the portion thereof assumed pursuant to or evidenced by such Obligation.  The principal amount of an Obligation in any form other than a bond shall be reduced as the principal amount of such an Obligation (or the obligation it evidences an assumption of) is paid or otherwise reduced.  The Company retains the right to have such principal payments or reductions readvanced unless the Company elects to have such payments treated as principal payments or retirements for purposes of Sections 5.3, 5.6, 5.8, 6.2, 7.3 or 17.3.  If any such principal payment or reduction shall not be treated as a payment or retirement because the Company has the right to have such paid or reduced amounts readvanced, once the readvance right expires or is relinquished or otherwise terminated, such principal payment or reduction shall thereupon be treated as a principal payment or retirement under such Sections.  The principal amount of an Obligation in any form other than a bond may be evidenced from time to time by an Officers’ Certificate delivered to the Trustee and the Holder of such Obligation.  In the event the Holder objects to the principal amount of such Obligation as set forth in such Officers’ Certificate by delivering a written objection to the Trustee within 60 days of the Holder’s receipt of such Officers’ Certificate, the Trustee may require such other evidence of the principal amount of such Obligation as shall be satisfactory to the Trustee in its sole discretion.  In the absence of any such objection by the Holder, the Trustee may rely conclusively on such Officers’ Certificate.  Such Officers’ Certificate shall contain a statement of the foregoing objection rights of the Holder and the 60-day period for objection.

(b)           The principal amount of an Original Issue Discount Obligation shall be determined as provided in Section 9.22.

1.19. Security Agreement and Financing Statement.

To the extent permitted by applicable law, this Indenture shall be deemed to be a security agreement and financing statement whereby the Company grants to the Trustee a security interest in all of the Trust Estate that is personal property or fixtures under the Uniform Commercial Code, as adopted or hereafter adopted in one or more of the states in which any part of the properties herein described are situated.  The address of the place of business and chief executive office of the Company, as debtor, is 5601 Electron Drive, Anchorage, AK  99519, and the mailing address of the Trustee, as secured party is 1420 Fifth Avenue, 7th Floor, Seattle, Washington 98101, Attention: Corporate Trust Services.

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2. FORMS OF OBLIGATIONS

2.1. Forms Generally.

Obligations may be in the form of bonds, notes, guarantees, assumption agreements or any other undertaking for the payment of borrowed money or purchase money indebtedness.  Obligations of each series shall be in substantially the form set forth in the Supplemental Indenture creating such series, or in a Board Resolution establishing such series and delivered to the Trustee, or in an Officers’ Certificate delivered to the Trustee pursuant to a Supplemental Indenture or Board Resolution, in each case with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Indenture, and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon as may be required to comply with the rules of any securities exchange or as may, consistently herewith, be determined by the Officers executing such Obligations, as evidenced by their execution of such Obligations.  Any portion of the text of any Obligation may be set forth on the reverse or subsequent pages thereof, with an appropriate reference thereto on the face of the Obligation if desired.  Such Obligations may be printed, lithographed, typewritten, photocopied or otherwise produced.

2.2. Form of Trustee’s Certificate of Authentication for Obligations.

The Trustee’s certificate of authentication for Obligations shall be in substantially the following form:

This is one of the Obligations of the series designated therein referred to in the within-mentioned Indenture.

Date:	[_______________], AS TRUSTEE
	By:
		Authorized Signatory

3.  THE OBLIGATIONS

3.1. Terms and Forms of Pre-Existing Obligations.

Authentication of the Pre-Existing Obligations shall be in substantially the form set forth in Section 2.2 and may be either on the Pre-Existing Obligations or on an allonge to be affixed to such Pre-Existing Obligations.  The Pre-Existing Obligations shall be in the forms of such instruments as are delivered to the Trustee for authentication under the Existing Indenture.  The Trustee shall authenticate the Pre-Existing Obligations upon presentation thereof to the Trustee by the Holder thereof (and Section 1.6 hereof shall not apply to require the delivery of any Officers’ Certificate or Opinion of Counsel in connection therewith).  The terms and conditions of the Pre-Existing Obligations, including series designations, principal amounts, maximum aggregate principal amount (if any), maturity dates, interest rates and payment and redemption provisions, shall be as provided for therein or in the Supplemental Indenture establishing the series to which such Pre-Existing Obligations belong.

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3.2. General Title; General Limitations; Issuable in Series.

Unless specified otherwise by a Company Request or provided for in a Supplemental Indenture, the general title of all series of Obligations shall be “First Mortgage Obligations,” “First Mortgage Notes” or “First Mortgage Bonds”.

(a)           Any increase in the principal amount of any Pre-Existing Obligation (other than an advance under a Pre-Existing Obligation held by a Credit Enhancer) shall be deemed an issuance of an Additional Obligation and shall, therefore, be subject to satisfying the conditions for the issuance of Additional Obligations provided in Article 5.

(b)           The aggregate principal amount of Obligations which may be authenticated and delivered and Outstanding under this Indenture is not limited, except as provided in Article 5 and the provisions of any Supplemental Indenture creating any series of Obligations and except as may be limited by law.

The Obligations may be issued in one or more series as from time to time authorized by the Board of Directors.

With respect to the Obligations of any particular series, the Company may incorporate in or add to the general title of such Obligations any words, letters or figures designed to distinguish that series.

3.3. Terms of Particular Series.

(a)           Each series of Additional Obligations shall be created by a Supplemental Indenture authorized by the Board of Directors and establishing the terms and provisions of such series of Additional Obligations or the method by which such terms and provisions shall be established.  The several series of Additional Obligations may differ from other series of Pre-Existing Obligations or Additional Obligations in any respect not in conflict with the provisions of this Indenture and as may be prescribed in the Supplemental Indenture creating such series.

The Company may, at the time of the creation of any series of Additional Obligations or at any time thereafter, make, and the Additional Obligations of such series may contain, provision for:

(i)             the timing and amount of principal and interest payments due on such series;

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(ii)           the exchange or conversion of the Additional Obligations of such series, at the option of the Holders thereof, for or into new Additional Obligations of a different series or other securities;

(iii)           a sinking, amortization, improvement or other analogous fund;

(iv)          limiting the aggregate principal amount of the Additional Obligations of such series;

(v)           exchanging Additional Obligations of such series, at the option of the Holders thereof, for other Obligations of the same series of the same aggregate principal amount of a different authorized kind or authorized denomination or denominations;

(vi)          the authentication of Additional Obligations of such series by the Authenticating Agent;

(vii)         the issuance of Additional Obligations of such series in bearer or book-entry form;

(viii)        specifying redemption or prepayment terms and procedures with respect to such series;

(ix)           specifying business days, grace periods, record dates, other provisions and such covenants, events of default or remedies with respect to Additional Obligations of such series; and

(x)            any other terms of the Additional Obligations of such series, or any maturity thereof, not inconsistent with the provisions of this Indenture;

all upon such terms as the Board of Directors may determine as evidenced by a Board Resolution.

All Additional Obligations of like maturity of the same series shall be substantially identical except that any series may have serial maturities and different interest rates for different maturities and except that the Supplemental Indenture creating such series may provide that Additional Obligations of like maturity of such series need not be identical as to interest rates and terms of redemption.

(b)           With respect to Additional Obligations of a series subject to a Periodic Offering, the Supplemental Indenture or the Board Resolution, or Officers’ Certificate pursuant to the Supplemental Indenture or Board Resolution, as the case may be, which establishes such series may provide general terms or parameters for Additional Obligations of such series and specify procedures by which such specific terms are to be established (which procedures may provide for authentication and delivery pursuant to oral or electronic instructions from the Company or any agent or agents thereof, which oral instructions are to be promptly confirmed electronically or in writing).

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3.4. Form and Denominations.

The form of the Obligations of each series shall be established by the provisions of this Indenture or the Supplemental Indenture creating such series.  The Obligations of each series shall be distinguished from the Obligations of other series in such manner as may be determined by the Officers of the Company executing particular Obligations as evidenced by their execution thereof.  The Supplemental Indenture creating a series of Obligations may designate whether the Obligations will be held in the Book-Entry System.

The Obligations of each series shall be issuable in such denominations as shall be provided in the provisions of the Supplemental Indenture creating such series.  In the absence of any such provision with respect to the Obligations of any particular series, the Obligations of such series shall be in the denomination of $1,000 or any integral multiple thereof.

The face of each Obligation shall state that the Company is personally obligated and fully liable for the amount due under such Obligation and that, subject to the provisions of this Indenture, each Holder has the right to sue on such Obligations and obtain a personal judgment against the Company for satisfaction of the amount due under such Obligation either before or after a foreclosure of this Indenture under Alaska Statutes 09.45.170-09.45.220.

3.5. Execution, Authentication, Delivery and Dating.

The Obligations shall be executed on behalf of the Company by any Officer and, if required by a Board Resolution, attested by its Secretary or one of its Assistant Secretaries.  The signature of any of these Officers on the Obligations may be manual or facsimile.  Obligations bearing the manual or facsimile signatures of individuals who were at any time the proper Officers of the Company shall bind the Company, notwithstanding that such individuals or any of them shall have ceased to hold such offices prior to the authentication and delivery of such Obligations or shall not have held such offices at the date of such Obligations.

At any time and from time to time after the execution and delivery of this Indenture, the Company may deliver Obligations executed by the Company to the Trustee for authentication, together with a Company Order for the authentication and delivery of such Obligations, and the Trustee shall authenticate and deliver such Obligations as in this Indenture provided and not otherwise.

All Obligations shall be dated as provided in the Supplemental Indenture creating such Obligations or, in the absence thereof, the date of their authentication.

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No Obligation shall be secured by, or be entitled to any lien, right or benefit under, this Indenture or be valid or obligatory for any purpose, unless there appears on such Obligation (or an allonge thereto) a certificate of authentication substantially in the form provided for herein, executed by the Trustee or the Authenticating Agent by manual signature, and such certificate upon any Obligation (or an allonge thereto) shall be conclusive evidence, and the only evidence, that such Obligation has been duly authenticated and delivered hereunder.

3.6. Temporary Obligations.

Pending the preparation of definitive Obligations, the Company may execute, and upon Company Request the Trustee shall authenticate and deliver, temporary Obligations which are printed, lithographed, typewritten, photocopied or otherwise produced or reproduced, in any authorized denomination, substantially of the tenor of the definitive Obligations in lieu of which they are issued, and with such appropriate insertions, omissions, substitutions and other variations as the Officers executing such Obligations may determine, as evidenced by their execution of such Obligations.

If temporary Obligations are issued, the Company will cause the definitive Obligations to be prepared without unreasonable delay.  After the preparation of definitive Obligations, the temporary Obligations shall be exchangeable for definitive Obligations upon surrender of the temporary Obligations at the office or agency of the Trustee in a Place of Payment therefor, without charge to the Holder.  Upon surrender for exchange of any one or more temporary Obligations the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor a like principal amount of definitive Obligations of authorized denominations.  Until so exchanged, temporary Outstanding Secured Obligations shall in all respects be entitled to the security and benefits of this Indenture.  Upon surrender for exchange, temporary Obligations shall be canceled as provided in Section 3.11.

3.7. Registration; Registration of Transfer and Exchange.

The Company shall cause to be kept at one of the offices or agencies maintained by the Trustee a register (herein sometimes referred to as the “Obligation Register”) in which, subject to such reasonable regulations as it may prescribe, the Trustee shall provide for the registration of Obligations and registration of transfers of Obligations.  The Trustee is hereby appointed “Obligation Registrar” for the purpose of registering Obligations and transfers of Obligations as herein provided.

Upon surrender for registration of transfer of any Obligation at the office or agency of the Trustee (or the delivery of other evidence satisfactory to the Trustee of the transfer of an Obligation), the Company shall execute, and the Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Obligations of the same series and maturity, of any authorized denomination and of a like aggregate principal amount, and the Obligation Registrar shall register such transfer on the Obligations Register.

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Upon surrender for exchange of any Obligation at the office or agency of the Trustee, the Company shall execute, and the Trustee shall authenticate and deliver, in the name of the Holder exchanging such Obligation, one or more new Obligations of the same or, in connection with the exchange of one series of Obligations for another as provided in a Supplemental Indenture, a different series, in each case, in an authorized denomination and of a like aggregate principal amount and maturity.

All Obligations surrendered upon registration of any exchange or transfer provided for in this Indenture shall be promptly cancelled by the Trustee and thereafter the Trustee shall retain such Obligations or destroy such Obligations and deliver a certificate of destruction to the Company.

All Obligations issued upon any registration of transfer or exchange of Obligations shall be the valid obligations of the Company, evidencing the same debt, and entitled to the same security and benefits under this Indenture, as the Obligations surrendered upon such registration of transfer or exchange.

Every Obligation presented or surrendered for registration of transfer, exchange or discharge from registration shall (if so required by the Company or the Obligation Registrar) be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the Company and the Obligation Registrar duly executed, by the Holder thereof or his attorney duly authorized in writing.

No service charge shall be made for any registration, discharge from registration, registration of transfer or exchange of Obligations, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Obligations, other than exchanges under Sections 3.6, 13.6 or 15.7 not involving any transfer.

Except as provided in a Supplemental Indenture, the Company shall not be required (i) to issue, register the transfer or exchange of any Obligation of any series during a period beginning at the opening of business 15 days before the day of the mailing of a notice of redemption of Obligations of such series under Section 15.4 and ending at the close of business on the day of such mailing, or (ii) to register the transfer of or exchange of any Obligation so selected for redemption in whole or in part, except the unredeemed portion of an Obligation being redeemed in part.

3.8. Mutilated, Destroyed, Lost and Stolen Obligations.

If (i) any mutilated Obligation is surrendered to the Trustee, or the Company and the Trustee receive evidence to their satisfaction of the destruction, loss or theft of any Obligation, and (ii) there is delivered to the Company and the Trustee such security or indemnity as may be required to save each of the Company and the Trustee harmless, then, in the absence of notice to the Company or the Trustee that such Obligation has been acquired by a bona fide purchaser, the Company shall execute and upon its written request the Trustee shall authenticate and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or stolen Obligation, a new Obligation of the same series and of like tenor and principal amount and bearing a number not assigned to any other Obligation contemporaneously Outstanding.

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In case any such mutilated, destroyed, lost or stolen Obligation has become due and payable, the Company in its discretion may, instead of issuing a new Obligation, pay such Obligation.

Upon the issuance of any new Obligation under this Section, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expense (including the fees and expenses of the Trustee) connected therewith.

Every new Obligation issued pursuant to this Section in lieu of any destroyed, lost or stolen Obligation shall constitute an original additional contractual obligation of the Company, whether or not the destroyed, lost or stolen Obligation shall be at any time enforceable by anyone, and shall be entitled to all the security and benefits of this Indenture equally and ratably with all other Outstanding Secured Obligations.

The provisions of this Section are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Obligations.

3.9. Payment of Interest; Interest Rights Preserved.

Interest on any Obligation of any series which is payable, and is punctually paid or duly provided for, on any Interest Payment Date shall be paid to the Person in whose name that Obligation (or one or more Predecessor Obligations) is registered at the close of business on the Regular Record Date for such interest as specified herein or in the provisions of the Supplemental Indenture creating such series.

Any interest on any Obligation of any series which is payable, but is not punctually paid or duly provided for, on any Interest Payment Date (herein called “Defaulted Interest”) shall be payable as provided in such Obligation, or if not so provided, shall forthwith cease to be payable to the Holder on the relevant Regular Record Date solely by virtue of such Holder having been such Holder, and such Defaulted Interest may be paid by the Company, at its election in each case, as provided in paragraphs (a) or (b) below:

(a)           The Company may elect to make payment of any Defaulted Interest on the Obligations of any series to the Persons in whose names such Obligations (or their respective Predecessor Obligations) are registered at the close of business on a Special Record Date for the payment of such Defaulted Interest, which shall be fixed in the following manner.  The Company shall notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each Obligation and the date of the proposed payment (which date shall be such as will enable the Trustee to comply with the next sentence hereof), and at the same time the Company shall deposit with the Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Trustee for such deposit prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Interest as in this paragraph provided and not to be deemed part of the Trust Estate or Trust Moneys.  Thereupon the Trustee shall fix a Special Record Date for the payment of such Defaulted Interest which shall be not more than 15 days nor less than 10 days prior to the date of the proposed payment and not less than 10 days after the receipt by the Trustee of the notice of the proposed payment.  The Trustee shall promptly notify the Company of such Special Record Date and, in the name and at the expense of the Company, shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be mailed, first-class postage prepaid, to each Holder of an Obligation of such series at his address as it appears in the Obligation Register not less than 10 days prior to such Special Record Date.  Notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor having been mailed as aforesaid, such Defaulted Interest shall be paid to the Persons in whose names the Obligations of such series (or their respective Predecessor Obligations) are registered on such Special Record Date and shall no longer be payable pursuant to the following Subsection (b).

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(b)           The Company may make payment of any Defaulted Interest on the Obligations of any series in any other lawful manner not inconsistent with the requirements of any securities exchange on which such Obligations may be listed and upon such notice as may be required by such exchange, if, after notice given by the Company to the Trustee of the proposed payment pursuant to this paragraph, such payment shall be deemed practicable by the Trustee.

Subject to the foregoing provisions of this Section, each Obligation delivered under this Indenture upon registration of transfer of or in exchange for or in lieu of any other Obligation shall carry all the rights to interest accrued and unpaid, and to accrue, which were carried by such other Obligation and each such Obligation shall bear interest from the date specified in the delivered Obligation, so that neither gain nor loss in interest shall result from such transfer, exchange or substitution.

3.10. Persons Deemed Owners.

Subject to the provisions of Section 1.13, prior to due presentment of such Obligation for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name any Obligation is registered in the Obligation Register as the Holder of such Obligation for the purpose of receiving payment of principal of (and premium, if any) and (subject to Section 3.9) interest on such Obligation and for all other purposes whatsoever, whether or not such Obligation be overdue, and, to the extent permitted by law, neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary.

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3.11. Cancellation.

All Obligations surrendered for payment, redemption, transfer, reissue, exchange or conversion, if surrendered to the Trustee, shall be promptly cancelled by it, and, if surrendered to any Person other than the Trustee, shall be delivered to the Trustee and, if not already cancelled, shall be promptly cancelled by it.  The Company may at any time deliver to the Trustee for cancellation any Obligations previously authenticated and delivered hereunder, which the Company may have acquired in any manner whatsoever, and all Obligations so delivered shall be promptly cancelled by the Trustee.  No Obligation shall be authenticated in lieu of or in exchange for any Obligation cancelled as provided in this Section, except as expressly provided by this Indenture.  All cancelled Obligations shall be retained by the Trustee in accordance with its document retention policies and, if the cancelled Obligations are destroyed, the Trustee thereafter shall deliver a certificate of destruction to the Company.

4.  PRE-EXISTING OBLIGATIONS

4.1. Effect of Amendment and Restatement; Terms.

Obligations Outstanding prior to the date hereof shall remain Outstanding under this Indenture following its amendment and restatement.  The title of any series of Obligations Outstanding on the date hereof may be referred to as “First Mortgage Obligations,” “First Mortgage Bonds” or “First Mortgage Notes” even though the Supplemental Indenture establishing the title of such Obligations does not contain such designation.

5.  AUTHENTICATION AND DELIVERY OF ADDITIONAL OBLIGATIONS

5.1. General Provisions.

Additional Obligations of any one or more series, or within a series, may from time to time be executed by the Company and delivered to the Trustee for authentication and thereupon the same shall be authenticated and delivered by the Trustee upon Company Request, upon the bases permitted by, and upon compliance with the conditions of, Section 5.2 (upon the basis of Bondable Additions), Section 5.3 (upon the basis of retirement or defeasance of, or principal payments on, Obligations previously Outstanding), Section 5.4 (upon the basis of Deposited Cash), Section 5.5 (upon the basis of Designated Qualifying Securities), Section 5.7 (in connection with Credit Enhancement Obligations) and Section 5.9 (upon the basis of Certified Progress Payments) and upon receipt in each case by the Trustee of the following (except to the extent such provisions provide otherwise) upon or prior to the date of the initial issuance of Additional Obligations of such series:

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(a)           A Board Resolution authorizing and requesting the authentication and delivery under one or more designated Sections of this Article from time- to- time or at any time of a specified principal amount of Additional Obligations of a designated series;

(b)           An Officers’ Certificate, dated within 30 days of the date of the relevant Application for the authentication and delivery of the initial issuance of such Additional Obligations and stating that (1) no Event of Default exists; (2) none of the Trust Estate is subject to any Prior Lien other than Prior Liens permitted by Section 14.6; and (3) all conditions precedent provided for in this Indenture relating to the authentication and delivery of the initial issuance of such Additional Obligations have been complied with (and, in the event such Additional Obligations are subject to a Periodic Offering, that the statements made in such Certificates shall be deemed remade at the time of each subsequent authentication and delivery of such Additional Obligations); and

(c)           An Opinion of Counsel:

(i)            specifying the certificate or other evidence that shows, or cash deposit that will provide for, compliance with the requirements, if any, of any tax or recording or filing law (other than fees for the recording of documents, for which no cash deposit with the Trustee shall be required) applicable to the authentication and delivery of the initial issuance of the Additional Obligations then applied for, or stating that there is no such requirement;

(ii)           specifying the certificate or other evidence that shows the authorization, approval or consent of or to the initial issuance by the Company of the Additional Obligations then applied for by any Federal, state or other governmental regulatory agency whose authorization, approval or consent is at the time required to be obtained by the Company having jurisdiction in the premises, or stating that no such authorization, approval or consent is required;

(iii)          stating that none of the Trust Estate is subject to any Prior Lien other than Prior Liens permitted by Section 14.6, PROVIDED, that the opinion required by this clause (iii) may be (A)  with respect to personal property, limited to that part of the Trust Estate in which a lien may be perfected by the filing of a financing statement under the Uniform Commercial Code, and (B) with respect to all or a portion of the real property included in the Trust Estate, based upon Title Evidence provided pursuant to Subsection (e) below; and

(iv)          stating that such Additional Obligations, when executed by the Company and authenticated and delivered by the Trustee and when issued by the Company (or, in the event of Additional Obligations subject to a Periodic Offering, when the terms of such Additional Obligations have been established as provided in the manner contemplated by this Indenture or the Supplemental Indenture under which such Additional Obligations are established), will be the legal, valid and binding obligations of the Company enforceable in accordance with their terms and the terms of this Indenture (subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and other laws of general applicability relating to or affecting creditors’ rights and to general equity principles)  and entitled to the benefits of and secured by the lien of this Indenture equally and ratably with all other Outstanding Secured Obligations.

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(d)           The documents and any cash deposit specified in such Opinion of Counsel, which cash deposit, if any, shall be held by the Trustee as part of the Trust Estate and applied by the Trustee for the purpose specified therein and, to the extent that such cash deposit ultimately proves to be excessive, returned to the Company upon Company Request.

(e)           Title Evidence, dated within 30 days of the date of the relevant Application for the authentication  and  delivery of the initial issuance of such Additional Obligations, indicating that the Trust Estate is subject only to the Permitted Encumbrances and Prior Liens permitted by Section 14.6 hereof.

In addition, Additional Obligations of any one or more new series, or Additional Obligations of an existing series, may from time to time be executed by the Company and delivered to the Trustee for authentication, and thereupon such Additional Obligations shall be authenticated and delivered by the Trustee upon Company Request, upon the basis permitted by, and upon compliance with the conditions of, Section 5.6.

In the event that the Company shall have applied for the authentication and delivery of Additional Obligations under this Article and thereafter, the Company shall not have sold, delivered or pledged, or created some other security interest in such Additional Obligations authenticated and delivered under this Article, the Company may surrender such Additional Obligations to the Trustee, whereupon such Additional Obligations, if not previously canceled, shall be canceled by the Trustee.  The Additional Obligations, so surrendered shall thereafter be treated as though they had never been Outstanding.  In addition, in the event that any portion of an Additional Obligation or series of Additional Obligations shall not be advanced or issued, and the Company’s right to receive and advance or issue such portion terminated to the satisfaction of the Trustee, such portion shall thereafter be treated as though it had never been Outstanding and the basis for issuing such Additional Obligations shall be deemed never to have been used for such purpose.

5.2. Authentication and Delivery of Additional Obligations Upon Basis of Bondable Additions.

Additional Obligations of one or more new series, or Additional Obligations of an existing series, may from time to time be executed by the Company and delivered to the Trustee for authentication, and thereupon the same shall be authenticated and delivered by the Trustee upon Company Request, in an aggregate principal amount up to but not exceeding the product obtained by multiplying a fraction, the numerator of which is 100 and the denominator of which is 110, by Bondable Additions available (which shall include the initial dollar amount for which the Company is to receive credit, pursuant to clause (b)(i) below, for purposes of the initial Certificate as to Bondable Additions) as a basis for such authentication and delivery as shown in item 7 of the Summary of Certificate as to Bondable Additions delivered to the Trustee in accordance with this Section, upon receipt by the Trustee of the instruments and cash referred to in this Section.

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Whenever requesting (i) the authentication and delivery of Additional Obligations under this Section, (ii) loans and advances under Conditional Obligations under Section 5.6 upon the basis of Bondable Additions, (iii) the withdrawal of Deposited Cash under Section 5.8 upon the basis of Bondable Additions, (iv) the use of Bondable Additions as a basis, in whole or in part, for the release of any part of the Trust Estate under Section 6.2, or (v) the withdrawal of Trust Moneys under Section 7.2, the Company shall deliver to the Trustee the relevant instruments (comprising the related Application) specified in the following clauses (a) through (g):

(a)           (1) In the case of a request for the authentication and delivery of Additional Obligations, the documents and any cash deposits required by Section 5.1 and an Available Margins Certificate; (2) in the case of a request for a loan or advance under a Conditional Obligation under Section 5.6 upon the basis of Bondable Additions, the Available Margins Certificate, Officers’ Certificate and Opinion of Counsel required by Section 5.6; (3) in the case of a request for the withdrawal of Deposited Cash under Section 5.8 upon the basis of Bondable Additions, the Company Request and Officers’ Certificate required by Section 5.8; (4) in the case of a request for the conversion of outstanding principal amounts under Section 5.10 upon the basis of Bondable Additions, the documents required by Section 5.10; (5) in the case of a request for the use of Bondable Additions as a basis for the release of any part of the Trust Estate under Section 6.2, the relevant documents required by Section 6.2 in addition to those specified in the following Subsections (b) through (g), which documents may be modified under certain circumstances as stated in the proviso to Section 6.2(d)(ii); (6) in the case of a request for the withdrawal of Trust Moneys under Section 7.2, the Company Request and Officers’ Certificate required by Section 7.2; and (7) in the case of a request for the use of Bondable Additions as a basis for the redesignation or surrender of Designated Qualifying Securities under Section 17.3, the documents required by Section 17.3.

(b)           A Certificate as to Bondable Additions showing in substance:

(i)             In the case of the first Certificate as to Bondable Additions, $322,225,226; and, in the case of any subsequent Certificate as to Bondable Additions, the balance (in either case, such amount to constitute item 1 in Summary of Certificate as to Bondable Additions set forth below), if any, of Bondable Additions stated in item 9 of the most recent Summary of Certificate as to Bondable Additions, if any, theretofore delivered to the Trustee, as the balance of Bondable Additions to remain after the action applied for in such most recent Summary.

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(ii)           An Amount of Property Additions (item 2 in Summary), not described in any previous Certificate as to Bondable Additions, acquired prior to the end of the period specified in the current Certificate (except that the Amount of Property Additions may include the Amount of Property Additions described in any previous Certificate as to Bondable Additions and used as a basis for the authentication and delivery of Additional Obligations surrendered to the Trustee pursuant to the last paragraph of Section 5.1 or as the basis for any portion of an Additional Obligation or series of Additional Obligations which has not been advanced or issued and for which the right to advance or issue has been terminated as provided in the last paragraph of Section 5.1).  With respect to such Property Additions:

(A)           The Certificate shall describe in reasonable detail, and state the Cost to the Company of, such Property Additions, which may include Property Additions to be acquired in connection with the granting of the related Application which shall be considered as already acquired for the purpose of computing the Amount of Property Additions.  The Certificate shall state that none of such Property Additions has been described in any previous Certificate as to Bondable Additions (except Property Additions described in any previous Certificate as to Bondable Additions and used as the basis for the authentication and delivery of Additional Obligations surrendered to the Trustee pursuant to the last paragraph of Section 5.1 or as the basis for any principal amount of an Additional Obligation or series of Additional Obligations which has not been loaned or advanced or an Additional Obligation or series of Additional Obligations which has not been issued and for which the Company’s right to receive a loan or advance under or to issue such Additional Obligation has been terminated as provided in the last paragraph of Section 5.1).  Except for major individual items, such Property Additions may be grouped by major classifications then being used by the Company in the maintenance of its fixed plant accounts and may, in the case of tracts or parcels of land or easements or rights-of-way, be described by reference to the deeds through which they were acquired or to the Supplemental Indenture conveying them to the Trustee.  The Certificate shall specify and separately describe any Property Additions consisting of a major item or an Acquired Facility or Property Additions acquired and paid for in whole or in part through the transfer or delivery of securities or other property, together with a description of the kind and respective amounts of such securities or other property.  The Cost to the Company shall be shown separately for each of such Property Additions which is separately described, whether described as a major item or as an Acquired Facility or as Property Additions acquired and paid for in whole or in part through the transfer or delivery of securities or other property.  The Cost to the Company may be shown in the aggregate for all Property Additions grouped within each particular major classification and the Cost to the Company may be allocated among major items and major classifications by an estimate of such nature and upon such basis as the signers deem proper.

(B)           The Certificate shall also state the Fair Value to the Company, in the opinion of the Engineer or Appraiser signing such Certificate, of such Property Additions, separately for each thereof or group thereof for which Cost to the Company is shown separately in the Certificate; PROVIDED, HOWEVER, that if such Property Additions include an Acquired Facility, the Fair Value to the Company thereof shall be stated as being the amount thereof set forth in any Independent Engineer’s or Independent Appraiser’s Certificate required by Subsection 5.2(c).  In addition the Certificate shall also state the fair market value in cash, as stated in any Independent Appraiser’s Certificate required by Subsection 5.2(d), of any securities or other property transferred or delivered to acquire or pay for any such Property Additions.

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(C)           The Certificate shall state that, with respect to each of such Property Additions or group thereof for which Cost to the Company is shown separately or by groups in the Certificate, the certified Amount of Property Additions is the lower of the certified Cost to the Company thereof and the certified Fair Value to the Company thereof.

(D)           Nothing in this Section shall be deemed to prevent the Company from certifying any Property Additions acquired by the Company during any period without simultaneously certifying other Property Additions that the Company may have acquired in that or any other period, and by so doing the Company shall not be deemed to have lost the right so to certify later such other Property Additions.

(iii)           The aggregate amount (item 3 in Summary) of all Retirements during the period from the date to which Retirements had been included in item 3 of the most recent Summary theretofore delivered to the Trustee (or the Cut-Off Date in the case of the first such Certificate) to the later of (a) a date not earlier than the 90th day before the date of the related Application and (b) the end of the period specified in the current Certificate pursuant to clause (ii) above.

(iv)           The credits (item 4 in Summary) against Retirements, which shall equal, subject to the provisions of the last sentence of clause (v) below, the sum of the following:

(A)           the excess of credits against Retirements carried forward from the most recent Certificate, as provided in the last sentence of clause (v) below;

(B)           the aggregate amount of (i) any cash, (ii) purchase money obligations, (iii) the principal amount of retired Obligations or principal amounts paid on Obligations (which amount may not be reloaned or readvanced under such Obligations), (iv) Bondable Additions and (v) Designated Qualifying Securities, in each case, delivered or certified to the Trustee for use as a basis for release of any part of the Trust Estate under Section 6.2 during the period covered by clause (iii) above; and

(C)           all insurance moneys received by the Trustee pursuant hereto or paid to a trustee, mortgagee or other holder under a Prior Lien during the period covered by clause (iii) above on account  of the damage, loss or destruction of any Bondable Property.

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(v)           The excess (item 6 in Summary) of the Amount of Property Additions shown pursuant to clause (ii) above (item 2) over the net amount of Retirements (item 5), which net amount shall be determined by deducting the credits shown pursuant to clause (iv) above (item 4) from the aggregate amount of Retirements shown pursuant to clause (iii) above (item 3), and such excess shall be the amount of the net Bondable Additions then being certified.  If in any case the credits against Retirements exceed the aggregate amount of Retirements shown pursuant to clause (iii) above (item 3), the net amount of Retirements for the purpose of this clause shall be deemed to be zero, but such excess of credits against Retirements may be carried forward and used as a credit against Retirements in the next Certificate.

(vi)          The sum (item 7 in Summary) of the amount shown pursuant to clause (i) above (item 1) and the amount shown pursuant to clause (v) above (item 6), namely the total Bondable Additions then available.

(vii)         The total amount (item 8 in Summary) of Bondable Additions which are then being used, which shall equal (in any combination) (i) 110% of the aggregate principal amount of any Additional Obligations whose authentication and delivery are then being applied for under this Section, (ii) 110% of the aggregate principal amount of the loans or other advances under Conditional Obligations which are then being applied for under Section 5.6, (iii) 110% of the amount of any Deposited Cash which is then being withdrawn under Section 5.8, (iv) 100% of any Trust Moneys which are then being withdrawn under Section 7.2, (v) 100% of any Bondable Additions which are then being used as a basis for a release under Section 6.2, (vi) 110% of the aggregate principal amount of Designated Qualifying Securities then being redesignated or surrendered under Section 17.3, and (vii) 110% of the outstanding principal amount then being converted under Section 5.10.

(viii)        The balance (item 9 in Summary) of the Bondable Additions shown by the Certificate that will remain after the granting of the Application then being made, which shall be computed by deducting the sum shown pursuant to clause (vii) above (item 8) from the amount shown pursuant to clause (vi) above (item 7).

(ix)           Except when converting outstanding principal amounts under Section 5.10, if any of the Property Additions described in the Certificate were acquired with Certified Progress Payments:

(A)          the amount of such Property Additions acquired with Certified Progress Payments; and

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(B)           the aggregate principal amount of the Additional Obligations authenticated and delivered upon the basis of the Certified Progress Payments used to acquire the Property Additions certified pursuant to subclause (A) above that has been paid, redeemed or otherwise retired or defeased under Article 8, which shall equal the product obtained by multiplying a fraction, the numerator of which is 100 and the denominator of which is 110 by the amount of Property Additions certified pursuant to subclause (A) above.

(x)           That the Property Additions described in the Certificate have not previously been certified for use as the basis for converting outstanding principal amounts under Section 5.10.

(xi)           That the Property Additions described in the Certificate, except such as have been Retired, are desirable in the conduct of the business of the Company; that the allocation of the Cost to the Company of such Property Additions to each major item or major classification  thereof is, in the opinion of the signers, proper; and that the balance of the Bondable Additions to remain after the action applied for plus the Cost to the Company or the Fair Value to the Company, whichever is less, of uncertified Property Additions is at least equal to the aggregate amount of uncertified Retirements.

(xii)          That the allowances or charges, if any, for interest, taxes, engineering, legal and accounting costs and expenses, allocated administrative charges, superintendence fees and expenses, insurance, casualties and other expenses during construction (or in connection with the acquisition of Property Additions) which are included in the Cost to the Company of such of the Property Additions described in the Certificate as were constructed or acquired by or for the Company have been charged and are properly chargeable to fixed plant accounts in accordance with Accounting Requirements and are, in the opinion of the signers, proper in respect of the Property Additions specified.

(xiii)         That no portion of the Cost to the Company of the Property Additions described in the Certificate should properly have been charged to maintenance or repairs and that no expenditures are included in the Certificate which under Accounting Requirements are not properly chargeable to fixed plant accounts.

(xiv)         That the terms used in the Certificate which are defined herein are used as herein defined.

The Certificate as to Bondable Additions required by this Subsection (b) shall be subdivided into numbered paragraphs corresponding to the foregoing clauses (i) to (viii), inclusive, and shall include a Summary in substantially the following form:

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Summary of Certificate as to

Bondable Additions No. ___

The undersigned hereby certify that the following is a true summary of the Certificate:

Start with:

1.	The balance of Bondable Additions remaining after the action applied for in the next previous Certificate (Certificate No. _______) [or, in the case of the first Certificate, $322,225,226]	$ ________
Then take the new gross Property Additions as shown in item 2 below:
2.	Amount of additional Property Additions now certified, being the Amount of all or some Property Additions prior to __________ and not certified in any previous Certificate as to Bondable Additions	$ ________
Then determine the deductions for Retirements by deducting item 4 below from item 3 below to produce item 5:
3.	The aggregate amount of all Retirements in the period from __________ through __________	$ ________
4.	The sum of the credits against Retirements in the period from __________ through __________	$ ________
5.	The net amount of Retirements to be deducted (if less than zero, enter zero)	$ ________
Then determine the net Bondable Additions now being certified by deducting item 5 from item 2 to produce item 6:
6.	Net Bondable Additions now being certified	$ ________
Then add item 1 and item 6 to produce item 7:
7.	Total Bondable Additions available for the action applied for	$ ________
Deduct item 8 from item 7 to produce item 9:
8.	Bondable Additions now being used	$ ________
9.	Balance of Bondable Additions to remain after the action applied for	$ ________

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Dated ________________________, ________.

(Title)

(Title)

(Engineer or Appraiser)

(Accountant)

(c)           In case any Property Additions described in the Certificate consist of an Acquired Facility, an Engineer’s or Appraiser’s Certificate (which shall be given by an Independent Engineer or Independent Appraiser if this Indenture is qualified under the TIA and the Amount of Property Additions attributed to such Acquired Facility is not less than $25,000 and not less than 1% of the aggregate principal amount of then Outstanding Secured Obligations), dated within 90 days prior to the date of the related Application, stating, in the opinion of the signer, the Fair Value to the Company of the Property Additions constituting such Acquired Facility, except such as have been Retired.

(d)           In case any Property Additions described in the Certificate have been acquired or paid for in whole or in part through the transfer or delivery of securities or other property, an Appraiser’s Certificate (which shall be given by an Independent Appraiser if this Indenture is qualified under the TIA and the fair market value of such securities as set forth in such Certificate is not less than $25,000 and not less than 1% of the aggregate principal amount of then Outstanding Secured Obligations) stating, in the opinion of the signer, the fair market value in cash of such securities and other property at the time of the transfer or delivery thereof in payment for such Property Additions, which fair market value shall be deemed to be, in whole or in part, as the case may be, the Cost to the Company of such Property Additions.

(e)           Such Supplemental Indenture or other instruments of conveyance, transfer and assignment as, in the Opinion of Counsel, may be necessary to subject to the lien of the Indenture all right, title and interest of the Company in and to the Property Additions so described or an Opinion of Counsel that no such instruments are necessary for such purpose.

(f)            An Opinion of Counsel (which may be based on opinions of other counsel deemed by him reliable), dated within five days prior to the date of the Application, to the effect that:

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(i)             if such Property Additions include any property located or constructed on, over or under public highways, rivers or other public property, the Company has the lawful right under permits or franchises granted by a governmental body having jurisdiction in the premises or by the law of the state in which such property is located to maintain and operate such property for an unlimited, indeterminate or indefinite period of time or for the period, if any, specified in such permit, franchise or law, and to remove such property at the expiration of the period covered by such permit, franchise or law, or that the terms of such permit, franchise or law require any public authority having the right to take over such property to pay fair consideration therefor or the term of such permit or franchise extends beyond the useful life of such property;

(ii)           the Company has corporate power to own and operate such Property Additions;

(iii)           the Indenture is, or upon delivery of the instruments of conveyance, transfer or assignment, if any, specified in such Opinion will be, a valid lien upon all Property Additions described in the Certificate (except such as have been Retired) free and clear of any Prior Liens except to the extent otherwise permitted by the proviso to Section 6.2(d)(ii)); and

(iv)           the documents which have been or are therewith delivered to the Trustee conform to the requirements of this Indenture for an Application for the action applied for and, upon the basis of such Application, all conditions precedent herein provided for relating to the authentication and delivery of the Additional Obligations therein applied for, the release of the property whose release is being requested, the withdrawal of the Deposited Cash or Trust Moneys whose withdrawal is then being requested or the conversion of outstanding principal amounts under Section 5.10 on the basis of Bondable Additions then requested, have been complied with, as applicable.

(g)           Title Evidence indicating that (1) the property described in the related Application qualifies as Property Additions under this Indenture, (2) the Company has or, contemporaneously with the taking of action applied for, will have title to the Property Additions described in the Certificate (except as have been Retired), free and clear of any Prior Liens (except to the extent otherwise permitted by the proviso to Section 6.2(d)(ii) and except for Permitted Encumbrances), (3) the Company has or, contemporaneously with the taking of action applied for, will have duly obtained any easements, rights-of-way or leasehold interest which is described in the Certificate, subject only to Permitted Encumbrances, and (4) the Indenture is, or contemporaneously with the taking of action applied for will be, a valid lien upon all such Property Additions, subject to no liens, encumbrances, covenants, restrictions or other defects other than Permitted Encumbrances and Prior Liens permitted by the proviso to Section 6.2(d)(ii); PROVIDED, that any Title Evidence as to personal property may be limited to such Property Additions in which a lien may be perfected by the filing of a financing statement under the Uniform Commercial Code.

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5.3. Authentication and Delivery of Additional Obligations Upon Basis of Retirement or Defeasance of Obligations or Principal Payments on Obligations.

Additional Obligations of one or more new series, or Additional Obligations of an existing series, may from time to time be executed by the Company and delivered to the Trustee for authentication, and thereupon the same shall be authenticated and delivered by the Trustee upon Company Request, in an aggregate principal amount up to but not exceeding the aggregate principal amount of the Obligations and the aggregate amount of principal payments on Obligations made the basis for such authentication and delivery, upon receipt by the Trustee of the following:

(a)           The documents and any cash deposit required by Section 5.1.

(b)           Subject to the restrictions of Subsection (d) of this Section, Obligations theretofore authenticated and delivered under this Indenture, whether or not in transferable form, matured or unmatured, cancelled or uncancelled, in an aggregate principal amount which, when added to the aggregate amount of principal payments, if any, on Obligations referred to in Subsection (c) below, will equal or exceed the aggregate principal amount of Additional Obligations whose authentication and delivery are then applied for under this Section 5.3; PROVIDED, HOWEVER, that, in lieu of delivering Obligations to the Trustee, the Company may deposit with or deliver to the Trustee:

(i)            cash sufficient to pay at Stated Maturity or to redeem certain specified Obligations theretofore authenticated and delivered hereunder, PROVIDED that, if such Obligations are to be redeemed, notice of such redemption shall have been duly given pursuant to this Indenture or provision therefor satisfactory to the Trustee shall have been made; and/or

(ii)           an Officers’ Certificate, dated within five days of the relevant Application for the authentication and delivery of such Additional Obligations, stating either or both of:

(A)           that cash sufficient to pay or redeem certain specified Obligations theretofore authenticated and delivered hereunder is then held by the Trustee in trust for such purpose and, if such Obligations are to be redeemed, that notice of such redemption has been duly given pursuant to this Indenture or provision therefor satisfactory to the Trustee has been made; and/or

(B)           that certain specified Obligations theretofore authenticated and delivered hereunder have been paid, redeemed or otherwise retired or have ceased to be Outstanding; or

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(iii)           an Officers’ Certificate, dated within five days of the relevant Application for the authentication and delivery of such Additional Obligations, stating that certain specified Obligations theretofore authenticated and delivered hereunder have been defeased under Article 8 and are no longer Outstanding.

(c)           An Officers’ Certificate, dated within five days of the Application for the authentication and delivery of such Additional Obligations, stating the aggregate amount of principal payments that have been made on specified Obligations (other than Obligations identified in Subsection (d) below) which, when added to the aggregate principal amount of the Obligations delivered to or with respect to which a deposit or delivery has been made with the Trustee pursuant to Subsection (b) above, will equal or exceed the aggregate principal amount of Additional Obligations whose authentication and delivery are then applied for under this Section; PROVIDED, HOWEVER, that in lieu of delivery of such Officers’ Certificate, the Company may deposit with or deliver to the Trustee cash sufficient to make principal payments on the certain specified Obligations in the aggregate amount otherwise required to be stated in such Officers’ Certificate.

(d)           An Officers’ Certificate, dated within five days of the relevant Application for the authentication and delivery of such Additional Obligations, stating that the Obligations or principal payments thereon then being made the basis for the authentication and delivery of the Additional Obligations do not include:

(i)             any Obligations or any principal payment on an Obligation which shall have theretofore been made, or is currently being otherwise made, the basis for the authentication and delivery of Additional Obligations (or any loan, advance thereunder or issuance thereof), the release of any part of the Trust Estate, the withdrawal or application of Deposited Cash or Trust Moneys or the surrender or redesignation of Designated Qualifying Securities; or

(ii)            any Obligation (a) whose payment, redemption or other retirement, or provision therefor, has been effected through the operation of any sinking, amortization, improvement or other analogous fund and (b) whose use under this Article is at the time precluded by any provision of this Indenture; or

(iii)           any Obligation which has been surrendered upon any exchange or transfer or any Obligation in lieu of which another Obligation has been authenticated and delivered under Section 3.8; or

(iv)           any Obligation which, in accordance with the last paragraph of Section 5.1, is treated as though it had never been Outstanding;

(v)           any Obligation authenticated and delivered on the basis of Designated Qualifying Securities or any Obligation that has been paid or deemed paid by the proceeds of the payment or redemption of Designated Qualifying Securities (in all cases after giving effect to any provision of this Indenture whereby Obligations originally authenticated and delivered on one basis shall be deemed to be authenticated and delivered upon another basis); or

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(vi)          any Obligation or any principal payment on an Obligation retired or paid pursuant to or by an advance or loan under an Obligation held by a Credit Enhancer and evidencing Credit Enhancement; or

(vii)         any Obligation authenticated and delivered on the basis of Certified Progress Payments or any principal payment of amounts outstanding under an Obligation on the basis of Certified Progress Payments unless such Obligation or principal payment has been paid, redeemed, or otherwise retired or defeased under Article 8 using the proceeds of the Additional Obligations whose authentication and delivery are then being applied for (and each such Additional Obligation, or principal amount loaned or advanced thereunder, shall be deemed to have been authenticated and delivered or, in the case of a loan or advance, made on the basis of Certified Progress Payments).

(e)           An Opinion of Counsel stating that the documents and cash or Obligations which have been or are therewith delivered to the Trustee conform to the requirements of this Indenture and that, upon the basis of the relevant Application, the conditions precedent to authentication and delivery of the Additional Obligations applied for under this Section 5.3 have been satisfied.

(f)           An Available Margins Certificate.

Every Obligation received by the Trustee and on the basis of which an Additional Obligation is authenticated and delivered under this Article, if not already cancelled, shall be promptly cancelled and thereafter the Trustee shall destroy such Obligation and deliver a certificate of destruction to the Company.

5.4. Authentication and Delivery of Additional Obligations Upon Deposit of Cash With Trustee.

Additional Obligations of one or more new series, or Additional Obligations of an existing series, may from time to time be executed by the Company and delivered to the Trustee for authentication, and thereupon the same shall be authenticated and delivered by the Trustee upon Company Request, upon receipt by the Trustee of the following:

(a)           The documents and any cash deposit required by Section 5.1.

(b)           Cash (which may be cash representing the purchase price of, or the proceeds of a loan or advance evidenced by the Additional Obligations to be authenticated and delivered under this Section 5.4) equal to the aggregate principal amount of the Additional Obligations whose authentication and delivery are then applied for under this Section 5.4 (such cash being herein sometimes referred to as “Deposited Cash”).

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(c)           An Opinion of Counsel stating that the documents which have been or are therewith delivered to the Trustee conform to the requirements of this Indenture and that, upon the deposit of an amount of cash equal to the aggregate principal amount of the Additional Obligations whose authentication and delivery are so applied for, the conditions precedent to such authentication and delivery of such Additional Obligations under this Article shall have been satisfied.

(d)           An Available Margins Certificate.

5.5. Authentication and Delivery of Additional Obligations Upon Basis of Designated Qualifying Securities.

Additional Obligations of one or more new series, or Additional Obligations of an existing series, may from time to time be executed by the Company and delivered to the Trustee for authentication, and thereupon such Additional Obligations shall be authenticated and delivered by the Trustee upon Company Request, in an aggregate principal amount up to but not exceeding the aggregate principal amount of the Designated Qualifying Securities made the basis of such authentication and delivery, upon receipt by the Trustee of the following:

(a)           The documents and any cash deposit required by Section 5.1.

(b)           An Available Margins Certificate.

(c)           Designated Qualifying Securities, which (1) the Company designates as the basis for authentication and delivery of such Additional Obligations; (2) shall be redeemable at the demand of the Trustee on or after an Event of Default; PROVIDED, HOWEVER, that in the case of Designated Qualifying Securities issued in connection with a Restructuring Transaction, this Subsection shall not be applicable; (3) bear interest at the rate at least equal to the rate of interest to accrue on the Additional Obligations to be authenticated and delivered upon the basis of such Designated Qualifying Securities or on the basis of Deposited Cash to the extent any of such Deposited Cash is withdrawn on the basis of such Designated Qualifying Securities; (4) may, but need not, contain provisions for the redemption thereof at the option of the issuer thereof, any such redemption to be made at a redemption price or prices not less than the principal amount thereof; (5) mature on such date or dates and in such principal amounts as shall correspond to the maturity date or dates and principal amounts of the Additional Obligations to be authenticated and delivered upon the basis of such Designated Qualifying Securities or on the basis of Deposited Cash to the extent any of such Deposited Cash is withdrawn on the basis of such Designated Qualifying Securities; (6) contain mandatory redemption provisions corresponding to the mandatory and optional redemption provisions (pursuant to a sinking fund, at the option of the Holder thereof, or otherwise) of the Additional Obligations to be authenticated and delivered on the basis of such Designated Qualifying Securities or on the basis of Deposited Cash to the extent any of such Deposited Cash is withdrawn on the basis of Designated Qualifying Securities; and (7) shall be held by the Trustee in accordance with Article 17.

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(d)           An Officers’ Certificate, dated within five days of the relevant Application for the authentication and delivery of Additional Obligations, stating that the Designated Qualifying Securities then being made the basis for such authentication and delivery of Additional Obligations do not include any Designated Qualifying Securities which shall have theretofore been made, or are currently being otherwise made, the basis for the authentication and delivery of Additional Obligations (or any advance or issuance thereunder), the release of any part of the Trust Estate, the withdrawal of Deposited Cash or Trust Moneys or the surrender or redesignation of Designated Qualifying Securities.

(e)           An Engineer’s or Appraiser’s Certificate (which shall be given by an Independent Engineer or Independent Appraiser if (1) the aggregate of the fair value of such Designated Qualifying Securities to be deposited with the Trustee in connection with such Application and the fair value of all Designated Qualifying Securities and other securities deposited with the Trustee since the commencement of the then current calendar year (as previously certified to the Trustee) is 10% or more of the aggregate principal amount of Obligations then Outstanding and (2) the fair value of such Designated Qualifying Securities to be deposited with the Trustee in connection with such Application is not less than $2,000,000 (or, if this Indenture is qualified under the TIA, $25,000) and not less than 1% of the aggregate principal amount of Obligations then Outstanding), dated within 30 days prior to the date of the related Application, stating, in the opinion of the signer, the fair value to the Company of such Designated Qualifying Securities to be deposited with the Trustee in connection with such Application.

(f)            An Opinion of Counsel (which as to clauses (i), (ii) and (iii) below may be from counsel to the issuer of the Designated Qualifying Securities) stating that:

(i)             the forms of the Qualifying Securities delivered pursuant to Subsection (c) above have been duly approved by the issuer of the Designated Qualifying Securities and have been established in conformity with the provisions of the related Qualifying Securities Indenture;

(ii)            the terms of such Qualifying Securities have been duly authorized by the issuer of the Designated Qualifying Securities and have been established in conformity with the provisions of the related Qualifying Securities Indenture;

(iii)           such Qualifying Securities have been duly issued under the related Qualifying Securities Indenture and constitute valid and legally binding obligations of the issuer of the Designated Qualifying Securities, entitled to the benefits provided by such Qualifying Securities Indenture, and are enforceable in accordance with their terms; and

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(iv)          the documents, cash, if any, and Designated Qualifying Securities which have been or are therewith delivered to the Trustee and the Qualifying Securities Indenture pursuant to which such Designated Qualifying Securities have been issued conform to the requirements of this Indenture and that, on the basis of the Application, the conditions precedent provided for in this Indenture relating to the authentication and delivery of the Additional Obligations therein applied for have been complied with.

(g)           Certified copies of all opinions, certificates and other documents delivered to the trustee under the applicable Qualifying Securities Indenture in connection with the issuance of such Designated Qualifying Securities.

5.6. Authentication and Delivery of Conditional Obligations; Loans or Advances Thereunder.

“Conditional Obligations” are (i) Additional Obligations authenticated and delivered as provided in this Section, and under which no principal amount is outstanding thereunder at the time of such authentication and delivery and (ii) Pre-Existing Obligations with principal amounts remaining to be loaned or advanced after the date hereof.

Conditional Obligations of one or more new series, or Conditional Obligations of an existing series, may from time to time be executed by the Company and delivered to the Trustee for authentication, and thereupon such Conditional Obligations shall be authenticated and delivered by the Trustee upon Company Request, upon receipt by the Trustee of the documents and cash deposit, if any, specified in Subsections (a), (b), (c) and (d) of Section 5.1 (except that the Officers’ Certificate and Opinion of Counsel with respect to the compliance with conditions precedent shall apply only to the conditions precedent set forth in Section 5.1).

Loans or advances under a Conditional Obligation shall only be made upon the delivery of a written certification by the Trustee under this Section.  For purposes of the other Sections of this Indenture, each loan or advance under a Conditional Obligation shall be treated as though an Additional Obligation in an aggregate principal amount equal to the amount of the loan or advance was being authenticated and delivered under the applicable Section of this Indenture referred to in Subsection (a) below, and all references to Additional Obligations so authenticated and delivered shall include loans or advances made under Conditional Obligations on the same basis.  Upon Company Request, the Trustee shall deliver to the Company a written certification upon receipt by the Trustee of the following:

(a)           Either (1) the relevant documents specified in Subsections (b) through (g), inclusive, of Section 5.2, (2) the relevant documents, Obligations or principal payments on Obligations specified in Subsections (b) through (e) of Section 5.3, (3) the relevant documents and Designated Qualifying Securities specified in Subsections (c) through (g), inclusive, of Section 5.5, or (4) the relevant documents specified in Subsections (c) through (d), inclusive, of Section 5.9 (in each case with such omissions and variations as are appropriate in view of the fact that such Sections are being used as the basis for loans or advances under Conditional Obligations rather than the authentication and delivery of Additional Obligations), which documents would permit the authentication and delivery of Additional Obligations in an aggregate principal amount equal to such requested loan or advance.

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(b)           An Available Margins Certificate.

(c)           An Officers’ Certificate and an Opinion of Counsel each stating that the conditions precedent provided for in this Indenture for the Trustee to deliver a written certificate with respect to such loan or advance have been complied with.

For the purposes of (i) receiving payment on Conditional Obligations, whether at Stated Maturity, upon redemption or if the principal of all Obligations is declared immediately due and payable following an Event of Default, as provided in Section 9.1 of this Indenture, or (ii) computing the principal amount of such Conditional Obligations in connection with any exercise of remedies or Act on the part of the Holder thereof, the principal amount of such Conditional Obligations shall equal the aggregate of the amounts loaned or advanced to, or on behalf of, the Company thereunder, less any repayments thereof.

Each written certification required to be delivered by the Trustee under this Section shall state that the Trustee has received the relevant documents specified in Subsections (a) through (c) above and the amount of the loan or advance permitted under this Section by virtue of the delivery of such documents.

5.7. Authentication and Delivery of Credit Enhancement Obligations.

Additional Obligations of one or more new series, or Additional Obligations of an existing series (“Credit Enhancement Obligations”), may from time to time be executed by the Company and delivered to the Trustee for authentication, and such Credit Enhancement Obligations shall be authenticated and delivered by the Trustee upon Company Request, in connection with the authentication and delivery of any Additional Obligations pursuant to Section 5.2, 5.3, 5.4, 5.5, 5.6 or 5.9, for the purpose of evidencing the Company’s obligation to repay amounts paid by the Credit Enhancer on an Obligation or any loan or advance made to, or on behalf of, the Company (and related interest, fees, charges and other amounts) in connection with Credit Enhancement or liquidity support of the Additional Obligations in connection with which the Credit Enhancement Obligations are authenticated and delivered; PROVIDED, HOWEVER, that the stated maximum principal amount of any such Credit Enhancement Obligations shall not exceed the aggregate principal amount of the Additional Obligations with respect to which such Credit Enhancement or liquidity support is being provided, plus an amount equal to such number of days’ interest thereon as the Company shall determine in connection with (as provided in the Supplemental Indenture) the issuance thereof computed at the maximum interest rate applicable thereto, and the Credit Enhancement Obligation may also evidence the Company’s obligation to pay related fees and other charges related thereto or the enforcement thereof.  Except as otherwise provided in a Supplemental Indenture, for the purposes of (A) receiving payment on a Credit Enhancement Obligation, whether at Stated Maturity, upon redemption or if the principal of all Obligations is declared immediately due and payable following an Event of Default, as provided in Section 9.1 of this Indenture, or (B) computing the principal amount of any Credit Enhancement Obligation in connection with any Act on the part of the Holder, the principal amount of a Credit Enhancement Obligation shall be the actual principal amount that the Company shall owe thereon at the time as a consequence of payments made or loans or advances to or for the account of the Company.  The proceeds of any payment pursuant to, or any loan or advance under, any Credit Enhancement Obligation shall be used solely for the payment of the related Obligation or for the enforcement of, or protection of the security for, such Credit Enhancement Obligation, and for other related fees and charges.

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5.8. Withdrawal of Deposited Cash.

Until the same is paid upon Company Request as provided in this Section, the Trustee shall hold all Deposited Cash as a part of the Trust Estate; and, upon any sale of the Trust Estate or any part thereof under Article 9, any Deposited Cash then held by the Trustee shall be applied in accordance with Section 9.7; but, prior to any such sale, all or any part of the Deposited Cash shall be applied by the Trustee from time to time as hereinafter in this Section provided.

From time to time, whenever the Company becomes entitled to the authentication and delivery of Additional Obligations under Section 5.2 upon the basis of Bondable Additions or under Section 5.3 upon the basis of the retirement or defeasance of, or principal payments on, Obligations, under Section 5.5 upon the basis of Designated Qualifying Securities, or under Section 5.9 upon the basis of Certified Progress Payments, the Trustee shall (in lieu of authenticating and delivering Additional Obligations) pay to or as directed by the Company upon Company Request, and the Company shall be entitled to withdraw and receive or direct payment of, Deposited Cash in an amount equal to the principal amount of the Additional Obligations to whose authentication and delivery the Company would be so entitled, but only upon receipt by the Trustee of the following:

(a)           A Company Request requesting the withdrawal and payment to, or as directed by, the Company of a specified amount of Deposited Cash.

(b)           An Officers’ Certificate, dated within five days of the date of the relevant Application for such withdrawal and payment stating that no Event of Default exists, that all conditions precedent provided for in this Indenture relating to such withdrawal and payment have been complied with.

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(c)           In the case of an Application for the withdrawal and payment of Deposited Cash upon the basis of Bondable Additions, the additional relevant documents specified in Section 5.2 (other than an Available Margins Certificate) for delivery whenever requesting the use of Bondable Additions as a basis for such withdrawal of Deposited Cash under this Section, PROVIDED that any Additional Obligation that was authenticated and delivered on the basis of Deposited Cash that is withdrawn and paid on the basis of Bondable Additions thereafter shall be deemed to have been authenticated and delivered on the basis of Bondable Additions.

(d)           In the case of an Application for the withdrawal of Deposited Cash upon the basis of the retirement or defeasance of, or principal payments on, Obligations, the documents and Obligations specified in Subsections (b), (c), (d) and (e) of Section 5.3 for delivery to the Trustee (with such omissions and variations as are appropriate in view of the fact that the Application involves the withdrawal of Deposited Cash and not the authentication and delivery of any Additional Obligations), PROVIDED that thereafter any Additional Obligation that was authenticated and delivered on the basis of Deposited Cash that is withdrawn and paid on the basis of the retirement or defeasance of, or principal payments on, Obligations thereafter shall be deemed to have been authenticated and delivered on the basis of the retirement of Obligations.

(e)            In the case of an Application for the withdrawal and payment of Deposited Cash upon the basis of Designated Qualifying Securities, the documents and Designated Qualifying  Securities specified in Subsections (c), (d), (e), (f) and (g) of Section 5.5 for delivery to the Trustee (with such omissions and variations as are appropriate in the view of the fact that the Application involves the withdrawal and payment of Deposited Cash and not the authentication and delivery of Additional Obligations); PROVIDED that thereafter any Additional Obligation that was authenticated and delivered on the basis of Deposited Cash that is withdrawn and paid on the basis of Designated Qualifying Securities thereafter shall be deemed to have been authenticated and delivered on the basis of Designated Qualifying Securities.

(f)            In the case of an Application for the withdrawal and payment of Deposited Cash upon the basis of Certified Progress Payments, the documents specified in Subsections (c) and (d) of Section 5.9 for delivery to the Trustee (with such omissions and variations as are appropriate in the view of the fact that the Application involves the withdrawal and payment of Deposited Cash and not the authentication and delivery of Additional Obligations); PROVIDED that thereafter any Additional Obligation that was authenticated and delivered on the basis of Deposited Cash that is withdrawn and paid on the basis of Certified Progress Payments thereafter shall be deemed to have been authenticated and delivered on the basis of Certified Progress Payments.

(g)           An Opinion of Counsel stating that the conditions precedent provided for in this Indenture relating to such withdrawal and payment of Deposited Cash have been complied with.

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5.9. Authentication and Delivery of Additional Obligations Upon Basis of Certified Progress Payments.

Additional Obligations of one or more new series, or Additional Obligations of an existing series, may from time to time be executed by the Company and delivered to the Trustee for authentication, and thereupon such Additional Obligations shall be authenticated and delivered by the Trustee upon Company Request, in an aggregate principal amount up to but not exceeding the product obtained by multiplying a fraction, the numerator of which is 100 and the denominator of which is 110, by the Certified Progress Payments made the basis for such authentication and delivery, upon receipt by the Trustee of the following:

(a)           The documents and any cash deposit required by Section 5.1.

(b)           An Available Margins Certificate.

(c)           An Officers’ Certificate, dated within five days of the relevant Application for the authentication and delivery of Additional Obligations, stating:

(i)            the total amount of Certified Progress Payments which are then being made the basis for the authentication and delivery of Additional Obligations, which shall equal 110% of the aggregate principal amount of Additional Obligations whose authentication and delivery are then being applied for under this Section;

(ii)            that the sum of (a) the aggregate principal amount of all Additional Obligations then Outstanding that were originally authenticated and delivered on the basis of Certified Progress Payments to the extent such principal amount has not been converted under Section 5.10 plus (b) the aggregate principal amount of the Additional Obligations whose authentication and delivery are then being applied for under this Section does not exceed 40% of the sum of (i) the aggregate principal amount of all Obligations then Outstanding plus (ii) the aggregate principal amount of the Additional Obligations whose authentication and delivery are then being applied for under this Section; and

(iii)           that the Certified Progress Payments then being made the basis for the authentication and delivery of Additional Obligations do not include any Certified Progress Payments which shall have theretofore been made, or are otherwise currently being made, the basis for the authentication and delivery of Additional Obligations (or any advance or issuance thereunder).

(d)           An Opinion of Counsel stating that the applicable Qualified EPC Contract is part of the Trust Estate and that the actions taken by the Company under this Section with respect to the delivery of documents to the Trustee conform to the requirements of this Indenture and that, upon the basis of the Application, the conditions precedent provided for in this Indenture relating to the authentication and delivery of the Additional Obligations therein applied for have been complied with.

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5.10. Conversion of Additional Obligations.

From time to time, upon Company Request, all or a portion of the principal amount outstanding under Additional Obligations originally authenticated and delivered (or deemed to have been authenticated and delivered with respect to a loan or advance under a Conditional Obligation) upon the basis of Certified Progress Payments under Section 5.9, shall be converted to principal amounts outstanding under Additional Obligations deemed to have been authenticated and delivered upon the basis of Bondable Additions under Section 5.2, in an aggregate principal amount up to but not exceeding the product obtained by multiplying a fraction, the numerator of which is 100 and the denominator of which is 110, by Bondable Additions acquired with the proceeds of Certified Progress Payments and made the basis for such conversion as shown in item 8 of the Summary of Certificate as to Bondable Additions delivered to the Trustee under this Section, upon receipt by the Trustee of the following:

(a)           The relevant documents specified in Subsections (b) through (g), inclusive, of Section 5.2 for delivery to the Trustee whenever requesting the use of Bondable Additions as the basis for converting principal amounts outstanding under Additional Obligations under this Section.

(b)           An Officers’ Certificate, dated within five days of the relevant Application requesting the conversion of principal amounts outstanding under Additional Obligations under this Section, stating that:

(i)             no Event of Default exists;

(ii)            the conditions precedent provided for in this Indenture relating to such conversion have been complied with; and

(iii)           identifying the Additional Obligations all or a portion of the principal amount of which is to be converted under this Section and specifying the principal amount to be converted.

(c)           An Opinion of Counsel stating that the documents which have been or are therewith delivered to the Trustee conform to the requirements of this Indenture, and that, upon the basis of the Application, the conditions precedent provided for in this Indenture relating to the conversion of principal amounts outstanding under Additional Obligations under this Section have been complied with.

Upon compliance with the foregoing provisions of this Section, the principal amount outstanding under Additional Obligations specified in the Officers’ Certificate delivered to the Trustee pursuant to Subsection (b) above shall be converted.  By virtue of such conversion, and notwithstanding any other provision of this Indenture, (i) such specified principal amount shall be deemed always to have been outstanding under Additional Obligations authenticated and delivered under Section 5.2 and never to have been outstanding under Additional Obligations upon the basis of Certified Progress Payments and (ii) Property Additions acquired with Certified Progress Payments made the basis for the authentication and delivery of such specified principal amount so converted shall be deemed never to have been acquired with Certified Progress Payments.

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6.  RELEASES

6.1. Right of Company to Possess and Operate Trust Estate; Dispositions Without Release.

So long as no Event of Default shall exist, the Company shall have the right, subject only to the express limitations of this Indenture, to possess, use, manage, operate and enjoy the Trust Estate (other than any cash and securities constituting part of the Trust Estate and deposited with the Trustee), to use and consume such fuel, materials, equipment and supplies as may be necessary or appropriate to generate, transmit and distribute electricity or operate the Company’s business, and to collect, receive, use, invest and dispose of the rents, issues, tolls, profits, revenues and other income, products and proceeds from the Trust Estate, freely and without restriction or hindrance on the part of the Trustee or of the Holders, to gather, cut, mine and produce crops, timber, coal, ore, gas, oil, minerals or other natural resources, products, materials and supplies and to use, consume and dispose of any thereof, and to alter, repair and change the position or location of any of its railroads, mines, mills, plants, warehouses, buildings, works, structures, machinery, equipment and other property, PROVIDED that such alterations, repairs or changes shall not materially diminish the value thereof or impair the lien of this Indenture thereon, and to deal with, exercise any and all rights under, receive and enforce performance under, modify or amend, and adjust and settle all matters relating to current performance of, choses in action, leases and contracts.

Except as otherwise expressly  provided herein, the Company shall have, in addition and not in limitation of the rights set forth in the preceding paragraph or otherwise, the right, at any time and from time to time if no Event of Default exists, freely and without restriction on the part of the Trustee or of the Holders, and without any release from or consent by the Trustee,

(a)           to sell, exchange or otherwise dispose of, free from the lien of this Indenture, any machinery, equipment, furniture, apparatus, tools or implements, materials or supplies or other similar property subject to the lien hereof, which may have become obsolete or unfit for use or no longer useful, necessary or profitable in the conduct of the business of the Company, upon substituting for the same other machinery, equipment, furniture, apparatus, tools or implements, materials or supplies or other property not necessarily of the same character but of at least equal value to the Company as the property disposed of, which shall forthwith become, without further action, subject to the lien of this Indenture; and no purchaser of any such property shall be bound to inquire into any question affecting the right of the Company to sell or otherwise dispose of the same free from the lien of this Indenture;

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(b)           except as otherwise expressly limited by this Section in the case of any particular lease or contract, to abandon, terminate, cancel, release or make alterations in or substitutions  of any leases, contracts or rights-of-way subject to the lien of this Indenture, PROVIDED that any altered or substituted  leases, contracts or rights-of-way shall forthwith, without further action, become subject to the lien of this Indenture to the same extent as those previously existing and PROVIDED FURTHER that, if the Company shall receive any money or property as consideration or compensation for such abandonment, termination, cancellation, release, amendment, alteration or substitution, such money (to the extent it exceeds $500,000 per abandonment, cancellation, release, amendment, alteration or substitution) or property, forthwith upon its receipt by the Company, shall be deposited with the Trustee (unless otherwise required by a Prior Lien) or otherwise subjected to the lien of this Indenture;

(c)           to surrender or modify, free and clear of the lien of this Indenture, any franchise, right (charter and statutory), license or permit subject to the lien of this Indenture which it may own or under which it may be operating, PROVIDED that, in the opinion of the Board of Directors or an Officer of the Company, the preservation of such franchise, right, license or permit is no longer necessary in the conduct of the business of the Company, PROVIDED FURTHER that the exercise by any governmental authority, municipality or other political subdivision of any right to terminate a franchise, right, license or permit shall not be deemed to be a surrender or modification of the same; and PROVIDED FURTHER that, if the Company shall be entitled to receive any money or property as consideration or compensation for such surrender or modification, such money (to the extent it exceeds $500,000 per surrender or modification) or property, forthwith upon its receipt by the Company, shall be deposited with the Trustee (unless otherwise required by a Prior Lien) or otherwise subjected to the lien of this Indenture;

(d)           to lease or grant rights-of-way, easements, licenses and permits over or in respect of any property constituting part of the Trust Estate, or release or cancel leases, rights-of-way, easements, licenses or permits constituting part of the Trust Estate, free and clear of the lien of the Indenture, PROVIDED that, in the opinion of the Board of Directors or an Officer of the Company, no such grant will impair in any material respect the usefulness of such property in the conduct of the Company’s business and no such release shall occur with respect to any right-of-way, easement, license or permit that is necessary for the operation of the Company’s business, and PROVIDED FURTHERthat any cash consideration in excess of $500,000 (per grant or release) received by the Company upon or in connection with the granting thereof, forthwith upon its receipt by the Company, shall be deposited with the Trustee (unless otherwise required by a Prior Lien) or otherwise subjected to the lien of this Indenture;

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(e)            to demolish, dismantle, tear down or use for scrap any property in the Trust Estate, or abandon any thereof other than land and interests in land free and clear of the lien of this Indenture if in the opinion of the Board of Directors or any Officer of the Company such demolition, dismantling, tearing down, scrapping or abandonment is desirable in the conduct of the business of the Company and the value and utility of the Trust Estate as an entirety and the security for the Obligations will not thereby be materially impaired;

(f)            to alter, repair, replace, change the location or position of and add to its plants, structures, machinery, systems, equipment, fixtures and appurtenances, PROVIDED that no change shall be made in the location of any such property subject to the lien of this Indenture which removes such property into a jurisdiction in which this Indenture and any required financing or continuation statement covering security interests in such property have not been recorded, registered or filed in the manner required by law to preserve the lien of this Indenture on such property  or otherwise impairs in any material respect the lien hereof;

(g)            to deal in, sell, dispose of or otherwise use inventory which is subject to the lien of this Indenture in the ordinary course of the Company’s business, or collect, liquidate or otherwise dispose of accounts receivable which are subject to the lien of this Indenture in the ordinary course of the Company’s business or use cash proceeds of the Trust Estate (other than cash deposited or required to be deposited with the Trustee pursuant to this Indenture) in the business of the Company; PROVIDED, that the Company’s right to rely upon this Paragraph (g) shall be conditioned upon and the Company shall deliver to the Trustee, within 30 days following January 1 and July 1 in each year (each, a “Six-Month Period”), an Officers’ Certificate to the effect that all sales of inventory by the Company and all collections and other dispositions of accounts receivable by the Company during such Six-Month Period were in the ordinary course of the Company’s business and that all proceeds therefrom were used by the Company in connection with its business or to make other cash payments permitted by this Indenture, and PROVIDED FURTHER that this Paragraph (g) shall not apply to any disposition of any portion of the Trust Estate in any transaction or related series of transactions involving the disposition of more than 10% of the fair value of the Trust Estate and, in such event, such disposition shall be made pursuant to the provisions of Section 6.2 below; and

(h)            to sell, lease, sublease or otherwise dispose of any property constituting part of the Trust Estate, subject to the lien of this Indenture, PROVIDED that the Company shall maintain possession and control of such property pursuant to a lease or sublease meeting the requirements of paragraph (c) of the definition of “Property Additions.”

The Trustee shall, from time to time, execute a written instrument to evidence and confirm any action taken by the Company under this Section, upon receipt by the Trustee of (i) a Board Resolution or Officers’ Certificate requesting the same and expressing any required opinions, (ii) an Officers’ Certificate stating that no Event of Default exists and that said action was duly taken in conformity with a designated Subsection of this Section, and (iii) an Opinion of Counsel stating that said action was duly taken by the Company in conformity with said Subsection and that the execution of such written instrument is appropriate to confirm such action under this Section.

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6.2. Releases.

The Company shall have the right, at any time and from time to time, to sell, exchange or otherwise dispose of any part of the Trust Estate free and clear of the lien of this Indenture (except cash, Pledged Securities and other personal property held by, or required to be deposited with, the Trustee hereunder) and the Trustee shall, from time to time, release property so sold, exchanged or otherwise disposed of from the lien of this Indenture, but only upon receipt by the Trustee of the items specified in this Section.  The Company shall also have the right, at any time and from time to time, to have any part of the Trust Estate released from the lien of this Indenture (except cash, Pledged Securities and other personal property held by, or required to be deposited with, the Trustee hereunder) without selling, exchanging or otherwise disposing of such part of the Trust Estate, and the Trustee shall, from time to time, release such property from the lien of this Indenture, but only upon receipt by the Trustee of the following:

(a)           A Board Resolution requesting such release and describing the property so to be released; PROVIDED, HOWEVER, that no Board Resolution shall be required if the Officers’ Certificate delivered pursuant to Subsection 6.2(b) states that the value of each item of property to be released does not exceed $ 5,000,000.

(b)           An Officers’ Certificate (hereinafter in this Section called a Release Certificate), dated not more than 30 days prior to the date of the Application for such release and signed also in the case of the following clauses (i), (ii) and (iv), by an Engineer, and in the case of the following clauses (v), if applicable, and (vi), by an Engineer or an Appraiser, setting forth in substance as follows:

(i)            if applicable, that the Company has sold or disposed of or has contracted to sell, exchange or otherwise dispose of the property so requested to be released;

(ii)           that

(A)           such release is desirable in the conduct of the business of the Company or the property to be released is no longer useful or advantageous in the judicious management and maintenance of the Trust Estate or in the conduct of the business of the Company, or

(B)           such release is to be made in lieu and reasonable anticipation of the taking of such property by eminent domain by the United States of America or a designated state, municipality or other governmental authority having the power to take such property by eminent domain, or

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(C)           such release is to be made in lieu and reasonable anticipation of the exercise of a right of the United States of America or a designated state, municipality or other governmental authority to purchase, or designate a purchaser or order the sale of, such property; or

(D)           such release is in connection with the sale and leaseback of any property;

(iii)           that no Event of Default exists;

(iv)           that, in the opinion of the signers, the proposed release will not impair the security under this Indenture in contravention of the provisions hereof and that all conditions precedent herein provided for relating to such release have been complied with;

(v)           the fair value, in the opinion of said Engineer or Appraiser, of the property to be released at the date of the Release Certificate; and if, by virtue of clause (vii) of this Subsection, any of the property to be released shall be separately described in the Release Certificate, the fair value of such property shall be separately stated; PROVIDED, HOWEVER, that it shall not be necessary under this clause to state the fair value of any property whose fair value is certified in an Independent Engineer’s or Independent Appraiser’s Certificate under Subsection (c) of this Section;

(vi)           if this Indenture is required to be qualified under the TIA, whether

(A)           the aggregate of the fair value of the property to be released at the date of the Release Certificate and the fair value of all securities or other property released since the commencement of the then current calendar year (as previously certified to the Trustee in connection with releases) is 10% or more of the aggregate principal amount of all Obligations at the time Outstanding and whether said fair value of the property to be released is at least $25,000 and at least 1% of the aggregate principal amount of all Obligations at the time Outstanding, or

(B)           the fair value of the property to be released at the date of the Release Certificate is more than $5,000,000,

and, if all the facts specified in either subclause (A) or (B) above are present, that a certificate of an Independent Engineer or Independent Appraiser as to the fair value of the property to be released will be furnished under Subsection (c) of this Section;

(vii)          whether any purchase money obligations to be delivered to the Trustee or to be certified as delivered to the trustee, mortgagee or other holder of a Prior Lien under Subsection (d)(iv) of this Section are to be secured by a purchase money mortgage on less than all the property to be released; and, if so, the property to be covered by such purchase money mortgage shall be separately described.

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(c)           In case it shall be stated pursuant to  Subsection (b)(vi) that the same will be furnished, a certificate of an Independent Engineer or Independent Appraiser, dated not more than 30 days prior to the date of the Application for such release, stating the fair value, in the Independent Engineer’s or Independent Appraiser’s opinion, at the date of the Release Certificate of the property to be released, stating separately the fair value of any such property separately described pursuant to Subsection (b)(vii) of this Section and stating also that, in the opinion of the Independent Engineer or Independent Appraiser, the proposed release will not impair the security under this Indenture in contravention of the provisions hereof.

(d)           Cash equal to the fair value, as certified pursuant to this Section, of the property to be released; PROVIDED, HOWEVER, that, no cash deposit will be required if the Officers, Certificate delivered pursuant to Subsection (b) of this Section states that the value of each item of property to be released does not exceed $500,000 and the value of all property released during the current calendar year under this proviso does not exceed $5,000,000; and PROVIDED FURTHER that, in lieu of all or any part of such cash, the Company shall have the right to deposit and pledge with or deliver to the Trustee any of the items described in the following clauses of this Subsection:

(i)            purchase money obligations secured by a mortgage or similar instrument on the property to be released or the portion thereof separately described pursuant to Subsection (b)(vii) of this Section, maturing not more than 10 years after the date of the deposit thereof and not exceeding in principal amount 80% of the fair value of the property covered by such purchase money mortgage, as certified pursuant to Subsection (b)(v) or Subsection (c) of this Section, which purchase money obligations and the mortgage securing the same shall be duly assigned to and deposited and pledged with the Trustee, shall be accompanied by an Officers’ Certificate stating that the aggregate unpaid principal amount of all purchase money obligations received by the Trustee under this clause and then deposited and pledged with it (including those then being deposited and pledged with the Trustee), together with all those then and theretofore delivered to and then held by any trustees, mortgagees or other holders of Prior Liens under clause (iv) of this Subsection, does not exceed 10% of the aggregate principal amount of all Outstanding Secured Obligations and shall be received by the Trustee at their principal amount in lieu of cash;

(ii)           the relevant documents specified in Subsections 5.2(b) through (g) for delivery whenever requesting the use of Bondable Additions as a basis, in whole or in part, for the release of any part of the Trust Estate under this Section, said documents to be received by the Trustee in lieu of cash up to the Bondable Additions thereby certified; PROVIDED, HOWEVER, that if all the property to be released was, immediately before the requested release thereof Non-Bondable Property, subject to a Prior Lien, the Bondable Additions being used as a basis for such release may be subject to the same Prior Lien without any deduction for the Prior Lien Obligations thereby secured in computing such Bondable Additions and said documents may be modified accordingly;

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(iii)           the relevant documents specified in Subsections (b), (c), (d) and (e) of Section 5.3 (with such omissions and variations as are appropriate in view of the fact that the previous or concurrent retirement or defeasance of, or payment of principal on, the Obligations described therein are being used as the basis for the release of any part of the Trust Estate) for delivery whenever requesting the use of Obligations previously or concurrently retired or defeased, or the payment of principal on any Obligations, as a basis, in whole or in part, for the release of any part of the Trust Estate under this Section, said documents to be received by the Trustee in lieu of cash up to the amount of Obligations previously or concurrently retired or defeased, or principal amount of Obligations paid, and not previously used as a basis for the issuance of Additional Obligations or the withdrawal of cash;

(iv)           a certificate of the trustee, mortgagee or other holder of a Prior Lien on all or any part of the property to be released, stating that a specified amount of cash or a specified principal amount of purchase money obligations of the character described in clause (i) of this Subsection and representing proceeds of the sale of such property have been deposited with such trustee, mortgagee or other holder pursuant to the requirements of such Prior Lien, such certificate to be received by the Trustee in lieu of cash equal to the cash and the principal amount of the purchase money obligations so certified to have been deposited with such trustee, mortgagee or other holder, PROVIDED there shall also be delivered to the Trustee an Officers’ Certificate stating that such property to be released was subject to such Prior Lien, which shall be briefly described or otherwise identified, and that the aggregate principal amount of all purchase money obligations received by the Trustee under clause (i) of this Subsection and then deposited and pledged with it, together with all those then and theretofore delivered to and then held by any trustees, mortgagees or other holders of Prior Liens under this clause, does not exceed 10% of the aggregate principal amount of all Obligations then Outstanding;

(v)           an Officers’ Certificate stating that the property to be released has been sold or disposed of subject to a specified Prior Lien or Liens existing thereon immediately before such release, briefly describing or otherwise identifying such Prior Lien or Liens, stating the principal amount of the outstanding Prior Lien Obligations secured thereby and stating that such property constitutes all the property which, immediately before such sale, exchange or other disposition was subject to such Prior Lien or Liens, said Certificate to be received by the Trustee in lieu of cash in an amount equal to the principal amount of outstanding Prior Lien Obligations so stated to be secured by such Prior Lien or Liens; and

(vi)          whenever Designated Qualifying Securities are used as a basis, in whole or in part, for the release of any part of the Trust Estate under this Section, the relevant documents and Designated Qualifying Securities specified for delivery in paragraphs (c), (d) through (g) of Section 5.5 (with such omissions and variations as are appropriate in view of the fact that the Designated Qualifying Securities described therein are being used as the basis for the release of any part of the Trust Estate and except that the maturity date or dates for such Designated Qualifying Securities may be as determined by the Company), said documents to be received by the Trustee in lieu of cash up to an amount equal to the principal amount of such Designated Qualifying Securities.

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(e) An Opinion of Counsel

(i)            stating that the certificates, opinions and other instruments and/or cash and/or obligations which have been or are therewith delivered to or deposited and pledged with the Trustee conform to the requirements of this Indenture, that, upon the basis of the Application, all conditions precedent herein provided for or relating to the release from the lien of this Indenture of the property so sold or disposed of or contracted to be sold or disposed of have been complied with in all material respects;

(ii)           stating that the purchase money obligations, if any, being delivered to the Trustee or to the trustee, mortgagee or other holder of a Prior Lien are valid obligations and are duly secured by a valid purchase money mortgage constituting a lien upon all the property to be released, or upon the portion thereof separately described pursuant to Subsection (b)(vii) of this Section, free and clear of any Prior Liens other than any existing on the property to be released immediately prior to such release, and that the assignment to the Trustee of such purchase money obligations and the mortgage securing the same is valid and in recordable form;

(iii)           in case any cash or purchase money obligation shall be certified to have been deposited with the trustee, mortgagee or other holder of a Prior Lien, stating that the property to be released, or a specified portion thereof, is or immediately before such release was subject to such Prior Lien and that such deposit is required by such Prior Lien;

(iv)           in case the sale, exchange or other disposition of the property to be released shall have been certified to be in lieu and reasonable anticipation of the taking of such property by eminent domain, stating that such property could lawfully have been taken by the grantee by eminent domain;

(v)           in case the sale, exchange or other disposition of the property to be released shall have been certified, pursuant to Subsection (b)(ii)(C) of this Section, to be in lieu and reasonable anticipation of the exercise of a right to purchase, or to designate a purchaser or order the sale of, such property, stating that the designated governmental authority had, at the time of such sale or disposition, a right to purchase or designate a purchaser of such property or to order its sale;

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(vi)           in case an Officers’ Certificate shall have been delivered to the Trustee in lieu of cash pursuant to Subsection (d)(v) of this Section, stating that the property to be released, or a specified portion thereof, is or immediately before such release was subject to the Prior Lien or Liens described or otherwise identified in said Certificate and that the nature and extent of such Prior Lien or Liens and the principal amount of the outstanding Prior Lien Obligations thereby secured are correctly stated in said Certificate.

If any property released from the lien of this Indenture as provided in this Section shall continue to be owned by the Company after such release, this Indenture shall not become or be, or be required to become or be, a lien on such property or any improvement, extension or addition to such property or renewals, replacements or substitutions of or for any part or parts of such property unless the Company shall execute and deliver to the Trustee a Supplemental Indenture, in recordable form, containing a grant, conveyance, transfer or mortgage thereof to the Trustee all in accordance with Section 14.5.

With respect to any property released from the lien of the Indenture as provided in this Section, the Trustee, upon Company Request, shall execute and deliver a release or other document to be recorded, registered or filed evidencing that such property is not subject to the lien of the Indenture.

6.3. Eminent Domain.

If any or all of the Trust Estate shall be taken by eminent domain or purchased pursuant to the right of a governmental authority to purchase or designate a purchaser for such property or to order its sale, the Trustee may release the property so taken and shall be fully protected in so doing upon being furnished with:

(a)           an Officers’ Certificate requesting such release, describing the property so to be released and stating that such property has been taken by eminent domain or purchased pursuant to the right of a governmental authority to purchase or designate a purchaser for such property or to order its sale and that all conditions precedent herein provided for relating to such release have been complied with;

(b)           an Opinion of Counsel stating that an order of a court of competent jurisdiction has been issued providing for the taking of such property by the exercise of the power of eminent domain or that such property has been purchased pursuant to the right of a governmental authority to purchase or designate a purchaser for such property or to order its sale, that such order or such purchase of such property has become final or an appeal therefrom is not being pursued by the Company and that all conditions precedent herein provided for relating to such release have been complied with; and

(c)           subject to the requirements of any Prior Lien on the property so taken, cash equal to such award or sale price; PROVIDED, HOWEVER, that, no cash deposit will be required if the Officers’ Certificate delivered pursuant to Subsection (a) of this Section states that the value of each item of property to be taken or purchased does not exceed $500,000 and the value of all property taken or released during the current calendar year under this proviso does not exceed $5,000,000.

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6.4. Written Disclaimer of Trustee.

(a)           In case the Company proposes to sell, exchange or otherwise dispose of or has sold, exchanged or otherwise disposed of any property not subject to the lien hereof and the transferee thereof requests the Company to furnish a written disclaimer or quit-claim by the Trustee of any interest in such property under this Indenture, the Trustee shall execute such an instrument without substitution of other property or cash upon receipt by the Trustee of:

(i)             a Company Request for the execution of such disclaimer or quit-claim; and

(ii)            an Officers’ Certificate which shall recite the sale, exchange or other disposition or proposed sale, describe in reasonable detail the property sold or to be sold, state that such property is not subject to the lien hereof, and state that the transferee has requested a written disclaimer or quit-claim by the Trustee.

(b)           Upon receipt of a Company Request, the Trustee shall execute and deliver a subordination, non-disturbance, attornment or similar agreement in favor of the beneficiary of any Permitted Encumbrance.

6.5. Powers Exercisable Notwithstanding Event of Default.

While in possession of all or substantially all of the Trust Estate (other than any cash and securities constituting part of the Trust Estate and deposited with the Trustee), the Company may exercise the powers conferred upon it in the Sections of this Article even though it is prohibited from doing so while an Event of Default exists as provided therein, if the Trustee in its discretion (based upon such opinions and certifications as the Trustee deems necessary), or the Holders of not less than a majority in aggregate principal amount of the Obligations then Outstanding, by Act of such Holders, shall consent to such action (and such consent may be on a retroactive basis, except that if any of the Obligations originally designated as New Bonds, 2001 Series A, or New Bonds, 2002 Series A, shall remain Outstanding, such consent may not be on a retroactive basis unless the Credit Enhancer for such Obligations shall also have consented), in which event none of the instruments required to be furnished to the Trustee under any of such Sections as a condition to the exercise of such powers need state that no Event of Default exists as provided therein.

6.6. Powers Exercisable by Trustee or Receiver.

In case all or substantially all of the Trust Estate (other than any cash and securities constituting part of the Trust Estate and deposited with the Trustee) shall be in the possession of a trustee or receiver lawfully appointed, the powers hereinbefore in this Article conferred upon the Company with respect to the sale, exchange or other disposition and release of the Trust Estate may be exercised by such trustee or receiver (with the consent of the Trustee or Holders specified in Section 6.5) in which case a written request signed by such receiver or trustee shall be deemed the equivalent of any Board Resolution or Company Request required by this Article and a certificate signed by such trustee or receiver shall be deemed the equivalent of any Officers Certificate required by this Article and such certificate need not state that no Event of Default exists. If the Trustee shall be in possession of the Trust Estate under Section 9.3, such powers may be exercised by the Trustee in its discretion.

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6.7. Purchaser Protected.

No purchaser or other transferee in good faith of property purporting to be released herefrom shall be bound to ascertain the authority of the Trustee to execute the release or to inquire as to the satisfaction of any conditions herein prescribed for the exercise of such authority; nor shall any purchaser or grantee of any property or rights permitted by this Article to be sold, exchanged or otherwise disposed of by the Company be under any obligation to ascertain or inquire into the authority of the Company to make any such sale, exchange or other disposition. Any release executed by the Trusteeunder this Article shall be sufficient for the purpose of this Indenture and shall constitute a good and valid release of the property therein described from the lien hereof.

6.8. Disposition of Collateral on Discharge of Prior Liens.

Upon the cancellation and discharge of any Prior Lien, the Company will cause all cash and purchase money obligations then held by the trustee, mortgagee or other holder of such Prior Lien, which were received by such trustee, mortgagee or other holder in accordance with the provisions of this Article (including all proceeds of or substitutions for any thereof), to be paid to or deposited and pledged with the Trustee, such cash to be held and paid over or applied by the Trustee as provided in Article 7.

6.9. Disposition of Obligations Received.

All purchase money obligations received by the Trustee under this Article shall be held by the Trustee as a part of the Trust Estate.  Upon payment by or on behalf of the Company to the Trustee of the entire unpaid principal amount of any such obligation, the Trustee shall release and transfer such obligation and any mortgage securing the same upon Company Request.  Any cash received by the Trustee in respect of the principal of any such obligations shall be held by the Trustee as Trust Moneys under Article 7 subject to application as therein provided.  The Trustee shall not be responsible for the collection of the principal of or interest on any such obligations.  All interest and other income on any such obligations, when received by the Trustee, shall, except to any extent otherwise provided in Section 16.4, be paid from time to time upon Company Request, unless an Event of Default shall exist.  If an Event of Default shall exist, any interest and other income on any such obligations not theretofore paid upon Company Request, when collected by the Trustee, shall be applied by the Trustee in accordance with Section 9.7.

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6.10. Excludable Property.

Upon receipt of an Officers’ Certificate identifying Excludable Property, the Trustee shall execute and deliver a release or other document to be recorded, registered or filed evidencing that such Excludable Property is not subject to the lien of this Indenture.

7.  APPLICATION OF TRUST MONEYS

7.1. “Trust Moneys” Defined.

All moneys received by the Trustee

(a)           upon the release of property from the lien of this Indenture, including all moneys received in respect of the principal of all purchase money obligations, or

(b)           as compensation for, or proceeds of the sale of, any part of the Trust Estate taken by eminent domain or purchased by, or sold pursuant to an order of, a governmental authority or otherwise disposed of, or

(c)           as proceeds of insurance upon any part of the Trust Estate, or

(d)           as excess principal paid on Designated Qualifying Securities pursuant to Section 17.2(b); or

(e)           for application under this Article as elsewhere herein provided, or whose disposition is not elsewhere herein otherwise specifically provided for,

(all such moneys being herein sometimes called “Trust Moneys”) shall be held by the Trustee, except as otherwise provided in this Article, as a part of the Trust Estate and, upon any entry upon or sale of the Trust Estate or any part thereof under Article 9, Trust Moneys shall be applied in accordance with Section 9.7; but, prior to any such entry or sale, all or any part of the Trust Moneys may be withdrawn, and shall be paid, released or applied by the Trustee, from time to time as provided in Sections 7.2 to 7.9, inclusive, and may be applied by the Trustee as provided in Sections 10.7, 14.11 and 16.14.

7.2. Withdrawal on Basis of Bondable Additions.

Trust Moneys may be withdrawn by the Company and shall be paid by the Trustee under this Section upon Company Request, from time to time, equal to the Bondable Additions made the basis for such withdrawal pursuant to Subsection (c) of this Section, upon receipt by the Trustee of the following:

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(a)           A Company Request requesting the withdrawal and payment of a specified amount of Trust Moneys.

(b)           An Officers’ Certificate dated not more than 30 days prior to the date of the Application for the withdrawal and payment of such Trust Moneys, stating

(i)            that no Event of Default exists; and

(ii)            that all conditions precedent herein provided for relating to such withdrawal and payment have been complied with.

(c)           The additional relevant documents specified in Section 5.2 (other than an Available Margins Certificate) for delivery whenever requesting the use of Bondable Additions as a basis for the withdrawal of Trust Moneys under this Section.

7.3. Withdrawal on Basis of Retirement or Defeasance of Obligations or Principal Payments on Obligations.

Trust Moneys may be withdrawn by the Company and shall be paid by the Trustee upon Company Request, from time to time, equal to the principal amount of Obligations or principal payments on Obligations made the basis for such withdrawal pursuant to Subsection (c) of this Section, upon receipt by the Trustee of the following:

(a)           A Company Request requesting the withdrawal and payment of a specified amount of Trust Moneys.

(b)           An Officers’ Certificate, dated not more than 30 days prior to the date of the Application for the withdrawal and payment of such Trust Moneys, stating

(i)            that no Event of Default exists; and

(ii)            that all conditions precedent herein provided for relating to such withdrawal and payment have been complied with.

(c)           The Obligations and documents which the Company would be required to furnish to the Trustee upon an Application for the authentication and delivery of Obligations under Section 5.3, but without complying with the requirements of Subsections (a), (d), (e) and (f) thereof.

(d)           An Opinion of Counsel stating that the documents and Obligations which have been or are therewith delivered to the Trustee conform to the requirements of this Indenture, and that, upon the basis of the relevant Application, all conditions precedent herein provided for or relating to withdrawal and payment of the Trust Moneys whose withdrawal and payment is then requested have been complied with.

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7.4. Withdrawal on Basis of Designated Qualifying Securities.

Trust Moneys may be withdrawn by the Company and shall be paid by the Trustee under this Section to the Company or as otherwise specified in a Company Request, from time to time, equal to the principal amount of Designated Qualifying Securities made the basis for such withdrawal pursuant to Subsection (c) below, upon receipt by the Trustee of the following:

(a)           A Company Request requesting the withdrawal and payment of Trust Moneys.

(b)           An Officers’ Certificate, dated not more than 30 days prior to the date of the Application for the withdrawal and payment of such Trust Moneys, stating that:

(i)             no Event of Default exists; and

(ii)            the conditions precedent provided for in this Indenture relating to such withdrawal and payment have been complied with.

(c)           The Designated Qualifying Securities, documents and opinions which the Company would be required to furnish to the Trustee upon an Application for the authentication and delivery of Additional Obligations under Section 5.5, except for the documents and opinions required by Subsections (a), (b) and (f)(iv) thereof (with such omissions and variations as are appropriate in view of the fact that the Designated Qualifying Securities described therein are being used as the basis for the withdrawal and payment of Trust Moneys and except that the maturity date or dates for such Designated Qualifying Securities may be as determined by the Company).

(d)           An Opinion of Counsel stating that the Designated Qualifying Securities and the documents which have been or are therewith delivered to the Trustee conform to the requirements of this Indenture, and that, upon the basis of the Application, the conditions precedent provided for in this Indenture relating to the withdrawal and payment of the Trust Moneys then requested have been complied with.

7.5. Withdrawal on Basis of Certified Progress Payments.

Trust Moneys may be withdrawn by the Company and shall be paid by the Trustee under this Section to the Company or as otherwise specified in a Company Request, from time to time, equal to the Certified Progress Payments made the basis for such withdrawal pursuant to Subsection (c) below, upon receipt by the Trustee of the following:

(a)           A Company Request requesting the withdrawal and payment of Trust Moneys.

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(b)           An Officers’ Certificate, dated not more than 30 days prior to the date of the Application for the withdrawal and payment of such Trust Moneys, stating that:

(i)             no Event of Default exists; and

(ii)            the conditions precedent provided for in this Indenture relating to such withdrawal and payment have been complied with.

(c)           An Officers’ Certificate, dated not more than 30 days prior to the date of the Application for the withdrawal and payment of such Trust Moneys, stating that:

(i)             the Certified Progress Payments which are then being made the basis for the withdrawal and payment of such Trust Moneys, which shall equal 100% of the Trust Moneys the withdrawal and payment of which is then being applied for under this Section; and

(ii)            that the Certified Progress Payments then being made the basis for the authentication and delivery of Additional Obligations do not include any Certified Progress Payments which shall have theretofore been made, or are otherwise currently being made, the basis for (a) the withdrawal and payment of Trust Moneys to the Company or as otherwise specified in a Company Request under this Section, or (b) the authentication and delivery of Additional Obligations (or any advance or issuance thereunder).

(d)           An Opinion of Counsel stating that the applicable Qualified EPC Contract is part of the Trust Estate and that the actions taken by the Company under this Section with respect to the delivery of documents to the Trustee conform to the requirements of this Indenture and that, upon the basis of the Application, the conditions precedent provided for in this Indenture relating to the withdrawal and payment of Trust Moneys therein applied for have been complied with.

7.6. Retirement of Obligations or Payments on Obligations.

Trust Moneys shall be applied by the Trustee from time to time to the redemption of Outstanding Secured Obligations of the several series that may be designated for the purpose by the Company, all in accordance with the provisions applicable to redemption at the option of the Company and with the premiums applicable thereto, or to the payment of the principal of any such Outstanding Secured Obligations at their Stated Maturity or to the purchase thereof upon tender or in the open market or at private sale or upon any exchange or in any one or more of said ways or to any other payment of the principal of any Outstanding Secured Obligations that may be designated by the Company, all in accordance with the rights of the Company to make such payments and with any penalties or premiums applicable thereto, as the Company shall specify in a Company Request, upon receipt by the Trustee of the following:

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(a)           A Company Request directing the application pursuant to this Section of a specified amount of Trust Moneys and, in case any such moneys are to be applied to the redemption of Obligations, designating the Obligations so to be redeemed and stating the applicable Redemption Price, if any, or authorizing such designation and statement to be made in an Officers’ Certificate, and, in case such moneys are to be applied to the purchase of Obligations, prescribing the method of purchase, the price or prices to be paid and the maximum principal amount of Obligations to be purchased or authorizing the prescription of such method, price, and maximum principal amount to be made in an Officers’ Certificate, and in case such moneys are to be applied to the payment of principal on Obligations, designating the Obligations on which such payments are to be made, specifying the amount to be paid and stating the applicable penalties or premiums, if any, or authorizing such designation, specification and statement to be made in an Officers’ Certificate.

(b)           Cash equivalent to the maximum amount of the accrued interest and the premium or penalty, if any, required to be paid in connection with any such redemption, purchase or payment, which cash shall be held by the Trustee in trust for such purpose.

(c)           An Officers’ Certificate, dated not more than 30 days prior to the date of the relevant Application, stating

(i)            that no Event of Default exists; and

(ii)            that all conditions precedent herein provided for relating to such application of Trust Moneys have been complied with.

(d)           An Opinion of Counsel stating that the documents and the cash, if any, which have been or are therewith delivered to and deposited with the Trustee conform to the requirements of this Indenture and that upon the basis of such Application all conditions precedent herein provided for relating to such application of Trust Moneys under this Section in accordance with such Board Resolution have been complied with.

Upon compliance with the foregoing provisions of this Section, the Trustee shall apply Trust Moneys as requested by a Company Request, in an amount up to, but not exceeding, the principal amount of the Obligations so redeemed, paid or purchased, or the principal amount of the principal payments on the Obligations so made, and shall use only the cash deposited pursuant to Subsection (b) above, to the extent necessary, to pay any accrued interest, penalty and premium required in connection with such redemption, purchase or payment.

A Board Resolution expressed to be irrevocable directing the application of Trust Moneys under this Section to the payment of the principal of particular Obligations shall, for all purposes of this Indenture, be deemed the equivalent of the deposit of money with the Trustee in trust for such purpose.  Such Trust Moneys and any cash deposited with the Trustee pursuant to Subsection (b) of this Section for the payment of accrued interest, penalty and premium shall not, after compliance with the foregoing provisions of this Section, be deemed to be a part of the Trust Estate or Trust Moneys.

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7.7. Withdrawal of Insurance Proceeds.

(a)           To the extent that any Trust Moneys consist of proceeds of insurance upon any part of the Trust Estate, they may be withdrawn by the Company and shall be paid by the Trustee to the Company or as otherwise specified in a Company Request to reimburse the Company for the Cost to the Company to repair, rebuild or replace the property destroyed or damaged, upon receipt by the Trustee of the following:

(i)            An Officers’ Certificate, dated not more than 30 days prior to the date of the Application for the withdrawal and payment of such Trust Moneys and signed with respect to subclauses (A) and (C), in addition to the two officers signing the same, by a Person, who may be one of such officers, signing as an Accountant, setting forth:

(A)           that expenditures have been made, or costs incurred, by the Company in a specified amount for the purpose of making certain repairs, rebuildings and replacements, which shall be briefly described, and setting forth the amount of any such expenditures or costs for the acquisition of a major item of property, which shall be separately specified, in replacement of any destroyed or damaged property;

(B)           that no part of such expenditures or costs has been or is being made the basis for the authentication and delivery of Obligations or the withdrawal of any cash or the release of any property from the lien of this Indenture or has been paid out of the proceeds of insurance upon any part of the Trust Estate not required to be paid to the Trustee under Section 14.8;

(C)           that there is no outstanding indebtedness, other than costs for which payment is being requested, known to the Company, after due inquiry, for the purchase price or construction of such repairs, rebuildings or replacements, or for labor, wages, materials or supplies in connection with the making thereof, which, if unpaid, might become the basis of a vendor’s, mechanics’, laborers’, materialmen’s, statutory or other similar lien upon any of such repairs, rebuildings or replacements, which lien might, in the opinion of the signers of such Certificate, materially impair the security afforded by such repairs, rebuildings or replacements;

(D)           that no Event of Default exists; and

(E)           that all conditions precedent herein provided for relating to such withdrawal and payment have been complied with.

(ii)           An Engineer’s or Appraiser’s Certificate, dated not more than 30 days prior to the date of the related Application, stating, in the opinion of the signer, the fair value to the Company of any major item of property specified in the foregoing subclause (a)(i)(A); and the Engineer or Appraiser shall be an Independent Engineer or Appraiser if such property constitutes an Acquired Facility and if this Indenture is qualified under the TIA and the fair value to the Company of such Acquired Facility is at least $25,000 and at least 1% of the aggregate principal amount of all Obligations at the time Outstanding.

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(iii)           An Opinion of Counsel stating

(A)           that the documents which have been or are therewith delivered to the Trustee conform to the requirements of this Indenture, that, upon the basis of the related Application, all conditions precedent herein provided for relating to such withdrawal and payment of Trust Moneys then requested have been complied with; and

(B)           that the Company’s right, title and interest in and to such repairs, rebuildings and replacements described in the Officers’ Certificate delivered pursuant to subclause (a)(i)(A) above are subject to the lien of this Indenture.

(iv)           Title Evidence indicating that the Company has acquired, or upon payment of the costs to be paid as requested will acquire, title to the repairs, rebuildings or replacements described in the Officers’ Certificate delivered pursuant to subclause (a)(i)(A) above at least equivalent to its title to the property destroyed or damaged.

Upon compliance with the foregoing provisions of this Section, the Trustee shall pay on Company Request an amount of Trust Moneys of the character aforesaid equal to the amount of the expenditures or costs stated in such Officers’ Certificate; PROVIDED, HOWEVER, that, in the case of expenditures or costs for the acquisition of a major item of property in replacement of any destroyed or damaged property, such expenditures or costs shall not exceed the fair value to the Company of such replacement as certified pursuant to the foregoing clause (a)(ii).

(b)           To the extent that any Trust Moneys consist of proceeds of insurance upon, or payable in consequence of destruction of or damage to, that portion of the Trust Estate consisting of the property (“Leased Assets”) subject to a lease (a “Capital Asset Lease”) described in paragraph (c) of the definition of “Property Additions” or Section 6.1(h), they shall be paid by the Trustee as specified in a Company Request to the lessor under a Capital Asset Lease or its designee, upon receipt by the Trustee of the following:

(i)            An Officers’ Certificate, dated not more than 30 days prior to the date of the Application for the withdrawal and payment of such Trust Moneys and signed in the case of the following subclauses (B), (C) and (D) by an Engineer or Appraiser, setting forth in substance as follows:

(A)           an amount is, or with an election which shall be made by the Company, will be, due and payable to the lessor under the Capital Asset Lease in respect of such destruction of, or damage to, the Leased Assets and the amount of the request for withdrawal of Trust Moneys to which such Officers’ Certificate relates does not exceed such amount;

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(B)           the amount of Trust Moneys to be withdrawn pursuant to such Company Request is not more than the difference between (i) the amount of proceeds of insurance received in consequence of such destruction of or damage to the Leased Assets which has theretofore been deposited with the Trustee, minus either (ii) if the Leased Assets are not to be repaired or replaced, the difference between (A) the fair value in the opinion of said Engineer or Appraiser of the Leased Assets immediately prior to the destruction or damage giving rise to the receipt of the proceeds of insurance, minus (B) the fair value in the opinion of said Engineer or Appraiser of the Leased Assets at the date of such Officers’ Certificate or (iii) if the Leased Assets are to be repaired or replaced, the cost of repair or replacement as estimated by such Engineer or Appraiser;

(C)           whether:

(a)           the aggregate of the amount of Trust Moneys to be withdrawn in accordance with such Application and the fair value of all Trust Moneys, withdrawn pursuant to this Subsection or securities or other property released pursuant to Section 6.2 since the commencement of the then current calendar year (as previously certified to the Trustee in connection with withdrawals or releases) is 10% or more of the aggregate principal amount of all Obligations at the time Outstanding, and whether such amount of Trust Moneys to be withdrawn is at least $2,000,000 (or, if this Indenture is qualified under the TIA, $25,000) and at least 1% of the aggregate principal amount of all Obligations at the time Outstanding, or

(b)           the amount of the Trust Moneys to be withdrawn in accordance with such Application is more than $2,000,000;

(D)           that, in the opinion of the signers, the proposed withdrawal will not impair the security under this Indenture in contravention of the provisions hereof; and

(E)           that no Event of Default exists.

If the facts specified in either paragraph (a) or (b) of subclause (C) above are present, such Officers’ Certificate shall be accompanied by a certificate of an Independent Engineer or Independent Appraiser, dated not more than 30 days prior to the date of the Application for the withdrawal and payment of Trust Moneys, to the effect set forth in subclauses (B) and (D) above.  Upon compliance with the foregoing provisions of this Section, the Trustee shall pay to the Person specified in a Company Request an amount of Trust Moneys of the character aforesaid equal in the amount stated in such Officers’ Certificate.

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7.8. Amounts under $100,000.

In case the amount of Trust Moneys at any one time received by the Trustee shall not exceed $100,000, the same shall (unless an Event of Default exists) be paid over upon Company Request; and the Company covenants and agrees that it will, within 12 months after such Trust Moneys shall have been so paid over, deposit and file with the Trustee the documents and Obligations, if any, which by the provisions of Section 7.2, 7.3, 7.4, 7.5, 7.6 or 7.7 would have been delivered to the Trustee to entitle the Company to have the Trust Moneys paid over as in such section provided, with such omissions and variations as are appropriate by reason of the fact that such Trust Moneys have theretofore been paid over by the Trustee without prior compliance with such Section. In the event that the Company shall have failed to comply with the foregoing covenant, no further payment may be made under this Section until the Company shall have deposited with and delivered to the Trustee the required documents and Obligations, if any.

7.9. Powers Exercisable Notwithstanding Default.

While in possession of all or substantially all of the Trust Estate (other than any cash and securities constituting part of the Trust Estate and deposited with the Trustee), the Company may do any of the things enumerated in Sections 7.2 to 7.8, inclusive, which it is prohibited from doing while an Event of Default exists as provided therein, if the Trustee in its discretion (based upon such opinions and certifications as the Trustee deems necessary), or the Holders of not less than a majority in aggregate principal amount of the Obligations then Outstanding, by an Act of such Holders, shall consent to such action (and such consent may be on a retroactive basis, except that if any of the Obligations originally designated as New Bonds, 2001 Series A, or New Bonds, 2002 Series A, shall remain Outstanding, such consent may not be on a retroactive basis unless the Credit Enhancer for such Obligations shall also have consented), in which event any Certificate delivered to the Trustee under any of said Sections shall omit any statement to the effect that no Event of Default exists as provided thereunder.

7.10. Powers Exercisable by Trustee or Receiver.

In case all or substantially all of the Trust Estate (other than any cash and securities constituting part of the Trust Estate and deposited with the Trustee) shall be in the possession of a receiver or trustee lawfully appointed, the powers hereinbefore in this Article conferred upon the Company with respect to the withdrawal or application of Trust Moneys may be exercised by such receiver or trustee (with the consent of the Trustee or Holders specified in Section 7.9), in which case a written request signed by such receiver or trustee shall be deemed the equivalent of any Board Resolution or Company Request required by this Article and a certificate signed by such receiver or trustee shall be deemed the equivalent of any Officers’ Certificate required by this Article and such certification need not state that no Event of Default exists. If the Trustee shall be in possession of the Trust Estate under Section 9.3, such powers may be exercised by the Trustee in its discretion.

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7.11. Disposition of Obligations Retired.

All Obligations received by the Trustee and on the basis of which Trust Moneys are paid over or for whose payment, redemption or purchase Trust Moneys are applied under this Article, if not cancelled previously, shall be promptly cancelled by the Trustee and thereafter the Trustee may retain or destroy such Obligations and deliver a certificate of destruction to the Company.

8.  DEFEASANCE

8.1. Termination of Company’s Obligations.

(a)           The Company may terminate its obligations under the Obligations and this Indenture if all Obligations previously authenticated and delivered (other than destroyed, lost or stolen Obligations which have been replaced or paid or Obligations for whose payment money or securities has theretofore been held in trust and thereafter repaid to the Company, as provided in Section 8.3) have been delivered to the Trustee for cancellation and the Company has paid all sums payable by it hereunder and thereunder; or

(b)           Except as otherwise provided in this Section, the Company may terminate its obligations under any or all Obligations and all of its obligations under this Indenture to or for the benefit of the Holders of such Obligations, if:

(i)           the Company has (A) in case any of such Obligations are to be redeemed on any date prior to their Stated Maturity, given to the Trustee irrevocable instructions to give as provided in Article 15 notice of redemption of such Obligations (other than Obligations which have been purchased by the Trustee at the direction of the Company as hereinafter provided prior to the giving of such notice of redemption), and (B) irrevocably deposited or caused to be deposited with the Trustee or Paying Agent (if other than the Company), under the terms of an irrevocable trust agreement in form and substance satisfactory to the Trustee and any such Paying Agent, as trust funds in trust for the benefit of the Holders of such Obligations for that purpose, money or Defeasance Securities maturing as to principal and interest in such amounts and at such times as are sufficient (in the opinion of a nationally recognized firm of Independent Accountants expressed in a certificate signed by such firm and delivered to the Trustee), without consideration of any reinvestment of such interest, to pay principal or Redemption Price (if applicable) of, and interest due or to become due on such Obligations (other than destroyed, lost or stolen Obligations which have been replaced or paid or Obligations for whose payment money or securities has theretofore been held in trust and thereafter repaid to the Company as provided in Section 8.3) on or prior to the Redemption Date or Stated Maturity thereof, as the case may be, in accordance with the terms of this Indenture and such Obligations; PROVIDED, that the Trustee or Paying Agent shall have been irrevocably instructed to apply such money or the proceeds of such Defeasance Securities to the payment of said principal, Redemption Price and interest with respect to such Obligations;

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(ii)           no Event of Default shall exist on the date of such deposit or shall occur as a result of such deposit;

(iii)           [Reserved]

(iv)           the Company has paid or caused to be paid all sums then due from the Company hereunder and under such Obligations

(v)           [Reserved;]

(vi)           the Company has delivered an Opinion of Counsel from a nationally recognized law firm stating that the Holders of such Obligations (or the Trustee for the benefit of such Holders) shall have a perfected security interest under applicable law in the money or Defeasance Securities so deposited; and

(vii)           the Company has delivered to the Trustee and any Paying Agent an Officers’ Certificate, each stating that the conditions set forth in clauses (i) through (vi) above have been complied with.

After any such irrevocable deposit, the Trustee upon Company Request shall acknowledge in writing the discharge of the Company’s obligations under such Obligations and of the Company’s obligations to or for the benefit of the Holders of such Obligations under this Indenture, except for those surviving obligations specified below.

(c)           Notwithstanding the satisfaction of the conditions set forth in Subsection (b) with respect to any Obligations, the Company’s and the Trustee’s obligations to or for the Holders of such Obligations, and the Company’s obligations to the Trustee, in either case under Sections  3.7, 3.8, 8.2, 8.3, 8.4, 10.7, 10.10, 11.2, 14.1, 14.2, 14.3 and 16.14 shall survive until such Obligations are no longer Outstanding.  Thereafter, only the Company’s obligations under Sections 8.3, 8.4, 10.7 and 16.14 shall survive with respect to such Holders or the Trustee.

(d)           The Trustee or Paying Agent shall, if so directed by the Company (i) prior to the Stated Maturity of Obligations in respect of which a deposit has been made under clause (b)(i) above which are not to be redeemed prior to their Stated Maturity or (ii) prior to the giving of the notice of redemption referred to in clause (b)(i) above with respect to any Obligations in respect of which a deposit has been made under clause (b)(i) which are to be redeemed on a date prior to their Stated Maturity, apply moneys deposited with the Trustee in respect of such Obligations and redeem or sell Defeasance Securities so deposited with the Trustee and apply the proceeds thereof to the purchase of such Obligations and the Trustee shall immediately thereafter cancel all such Obligations so purchased; PROVIDED, HOWEVER, that the Trustee shall have received a certificate of a nationally recognized firm of Independent Accountants certifying, and setting forth calculations demonstrating, that the moneys and Defeasance Securities remaining on deposit with the Trustee or Paying Agent after the purchase and cancellation of such Obligations shall be sufficient to pay when due the principal or Redemption Price (if applicable) of, and interest due or to become due on, all Obligations in respect of which such moneys and Defeasance Securities are being held by the Trustee or Paying Agent on or prior to the Redemption Date or Stated Maturity thereof, as the case may be.  In the event that on any date as a result of any purchases and cancellations of Obligations as provided in this subsection the total amount of moneys and Defeasance Securities remaining on deposit with the Trustee or Paying Agent under this Section is in excess of the total amount that would have been required to be deposited with the Trustee or Paying Agent on such date under clause (b)(i) in respect of the remaining Obligations for which such moneys and Defeasance Securities are being held, the Trustee or Paying Agent shall, if requested by the Company and upon receipt by the Trustee or Paying Agent of a certificate of a nationally recognized firm of Independent Accountants setting forth the calculation of such excess, pay the amount of such excess to the Company free and clear of any trust, lien, security interest, pledge or assignment securing such Obligations or otherwise existing under this Indenture.

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(e)           If the requirements of this Section have been satisfied with respect to all Obligations theretofore Outstanding, then, upon Company Request, the rights and interest created hereby shall be cancelled and surrendered (except as otherwise provided herein) and the Trustee and each co-trustee and separate trustee, if any, then acting as such hereunder shall, at the expense of the Company, execute and deliver any releases, reconveyances, termination statements and other instruments of satisfaction and discharge as may be necessary to evidence the termination of any lien, security interest and other rights and interests arising under this Indenture and pay, sign, transfer and deliver to the Company or upon Company Order all cash, securities and other property then held by it hereunder as part of the Trust Estate.

8.2. Application of Deposited Money and Money From Defeasance Securities.

Money or Defeasance Securities deposited with the Trustee or the Paying Agent pursuant to Section 8.1 shall not be part of the Trust Estate and shall not be deemed to be Trust Moneys but shall constitute a separate trust fund for the benefit of persons entitled thereto.  Subject to the provisions of Section 14.3, the Trustee or Paying Agent shall hold in trust money or Defeasance Securities deposited with it pursuant to Section 8.1, and shall apply the deposited money and the money from Defeasance Securities to the payment of the principal or Redemption Price (if applicable) of, and interest on, the Obligations in respect of which such money and Defeasance Securities are deposited.  If money deposited with the Trustee under this Article 8, or money received from principal or interest payments on Defeasance Securities deposited with the Trustee under this Article 8, will be required at a later date for payment of the principal or Redemption Price (if applicable) of, and interest on, the Obligations in respect of which such money and Defeasance Securities are deposited, such money shall, at the written investment direction of the Company, to the extent practicable, be reinvested in Defeasance Securities maturing at times and in amounts that, together with other moneys so deposited or to be generated by other Defeasance Securities, will be sufficient to pay when due the principal or Redemption Price (if applicable) of, and interest to become due on, such Obligations, and the interest earned from such reinvestments shall be paid over to the Company, as received by the Trustee, free and clear of any trust, lien, security interest, pledge or assignment securing such Obligations or otherwise existing under this Indenture.

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8.3. Repayment to Company.

Subject to Section 8.1, to the extent any Defeasance Securities deposited with the Trustee or Paying Agent under this Article 8, or cash received from principal or interest payments on such Defeasance Securities, will not be required for the payment of the principal or Redemption Price (if applicable) of, and interest on, the Obligations in respect of which such money and Defeasance Securities are deposited, the Trustee and the Paying Agent shall upon Company Request accompanied by a certificate of a nationally recognized firm of Independent Accountants calculating such excess, promptly pay and deliver to the Company any such Defeasance Securities and cash, and thereupon the Trustee or Paying Agent shall be relieved from any liability with respect thereto.  Without limiting the foregoing, the Trustee and the Paying Agent shall pay to the Company upon Company Request any money held by them for the payment of principal, Redemption Price or interest that remains unclaimed for two years after the date such payment was due.  After payment to the Company, Holders entitled to such money must look to the Company for payment as general creditors unless an applicable law designates another person, and all liability of the Trustee and such Paying Agent with respect to such money shall cease.

8.4. Reinstatement.

If the Trustee or Paying Agent is unable to apply any money or Defeasance Securities in accordance with Section 8.1 and the second sentence of Section 8.2 by reason of any legal proceeding or by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, (i) the Company’s obligations under this Indenture to or for the benefit of the Holders of Obligations for whose benefit such money or Defeasance Securities were deposited (other than obligations arising under any provisions creating the lien hereof) and under such Obligations shall be revived and reinstated as though no deposit had occurred pursuant to Section 8.1 until such time as the Trustee or Paying Agent is permitted to apply all such money and Defeasance Securities in accordance with Section 8.1, and (ii) the lien of this Indenture shall be reinstated for the benefit of such Holders (and, if the lien of this Indenture shall previously have been fully released, then to the extent possible, the Company shall take all actions required to subject assets of the Company to a lien substantially similar, in amount and otherwise, to the Trust Estate subject to the lien of this Indenture as in effect on the date of the termination of the Company’s obligations hereunder pursuant to Section 8.1, which lien shall be effective until such time as the Trustee or Paying Agent is permitted to apply all such money and Defeasance Securities in accordance with Section 8.1); PROVIDED, HOWEVER, that if the Company has made any payment of interest on or principal of any Obligations because of the reinstatement of its obligations, the Company shall be subrogated to the rights of the Holders of such Obligations to receive such payment from the money or Defeasance Securities held therefor by the Trustee or Paying Agent.  Notwithstanding the foregoing or any other provision of this Indenture, during any period in which the Trustee or Paying Agent is unable, for any of the reasons described in the first sentence of this Section, to apply in accordance with Section 8.1 and the second sentence of Section 8.2 for the benefit of the Holders of any Obligations any money or proceeds from Defeasance Securities deposited with the Trustee with respect to such Obligations pursuant to Section 8.1, the Company’s right to obtain any excess funds from such moneys or proceeds, and the Company’s subrogation rights arising hereunder with respect to such Obligations, shall be suspended.

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9.  EVENTS OF DEFAULT AND REMEDIES

9.1. Events of Default.

“Event of Default” means, wherever used herein, any one of the following events (whatever the reason for such event and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body):

(a)           default in the payment of any interest upon any Obligation when such interest becomes due and payable, and continuance of such default for a period of 30 days or such other period provided for in such Obligation or in the Supplemental Indenture under which such Obligation is issued; or

(b)           default in the payment of the principal of (or premium,  if any, on) any Obligation at its Maturity and, if so provided for in such Obligation or the Supplemental Indenture under which such Obligation is issued, the continuance of such default for the period so provided; or

(c)           default in the performance, or breach, of any covenant or warranty of the Company in this Indenture (other than a covenant or warranty a default in the performance or breach of which is dealt with in Subsection (a) or (b) of this Section), and continuance of such default or breach for a period of 30 days after there has been given, by registered or certified mail, to the Company by the Trustee or to the Company and the Trustee by the Holders of at least 20% in principal amount of the Obligations Outstanding, a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a “Notice of Default” hereunder, unless such default cannot be reasonably cured within such 30-day period then, so long as a cure is being diligently pursued, the Company shall have a reasonable period of time beyond such 30-day period to complete such cure, but in no event shall such period of time exceed 90 days without the consent of the Holders of not less than 25% in principal amount of the Obligations Outstanding at the end of the 90-day period (provided, however, that for so long as any of the Obligations originally designated as New Bonds, 2001 Series A, or New Bonds, 2002 Series A, shall remain Outstanding, in no event shall such period of time exceed 60 days, unless the Credit Enhancer for such Obligations shall also have consented); or

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(d)           a failure to pay any portion of the principal when due and payable (other than amounts due and payable on acceleration) under any bond, debenture, note or other evidence of indebtedness for money borrowed by the Company, other than any indebtedness evidenced or secured by an Obligation, whether such indebtedness now exists or shall hereafter be created, which failure shall have resulted in such indebtedness becoming or being declared due and payable prior to the date on which it would otherwise have become due and payable in an aggregate principal amount exceeding $25,000,000 without such indebtedness having been discharged or such acceleration having been rescinded or annulled within a period of 10 days after such acceleration; or

(e)           the rendering against the Company of a judgment for the payment of moneys in excess of the sum of $25,000,000 and the continuance of such judgment unsatisfied and without stay of execution thereon for a period of 30 days after the entry of such judgment, or the continuance of such judgment unsatisfied for a period of 30 days after the termination of any stay of execution thereon entered within such first mentioned 30 days; but only in either case if such judgment shall have been continued unstayed or unsatisfied for a period of 10 days after written notice of default hereunder shall have been given, by registered or certified mail, to the Company by the Trustee, or to the Company and the Trustee by the Holders of not less than 25% in principal amount of the Obligations Outstanding; or

(f)           the entry by a court having jurisdiction in the premises of (i) a decree or order for relief in respect of the Company in an involuntary case or proceeding under any applicable Federal or state bankruptcy, insolvency, reorganization or other similar law or (ii) a decree or order adjudging the Company to be bankrupt or insolvent, or approving as properly filed a petition seeking reorganization, arrangement, adjustment or composition of or in respect of the Company under any applicable Federal or state law, or appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company or of any substantial part of its property, or ordering the winding up or liquidation of its affairs, and the continuance of any such decree or order for relief of any such other decree or order unstayed and in effect for a period of 60 consecutive days; or

(g)           the commencement by the Company of a voluntary case or proceeding under any applicable Federal or state bankruptcy, insolvency, reorganization or other similar law or of any other case or proceeding to be adjudicated a bankrupt or insolvent, or the consent by it to the entry of a decree or order for relief in respect of the Company in an involuntary case or proceeding under any applicable Federal or state bankruptcy, insolvency, reorganization or other similar law or to the commencement of any bankruptcy or insolvency case or proceeding against it, or the filing by it of a petition or answer or consent seeking reorganization or relief under any applicable Federal or state law, or the consent by it to the filing of such petition or to the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator or similar official of the Company or of any substantial part of its property, or the making by it of an assignment for the benefit of creditors, or the admission by it in writing of its inability to pay its debts generally as they become due, or the taking of corporate action by the Company in furtherance of any such action.

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9.2. Acceleration of Maturity Rescission and Annulment.

If an Event of Default exists, then and in every such case the Trustee or the Holders of not less than 25% in principal amount of the Obligations Outstanding may declare the principal (or, in the case of Obligations of any series constituting Original Issue Discount Obligations, such portion of the principal amount of such Original Issue Discount Obligations as may be specified in the terms of such series) of all the Obligations to be due and payable immediately, by a notice in writing to the Company (and to the Trustee, if given by Holders), and upon any such declaration such principal shall become immediately due and payable.

At any time after such a declaration of acceleration has been made, but before any sale of any of the Trust Estate has been made under this Article or any judgment or decree for payment of money due on any Obligations has been obtained by the Trustee as hereinafter in this Article provided, the Holders of a majority in principal amount of the Obligations Outstanding (unless such declaration has been made under Section 9.23 only with respect to a particular series of Outstanding Obligations, in which event only a majority in principal amount of the Obligations of such series) may, by written notice to the Company and the Trustee, rescind and annul such declaration and its consequences if

(a)           the Company has paid or deposited with the Trustee a sum sufficient to pay

(i)            all overdue installments of interest on all Obligations,

(ii)           the principal of (and premium, if any, on) any Obligations which have become due otherwise than by such declaration of acceleration and interest thereon at the rate or rates prescribed therefor in such Obligations,

(iii)           to the extent that payment of such interest is lawful, interest upon overdue installments of interest at the rate or rates prescribed therefor in such Obligations, and

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(iv)           all late payment charges or fees, if any, prescribed in such Obligations, and

(v)           all sums paid or advanced by the Trustee hereunder and the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel; and

(b)           all Events of Default, other than the non-payment of the principal of Obligations which have become due solely by such declaration of acceleration, have been cured or have been waived as provided in Section 9.17.

No such rescission and annulment shall affect any subsequent default or impair any right consequent thereon.

9.3. Entry.

The Company agrees that upon the occurrence of an Event of Default the Company, upon demand of the Trustee during the continuance thereof, shall forthwith surrender to the Trustee the actual possession of, and it shall be lawful for the Trustee by such officers or agents as it may appoint to enter and take possession of, the Trust Estate (and the books, papers and accounts of the Company), and to hold, operate, manage and control the Trust Estate (including the making of all needful repairs, and such alterations, additions and improvements as the Trustee shall deem wise) and to receive the rents, issues, tolls, profits, revenues and other income thereof, and, after deducting the costs and expenses of entering, taking possession, holding, operating and managing the Trust Estate, as well as payments for taxes, insurance and other proper charges upon the Trust Estate and reasonable compensation to itself, its agents and counsel, to apply the same as provided in Section 9.7. Whenever all that is then due upon the Obligations and under any of the terms of this Indenture shall have been paid and all defaults hereunder shall have been made good, the Trustee shall surrender possession of such property to the Company.

9.4. Power of Sale; Suits for Enforcement.

In case an Event of Default shall occur and be continuing, the Trustee, with or without entry, in its discretion may, subject to the provisions of Section 9.16:

(a)           sell, subject to any mandatory requirements of applicable law (including Chapter 34.20 of the Alaska Statutes), the Trust Estate as an entirety, or in such parcels as the Holders of a majority in principal amount of the Obligations then Outstanding shall in writing request, or in the absence of such request, as the Trustee may determine, to the highest bidder at public auction and upon such terms as the Trustee may (subject to applicable law) fix; or

(b)           proceed to protect and enforce its rights and the rights of the Holders under this Indenture by sale pursuant to judicial proceedings or by a suit, action or proceeding in equity or at law or otherwise, whether for the specific performance of any covenant or agreement contained in this Indenture or in aid of the execution of any power granted in this Indenture or for the foreclosure of this Indenture or for the enforcement of any other legal, equitable or other remedy, as the Trustee, being advised by counsel, shall deem most effectual to protect and enforce any of the rights of the Trustee or the Holders.

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9.5. Incidents of Sale.

Upon any sale of any of the Trust Estate, whether made under the power of sale hereby given or pursuant to judicial proceedings, to the extent permitted by law:

(a)           the principal of and accrued interest on all Outstanding  Secured Obligations, if not previously due, shall at once become and be immediately due and payable;

(b)           any Holder or Holders or the Trustee may bid for and purchase the property offered for sale, and upon compliance with the terms of sale may hold, retain and possess and dispose of such property, without further accountability, and may, in paying the purchase price therefor, deliver any Outstanding Secured Obligations or claims for interest thereon in lieu of cash in the amount which shall, upon distribution of the net proceeds of such sale, be payable thereon, and (unless such sale is effected under power of sale) such Obligations, in case the amounts so payable thereon shall be less than the amount due thereon, shall be returned to the Holders thereof after being appropriately stamped to show partial payment;

(c)           the Trustee may make and deliver to the purchaser or purchasers a good and sufficient deed, bill of sale and instrument of assignment and transfer of the property sold;

(d)           the Trustee is hereby irrevocably appointed the true and lawful attorney of the Company, in its name and stead, to make all necessary deeds, bills of sale and instruments of assignment and transfer of the property thus sold; and for that purpose it may execute all necessary deeds, bills of sale and instruments of assignment and transfer, and may substitute one or more persons, firms or corporations with like power, the Company hereby ratifying and confirming all that its said attorney or such substitute or substitutes shall lawfully do by virtue hereof; but if so requested by the Trustee or by any purchaser, the Company shall ratify and confirm any such sale or transfer by executing and delivering to the Trustee or to such purchaser or purchasers all proper deeds, bills of sale, instruments of assignment and transfer and releases as may be designated in any such request;

(e)           all right, title, interest, claim and demand whatsoever,  either at law or in equity or otherwise, of the Company of, in and to the property so sold shall be divested and such sale shall be a perpetual bar both at law and in equity against the Company, its successors and assigns, and against any and all persons claiming or who may claim the property sold or any part thereof from, through or under the Company, its successors and assigns; and

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(f)            the receipt of the Trustee or of the officer making such sale shall be a sufficient discharge to the purchaser or purchasers at such sale for his or their purchase money and such purchaser or purchasers and his or their assigns or personal representatives shall not, after paying such purchase money and receiving such receipt, be obliged to see to the application of such purchase money, or be in anywise answerable for any loss, misapplication or non-application thereof.

Upon a sale of substantially all the Trust Estate, whether made under the power of sale hereby given or pursuant to judicial proceedings, the Company will permit, to the extent permitted by law, the purchaser thereof and its successors and its and their assigns to take and use the name of the Company and to carry on business under such name or any variant or variants thereof and to use and employ any and all other trade names, brands and trademarks of the Company; and in such event, upon written request of such purchaser or its successors, or its or their assigns, the Company will, at the expense of the purchaser, change its name in such manner as to eliminate any similarity.

9.6. Covenant to Pay Trustee Amounts Due on Obligations and Right of Trustee to Judgment.

The Company covenants that, if

(a)           default is made in the payment of any interest on any Obligation when such interest becomes due and payable, and such default continues for the period prescribed in Section 9.1(a), or

(b)           default is made in the payment of the principal of (or premium, if any, on) any Obligation at its Maturity and, if applicable, such default continues for the period prescribed in Section 9.1(b),

then upon demand of the Trustee, the Company will pay to the Trustee, for the benefit of the Holders of such Obligations, the whole amount then due and payable on such Obligations (including any amount accelerated pursuant to Section 9.2) for principal (and premium, if any) and interest, with interest at the respective rate or rates prescribed therefor in the Obligations on overdue principal (and premium, if any) and, to the extent that payment of such interest is legally enforceable, on overdue installments of interest; and, in addition thereto, all late payment charges and fees, if any, prescribed in such Obligations and such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel.  If the Company fails to pay such amounts forthwith upon such demand, the Trustee, in its own name and as trustee of an express trust, shall be entitled to sue for and recover judgment against the Company and any other obligor on the Obligations for the whole amount so due and unpaid and exercise such other rights and remedies as may be provided by law or any agreement entered into pursuant to Section 14.5.

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The Trustee shall be entitled to sue and recover judgment as aforesaid either before, after or during the pendency of any proceedings for the enforcement of the lien of this Indenture, and in case of a sale of the Trust Estate and the application of the proceeds of sale as aforesaid, the Trustee, in its own name and as trustee of an express trust, shall be entitled to enforce payment of, and to receive, all amounts then remaining due and unpaid upon the Outstanding Secured Obligations, for the benefit of the Holders thereof, and shall be entitled to recover judgment for any portion of the same remaining unpaid, with interest as aforesaid.  No recovery of any such judgment upon any property of the Company shall affect or impair the lien of this Indenture upon the Trust Estate or any rights, powers, or remedies of the Trustee hereunder, or any rights, powers or remedies of the Holders of the Obligations.

9.7. Application of Money Collected.

Any money collected by the Trustee pursuant to this Article, including any rents, issues, tolls, profits, revenues and other income collected pursuant to Section 9.3 (after the deductions therein provided) and any proceeds of any sale (after deducting the costs and expenses of such sale, including a reasonable compensation to the Trustee, its agents and counsel, and any taxes, assessments or liens prior to the lien of this Indenture, except any thereof subject to which such sale shall have been made), whether made under any power of sale herein granted or pursuant to judicial proceedings, and any money collected by the Trustee under Sections 6.9 and 16.5 to be applied under this Section, together with, in the case of an entry or sale or as otherwise provided herein, any other sums then held by the Trustee as part of the Trust Estate, shall be applied in the following order, at the date or dates fixed by the Trustee and, in case of the distribution of such money on account of principal (or premium, if any) or interest (except as otherwise provided in an Obligation or Supplemental Indenture creating the Series to which such Obligation belongs), upon presentation of the Obligations and the notation thereon of the payment if only partially paid and upon surrender thereof if fully paid:

(a)           First:  To the payment of all undeducted amounts due the Trustee under Sections 10.7 and 16.14;

(b)           Second:  To the payment of the interest, principal and premium (if any) then due on the Obligations, as follows:

(i)             unless the principal of all of the Obligations shall have become due and payable,

First:  Interest - To the payment to the Persons entitled thereto of all installments of interest  then due (and, to the extent that payment of such interest is legally enforceable, interest on overdue installments of interest) on Outstanding Secured Obligations in the order of the maturity of such installments, together with accrued and unpaid interest on the Obligations theretofore called for redemption or prepayment, and, if the amount available shall not be sufficient to pay in full any installment or installments maturing on the same date, then to the payment thereof ratably, according to the amounts due thereon, to the Persons entitled thereto, without  any discrimination or preference; and

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Second:  Principal or Premium - To the payment to the Persons entitled thereto of the unpaid principal and premium (if any) of any Outstanding Secured Obligations which shall have become due, whether at Maturity or by call for redemption or acceleration, and, if the amount available shall not be sufficient to pay in full all the Obligations which shall have become due, then to the payment thereof ratably, according to the amounts of principal and premium (if any) due, to the Persons entitled thereto, without any discrimination or preference; and

(ii)           if the principal of all of the Obligations shall have become due and payable, to the payment of the principal, premium (if any) and interest then due and unpaid upon the Outstanding Secured Obligations without preference or priority of principal and premium (if any) over interest or of interest over principal and premium (if any), or of any installment of interest over any other installment of interest, or of any Obligation over any other Obligation, ratably, according to the amounts due respectively for principal, premium (if any) and interest, to the Persons entitled thereto without any discrimination or preference except as to any difference in the respective rates of interest specified in the Obligations; and

Third:  To the payment of all other amounts due and unpaid on or under the Outstanding Secured Obligations including, but not limited to, penalties, costs and expenses payable to the Holders, ratably, according to the amounts due respectively for such payments, to the Persons entitled thereto without any discrimination or preference;

Fourth:  To the payment of any amounts due under Obligations to maintain the value of reserve funds established and maintained in connection with debt securities (i) secured by a pledge of certain Obligations, (ii) issued on behalf of the Company and (iii) with respect to which an opinion was delivered on the date of the issuance of such securities to the effect that the interest on such securities is excluded from the gross income of the holder of such securities pursuant to the Internal Revenue Code, as amended; and

Fifth:  To the payment of the remainder, if any, to the Company or to whosoever may be lawfully entitled to receive the same or as a court of competent jurisdiction may direct.

Until such funds are so distributed, such funds shall be invested by the Trustee in overnight deposits with commercial banks having a combined capital and surplus of not less than $500 million or in shares of a money market mutual fund or other collective investment fund registered under the Investment Company Act of 1940, as amended, whose shares are registered under the Securities Act of 1933, as amended, having assets of at least $100 million and having a rating AAAm or AAAm-G by Standard & Poor’s Ratings Group, including money market mutual funds from which the Trustee or its affiliates derive a fee for investment advisory or other services to the fund or as otherwise directed by an Act of the Holders of a majority in principal amount of the Outstanding Secured Obligations.  The interest or other gains on such investments shall be distributed by the Trustee as if such interest or gains were amounts recovered from the Company.

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9.8. Receiver.

Upon the occurrence of an Event of Default and commencement of judicial proceedings by the Trustee to enforce any right under this Indenture, the Trustee shall be entitled, as against the Company, without notice or demand and without regard to the adequacy of the security for the Obligations or the solvency of the Company, to the appointment of a receiver of the Trust Estate, and of the rents, issues, profits, revenues and other income thereof, but, notwithstanding  the appointment of any receiver, the Trustee shall be entitled to retain possession and control of, and to collect and receive the income from, cash, securities and other personal property held by, or required to be deposited or pledged with, the Trustee hereunder.

9.9. Trustee May File Proofs of Claim.

In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding relative to the Company or any other obligor upon the Obligations or the property of the Company or of such other obligor or their creditors, the Trustee (irrespective of whether the principal of the Obligations shall then be due and payable, as therein expressed or by declaration or otherwise, and irrespective of whether the Trustee shall have made any demand on the Company for the payment of overdue principal, premium or interest) shall be entitled and empowered, by intervention in such proceeding or otherwise,

(a)           to file and prove a claim for the whole amount of principal (and premium, if any) and interest owing and unpaid in respect of the Outstanding Secured Obligations and to file such other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel) and of the Holders allowed in such judicial proceeding, and

(b)           to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute the same;

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and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee, and in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due to it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under  Sections 10.7 and 16.14.

Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Obligations or the rights of any Holder thereof, or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding.

9.10. Trustee May Enforce Claims Without Possession of Obligations.

All rights of action and claims under this Indenture or the Obligations may be prosecuted and enforced by the Trustee without the possession of any of the Obligations or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust.  Any recovery of judgment shall, after provision for the payment of the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, be for the ratable benefit of the Holders of the Obligations in respect of which such judgment has been recovered.

9.11. Limitation on Suits.

No Holder of any Obligation shall have any right to institute any proceeding, judicial or otherwise, under or with respect to this Indenture, or for the appointment of a receiver or trustee or for any other remedy hereunder, unless

(a)           such Holder has previously given written notice to the Trustee of a continuing Event of Default;

(b)           the Holders of not less than 25% in principal amount of the Obligations Outstanding shall have made written request to the Trustee to institute proceedings in respect of such Event of Default in its own name as Trustee hereunder;

(c)           such Holder or Holders (other than a governmental authority) have offered to the Trustee indemnity reasonably satisfactory to the Trustee against the costs, expenses and liabilities to be incurred in compliance with such request;

(d)           the Trustee for 60 days after its receipt of such notice, request and offer of indemnity, if any is required pursuant to Subsection (c), has failed to institute any such proceeding; and

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(e)           no direction inconsistent with such written request has been given to the Trustee during such 60-day period by the Holders of a majority in principal amount of the Obligations Outstanding;

it being understood and intended that no one or more Holders of Obligations shall have any right in any manner whatever by virtue of, or by availing of, any provision of this Indenture to affect, disturb or prejudice the lien of this Indenture or the rights of any other Holders of Obligations, or to obtain or to seek to obtain priority or preference over any other Holders or to enforce any right under this Indenture, except in the manner herein provided and for the equal and ratable benefit of all Outstanding Secured Obligations.

9.12. Unconditional Right of Holders to Receive Principal, Premium and Interest.

Notwithstanding any other provision in this Indenture, the Holder of any Obligation shall have the absolute and unconditional right to receive payment of the principal of (and premium, if any) and interest on such Obligation on the dates provided therefor in such Obligation (or, in the case of redemption, on the Redemption Date) and to institute suit for the enforcement of any such payment, and such rights shall not be impaired without the consent of such Holder.

9.13. Restoration of Positions.

If the Trustee or any Holder has instituted any proceeding to enforce any right or remedy under this Indenture by foreclosure, entry or otherwise and such proceeding has been discontinued or abandoned for any reason or has been determined adversely to the Trustee or to such Holder, then and in every such case the Company, the Trustee and the Holders shall, subject to any determination in such proceeding, be restored to their former positions hereunder, and thereafter all rights and remedies of the Trustee and the Holders shall continue as though no such proceeding had been instituted.

9.14. Rights and Remedies Cumulative.

Except as otherwise provided in Sections 3.8, 8.3 and 14.3 with respect to the replacement or payment of mutilated, destroyed, lost or stolen Obligations or the payment of certain moneys, no right or remedy herein conferred upon or reserved to the Trustee or to the Holders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise.  The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy.

9.15. Delay or Omission Not Waiver.

No delay or omission of the Trustee or of any Holder of any Obligation to exercise any right or remedy accruing upon an Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein.  Every right and remedy given by this Article or by law to the Trustee or to the Holders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the Holders, as the case may be.

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9.16. Control by Holders.

Subject to the provisions of Section 1.13, the Holders of a majority in principal amount of the Obligations Outstanding shall have the right, during the continuance of an Event of Default,

(a)           to require the Trustee to proceed to enforce this Indenture, either by judicial proceedings for the enforcement of the payment of the Obligations or otherwise and the foreclosure of this Indenture, the sale of the Trust Estate or otherwise or, at the election of the Trustee, by the exercise of the power of entry and/or sale hereby conferred; and

(b)           to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee hereunder, PROVIDED that

(i)            such direction shall not be in conflict with any rule of law or this Indenture,

(ii)           the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction, and

(iii)           the Trustee shall not determine that the action so directed would be unjustly prejudicial to the Holders not taking part in such direction.

9.17. Waiver of Past Defaults.

Before any sale of any of the Trust Estate has been made under this Article or any judgment or decree for payment of money due has been obtained by the Trustee as provided in this Article, the Holders of not less than a majority in principal amount of the Obligations Outstanding may, by Act of such Holders delivered to the Trustee and the Company, on behalf of the Holders of all the Obligations waive any past default hereunder and its consequences, except a default:

(a)            in the payment of the principal of (or premium, if any) or interest on any Obligation, or

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(b)           in respect of a covenant or provision hereof which under Article 13 cannot be modified or amended without the consent of the Holder of each Outstanding Obligation affected.

Upon any such waiver, such default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other default or impair any right consequent thereon.

9.18. Undertaking for Costs.

All parties to this Indenture agree, and each Holder of any Obligation by acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken, suffered or omitted by it as Trustee, the filing by any party in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys’ fees, against any party in such suit, having due regard to the merits and good faith of the claims or defenses made by such party; but the provisions of this Section shall not apply to any suit instituted by the Trustee, by the United States of America (or its agencies or instrumentalities) or by any Holder, or group of Holders, holding in the aggregate more than 10% in principal amount of the Obligations Outstanding, or to any suit instituted by any Holder for the enforcement of the payment of the principal of (or premium, if any) or interest on any Obligation on or after the respective Stated Maturities expressed in such Obligation (or, in the case of redemption or acceleration, on or after the Redemption Date or date of acceleration).

9.19. Waiver of Appraisement and Other Laws.

To the full extent that it may lawfully so agree, the Company will not at any time insist upon, plead, claim or take the benefit or advantage of, any appraisement, valuation, stay, extension or redemption law now or hereafter in force, in order to prevent or hinder the enforcement of this Indenture or the absolute sale of the Trust Estate, or any part thereof, or the possession thereof by any purchaser at any sale under this Article; and the Company, for itself and all who may claim under it, so far as it or they now or hereafter may lawfully do so, hereby waives the benefit of all such laws. The Company, for itself and all who may claim under it, waives, to the extent that it may lawfully do so, all right to have the property in the Trust Estate marshalled upon any foreclosure hereof, and agrees that any court having jurisdiction to foreclose this Indenture may order the sale of the Trust Estate as an entirety.

If any law in this Section referred to and now in force, of which the Company or its successor or successors might take advantage despite this Section, shall hereafter be repealed or cease to be in force, such law shall not thereafter be deemed to constitute any part of the contract herein contained or to preclude the application of this Section.

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9.20. Suits to Protect the Trust Estate.

The Trustee shall have power to institute and to maintain such proceedings as it may deem expedient to prevent any impairment of the Trust Estate by any acts which may be unlawful or in violation of this Indenture and to protect its interests and the interests of the Holders in the Trust Estate and in the rents, issues, profits, revenues, proceeds, products and other income arising therefrom, including power to institute and maintain proceedings to restrain the enforcement of or compliance with any governmental enactment, rule or order that may be unconstitutional or otherwise invalid, if the enforcement of or compliance with such enactment, rule or order would impair the security hereunder or be prejudicial to the interests of the Holders or the Trustee.

9.21. Remedies Subject to Applicable Law.

All rights, remedies and powers provided by this Article may be exercised only to the extent that the exercise thereof does not violate any applicable provision of law, and all the provisions of this Article are intended to be subject to all applicable mandatory provisions of law which may be controlling and to be limited to the extent necessary so that they will not render this Indenture invalid, unenforceable or not entitled to be recorded, registered, or filed under the provisions of any applicable law.

9.22. Principal Amount of Original Issue Discount Obligation.

The principal amount of an Original Issue Discount Obligation shall, for purposes of voting, directing the time, place or manner or exercising any remedy, applying moneys, authenticating and delivering Additional Obligations, release of any part of the Trust Estate and for all other purposes hereunder, be determined in the manner specified in the Supplemental Indenture establishing the series to which such Original Issue Discount Obligation belongs.

9.23. Default Not Affecting All Series of Obligations.

If an Event of Default affecting the rights of the Holders of Obligations of any one or more series which does not similarly affect the rights of Holders of all other series of Obligations at the time Outstanding (including, without limitation, an Event of Default specified in a Supplemental Indenture creating a series of Obligations) shall have occurred and be continuing, then whatever action (including, without limitation, the acceleration of Obligations under Section 9.2, the giving of any request or direction to the Trustee under Section 9.11 or 9.16 or the waiver of any default under Section 9.17) may or shall be taken under this Article upon the occurrence of such Event of Default by or upon the request of the Holders of a specified percentage in principal amount of the Obligations then Outstanding, may or shall be taken in respect of the Obligations then Outstanding of the series as to which such Event of Default shall have been made, by or upon the request of the Holders of the same percentage in principal amount of the Obligations of such series then Outstanding.

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9.24. Defaults Under Qualifying Securities Indentures.

In addition to every other right and remedy provided herein, the Trustee may exercise any right or remedy available to the Trustee in its capacity as owner and holder of Qualifying Securities which arises as a result of a default or a matured event of default under any Qualifying Securities Indenture, whether or not an Event of Default shall then have occurred and be continuing.

10.  THE TRUSTEE

10.1. Certain Duties and Responsibilities.

(a)           Except during the continuance of an Event of Default,

(i)            the Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and

(ii)            in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture; but in the case of any such certificates or opinions which by any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Indenture.

(b)           In case an Event of Default exists, the Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as a prudent person would exercise or use under the circumstances in the conduct of his own affairs.

(c)           No provision of this Indenture shall be construed to relieve the Trustee from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that

(i)             this paragraph shall not be construed to limit the effect of Subsection (a) above;

(ii)            the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts;

(iii)           the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders of a majority in principal amount of the Obligations Outstanding relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Indenture; and

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(iv)           no provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it.

(d)           Whether or not therein expressly so provided, every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section.

10.2. Notice of Defaults.

Within 90 days after the occurrence of any default hereunder, the Trustee shall transmit by mail to all Holders entitled to receive reports pursuant to Section 11.3(c), if operative, and if Section 11.3(c) is not operative, to all Holders of Obligations as their names and addresses appear in the Obligation Register, notice of such default hereunder known to the Trustee, unless such default shall have been cured or waived; PROVIDED, HOWEVER, that, except in the case of a default in the payment, repayment or prepayment of the principal of (or premium, if any) or interest on any Obligation or in the payment of any sinking or purchase fund installment, the Trustee shall be protected in withholding such notice if and so long as the board of directors, the executive committee or a trust committee of directors and/or Responsible Officers of the Trustee in good faith determine that the withholding of such notice is in the interests of the Holders; and PROVIDED FURTHER that, in the case of any default of the character specified in Section 9.1(c) or 9.1(d), no such notice to Holders shall be given until at least 60 days after the occurrence thereof.  For the purpose of this Section, the term “default” means any event which is, or after notice or lapse of time or both would become, an Event of Default.

10.3. Certain Rights of Trustee.

Except as otherwise provided in Section 10.1:

(a)           the Trustee may rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties;

(b)           any request or direction of the Company mentioned herein shall be sufficiently evidenced by a Company Request or Company Order and any resolution of the Board of Directors may be sufficiently evidenced by a Board Resolution;

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(c)           whenever in the administration of this Indenture the Trustee shall deem it desirable that a matter be proved or established  prior to taking, suffering or omitting any action hereunder, the Trustee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, rely upon an Officers’ Certificate;

(d)           the Trustee may consult with counsel and the written advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by the Trustee hereunder in good faith and in reasonable reliance thereon;

(e)           the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders pursuant to this Indenture, unless such Holders (other than any governmental authority) shall have offered to the Trustee security or indemnity reasonably satisfactory to the Trustee against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction;

(f)           the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document, or, except as specifically provided herein, compliance by the Company with its agreements or covenants in this Indenture, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of the Company, personally or by agent or attorney;

(g)           the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder; and

(h)           the Trustee shall not be deemed to have knowledge of any Event of Default unless a Responsible Officer of the Trustee shall have received notice thereof from the Company or the Holder of an Obligation or shall otherwise have actual knowledge thereof.

10.4. Not Responsible for Recitals Application of Proceeds or Contents of Disclosure Materials.

The recitals contained herein and in the Obligations, except the Trustee’s certificate of authentication on the Obligations, shall be taken as the statements of the Company, and the Trustee assumes no responsibility for their correctness.  The Trustee makes no representations as to the value or condition of the Trust Estate or any part thereof, or as to the title of the Company thereto or as to the security afforded thereby or hereby, or as to the validity or genuineness of any securities at any time pledged and deposited with the Trustee hereunder, or as to the validity or sufficiency of this Indenture or of the Obligations.  The Trustee shall not be accountable for the use or application by the Company of Obligations or the proceeds thereof or of any money paid to the Company or upon Company Order under any provision hereof.  The Trustee shall have no responsibility with respect to any information, statement or recital in any offering memorandum or other disclosure material prepared or distributed with respect to the Obligations.

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10.5. May Hold Obligations.

The Trustee, any Paying Agent, Obligation Registrar, Authenticating Agent or any other agent of the Company, in its individual or any other capacity, may become the owner or pledgee of Obligations and, subject to Sections 10.8 and 10.13, if operative, may otherwise deal with the Company with the same rights it would have if it were not Trustee, Paying Agent, Obligation Registrar, Authenticating Agent or such other agent.

10.6. Money Held in Trust.

Money held by the Trustee in trust hereunder need not be segregated from other funds except to the extent required by law.  The Trustee shall be under no liability for interest on any money received by it hereunder except as otherwise agreed with the Company.

10.7. Compensation and Reimbursement.

The Company agrees:

(a)           to pay to the Trustee and each Paying Agent from time to time such compensation as may be specifically agreed upon with the Trustee or Paying Agent and, absent specific agreement, reasonable compensation for all services rendered by it hereunder (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust);

(b)           except as otherwise expressly provided herein, to reimburse the Trustee and each Paying Agent upon its request for all reasonable expenses, disbursements and advances incurred or made by the Trustee or Paying Agent in accordance with any provision of this Indenture or as a result of its performance of any obligation under this Indenture (including the reasonable compensation and the expenses and disbursements of its agents and counsel), except any such expense, disbursement or advance as may be attributable to the Trustee’s or Paying Agent’s negligence or bad faith; and

(c)           to indemnify the Trustee and each Paying Agent for, and to hold it harmless against, any loss, liability or expense incurred without negligence or bad faith on its part, arising out of or in connection with the acceptance or administration of this trust or its duties hereunder, including the costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder.

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All such payments and reimbursements shall be made with interest at the “prime rate” as quoted by and in effect from time to time by the Trustee plus one percent (1%) per annum (such rate to be recomputed, and as so recomputed to take effect, as of the day immediately following the date on which the Trustee publicly announces any change in its “prime rate”).

As security for the performance of the obligations of the Company under this Section, the Trustee shall be secured under this Indenture by a lien prior to the Obligations, and for the payment of such compensation, expenses, reimbursements and indemnity the Trustee shall have the right to use and apply any Trust Moneys held by it hereunder for the benefit of any Holders.

10.8. Disqualification; Conflicting Interests.

(a)           If the Trustee has or shall acquire any conflicting interest, as defined in this Section (certain terms being defined and percentages calculated as hereinafter stated in this Section), if the default to which such conflicting interest relates has not been cured or duly waived or otherwise eliminated within the 90-day period immediately following the date on which the Trustee ascertains  that it has such conflicting interest, it shall, within such 90-day period, either eliminate such conflicting interest or resign in the manner and with the effect hereinafter specified in this Article.

(b)           In the event that the Trustee shall fail to comply with the provisions of Subsection (a) of this Section the Trustee shall, within 10 days after the expiration of such 90-day period, transmit notice of such failure to the Holders in the manner and to the extent provided in Section 11.3(c).

(c)           For the purposes of this Section, the Trustee shall be deemed to have a conflicting interest if there is an Event of Default and

(i)            the Trustee is trustee under another indenture under which any other securities, or certificates of interest or participation in any other securities, of the Company are outstanding, or is trustee for more than one outstanding series of securities, as hereafter defined, under a single indenture of the Company, unless such other indenture is a collateral trust indenture under which the only collateral consists of Obligations issued under this Indenture, PROVIDED that there shall be excluded from the operation of this clause other series under this Indenture and any indenture or indentures under which other securities, or certificates of interest or participation  in other securities, of the Company are outstanding, if the Company shall have sustained the burden of proving, on application to the Commission and after opportunity for hearing thereon, that trusteeship under this Indenture and such other indenture or indentures or under more than one outstanding series under a single indenture is not so likely to involve a material conflict of interest as to make it necessary in the public interest or for the protection of investors to disqualify  the Trustee from acting as such under one of such indentures or with respect to such series; or

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(ii)            the Trustee or any of its directors or executive officers is an underwriter for the Company; or

(iii)           the Trustee directly or indirectly controls or is directly or indirectly controlled by or is under direct or indirect common control with the Company or an underwriter for the Company; or

(iv)           the Trustee or any of its directors or executive officers is a director, officer, partner, employee, appointee or representative of the Company, or of an underwriter (other than the Trustee itself) for the Company who is currently engaged in the business of underwriting, except that (A) one individual may be a director or an executive officer or both of the Trustee and a director or an executive officer or both of the Company but may not be at the same time an executive officer of both the Trustee and the Company; (B) if and so long as the number of directors of the Trustee in office is more than nine, one additional individual may be a director or an executive officer, or both, of the Trustee and a director of the Company; and (C) the Trustee may be designated by the Company or by any underwriter for the Company to act in the capacity of transfer agent, registrar, custodian, paying agent, fiscal agent, escrow agent, or depositary, or in any other similar capacity, or, subject to the provisions of clause (i) above, to act as trustee, whether under an indenture or otherwise; or

(v)           10% or more of the voting securities of the Trustee is beneficially owned either by the Company or by any director, partner, or executive officer thereof, or 20% or more of such voting securities is beneficially owned, collectively, by any two or more of such persons; or 10% or more of the voting securities of the Trustee is beneficially owned either by an underwriter for the Company or by any director, partner or executive officer thereof, or is beneficially owned, collectively, by any two or more such persons; or

(vi)           the Trustee is the beneficial owner of, or holds as collateral security for an obligation which is in default (as hereinafter in this paragraph defined), (A) 5% or more of the voting securities, or 10% or more of any other class of security, of the Company not including the Obligations issued under this Indenture and securities issued under any other indenture under which the Trustee is also trustee, or (B) 10% or more of any class of security of an underwriter for the Company; or

(vii)           the Trustee is the beneficial owner of, or holds as collateral security for an obligation which is in default (as hereinafter in this paragraph defined), 5% or more of the voting securities of any person who, to the knowledge of the Trustee, owns 10% or more of the voting securities of, or controls directly or indirectly or is under direct or indirect common control with, the Company; or

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(viii)         the Trustee is the beneficial owner of, or holds as collateral security for an obligation which is in default (as hereinafter in this paragraph defined), 10% or more of any class of security of any person who, to the knowledge of the Trustee, owns 50% or more of the voting securities of the Company; or

(ix)           the Trustee owns, upon the occurrence of an Event of Default (or any occurrence that would constitute an Event of Default upon the lapse of time or giving of notice) or any anniversary of such date while such Event of Default or occurrence remains outstanding, in the capacity of executor, administrator, testamentary or inter vivos trustee, guardian, committee or conservator, or in any other similar capacity, an aggregate of 25% or more of the voting securities, or of any class of security, of any person, the beneficial ownership of a specified percentage of which would have constituted a conflicting interest under clauses (vi), (vii) or (viii) above.  As to any such securities of which the Trustee acquired ownership through becoming executor, administrator, or testamentary trustee of an estate which included them, the provisions of the preceding sentence shall not apply, for a period of two years from the date of such acquisition, to the extent that such securities included in such estate do not exceed 25% of such voting securities or 25% of any such class of security.  Promptly after any Event of Default (or other occurrence that would constitute an Event of Default upon the lapse of time or giving of notice) and annually in each succeeding year that any Event of Default or other occurrence remains outstanding, the Trustee shall make a check of its holdings of such securities in any of the above-mentioned capacities as of such dates.  If the Company fails to make payment in full of the principal of, or the premium, if any, or interest on, any of the Obligations when and as the same becomes due and payable, and such failure continues for 30 days thereafter, the Trustee shall make a prompt check of its holdings of such securities in any of the above-mentioned capacities as of the date of the expiration of such 30-day period, and after such date, notwithstanding the foregoing provisions of this clause, all such securities so held by the Trustee, with sole or joint control over such securities vested in it, shall, but only so long as such failure shall continue, be considered as though beneficially owned by the Trustee for the purposes of clauses (vi), (vii) or (viii) above; or

(x)           except under the circumstances described in Section 10.13(b), the Trustee shall become a creditor of the Company.

For purposes of clause (i) above, the term “series of securities” or “series” means a series, class or group of securities issuable under an indenture pursuant to whose terms holders of one such series may vote to direct the Trustee, or otherwise take action pursuant to a vote of such Holders, separately from Holders of another such series; PROVIDED that “series of securities” or “series” shall not include any series of securities issuable under an indenture if all such series rank equally and are wholly unsecured.

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The specification of percentages in clauses (v) to (ix) inclusive, above, shall not be construed as indicating that the ownership of such percentages of the securities of a person is or is not necessary or sufficient to constitute direct or indirect control for the purposes of clause (iii) or (vii) above.

For the purposes of clauses (vi), (vii), (viii) and (ix) above only, (a) the terms “security” and “securities” shall include only such securities as are generally known as corporate securities, but shall not include any note or other evidence of indebtedness issued to evidence an obligation to repay moneys lent to a person by one or more banks, trust companies or banking firms, or any certificate of interest or participation in any such note or evidence of indebtedness; (b) an obligation shall be deemed to be in “default” when a default in payment of principal shall have continued for 30 days or more and shall not have been cured; and (c) the Trustee shall not be deemed to be the owner or holder of (1) any security which it holds as collateral security, as trustee or otherwise, for an obligation which is not in default as defined above, or (2) any security which it holds as collateral security under this Indenture, irrespective of any default hereunder, or (3) any security which it holds as agent for collection, or as custodian, escrow agent, or depositary, or in any similar representative  capacity.

Except in the case of the failure to pay, repay or prepay the principal of or interest on any Obligation, or to pay any sinking or purchase fund installment, on the date on which it becomes due, the Trustee shall not be required to resign as provided by this paragraph if such Trustee shall have sustained the burden of proving, on application to the Commission and after opportunity for hearing thereon, that:

(A)          the Event of Default (or other event that would constitute an Event of Default upon the passage of time or giving of notice) otherwise giving rise to an obligation by the Trustee to resign may be cured or waived during a reasonable period and under the procedures described in such application, and

(B)           a stay of the Trustee’s duty to resign will not be inconsistent with the interests of Holders of the Obligations.  The filing of such an application shall automatically stay the performance of the duty to resign until the Commission orders otherwise.

Any resignation of the Trustee shall become effective only upon the appointment of a successor trustee and such successor’s acceptance of such an appointment.

(d)           For the purposes of this Section:

(i)            The term “underwriter” when used with reference to the Company means every person who, within one year prior to the time as of which the determination is made, has purchased from the Company with a view to, or has offered or sold for the Company in connection with, the distribution of any security of the Company outstanding at such time, or has participated or has had a direct or indirect participation in any such undertaking, or has participated or has had a participation in the direct or indirect underwriting of any such undertaking, but such term shall not include a person whose interest was limited to a commission from an underwriter or dealer not in excess of the usual and customary distributors’ or sellers’ commission.

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(ii)           The term “director” means any director of a corporation, or any individual performing similar functions with respect to any organization whether incorporated or unincorporated.

(iii)           The term “person” means an individual, a corporation, a partnership, an association, a joint-stock company, a trust, an unincorporated organization, or a government or political subdivision thereof.  As used in this clause, the term “trust” shall include only a trust where the interest or interests of the beneficiary or beneficiaries are evidenced by a security.

(iv)           The term “voting security” means any security presently entitling the owner or holder thereof to vote in the direction or management of the affairs of a person, or any security issued under or pursuant to any trust, agreement or arrangement whereby a trustee or trustees or agent or agents for the owner or holder of such security are presently entitled to vote in the direction or management of the affairs of a person.

(v)           The term “Company” means any obligor upon the Obligations.

(vi)           The term “executive officer” means the president, every vice president, every trust officer, the cashier, the secretary, and the treasurer of a corporation, and any individual  customarily performing similar functions with respect to any organization whether incorporated or unincorporated, but shall not include the chairman of the board of directors.

(vii)           The term “Trustee” includes any separate or co-trustee appointed under Section 10.14.

(e)           The percentages of voting securities and other securities specified in this Section shall be calculated in accordance with the following provisions:

(i)           A specified percentage of the voting securities of the Trustee, the Company or any other person referred to in this Section (each of whom is referred to as a “person” in this clause) means such amount of the outstanding voting securities of such person as entitles the holder or holders thereof to cast such specified percentage of the aggregate votes which the holders of all the outstanding voting securities of such person are entitled to cast in the direction or management of the affairs of such person.

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(ii)           A specified percentage of a class of securitiesof a person means such percentage of the aggregate amount of securities of the class outstanding.

(iii)           The term “amount” means, when used in regard to securities, the principal amount if relating to evidences of indebtedness, the number of shares if relating to capital shares, and the number of units if relating to any other kind of security.

(iv)           The term “outstanding” means issued and not held by or for the account of the issuer.  The following securities shall not be deemed outstanding within the meaning of this definition:

(A)           securities of an issuer held in a sinking fund relating to securities of the issuer of the same class;

(B)           securities of an issuer held in a sinking fund relating to another class of securities of the issuer, if the obligation evidenced by such other class of securities is not in default as to principal or interest or otherwise;

(C)           securities pledged by the issuer thereof as security for an obligation of the issuer not in default as to principal or interest or otherwise; and

(D)           securities held in escrow if placed in escrow by the issuer thereof;

PROVIDED, HOWEVER, that any voting securities of an issuer shall be deemed outstanding if any person other than the issuer is entitled to exercise the voting rights thereof.

(v)           A security shall be deemed to be of the same class as another security if both securities confer upon the holder or holders thereof substantially the same rights and privileges; PROVIDED, HOWEVER, that, in the case of secured evidences of indebtedness, all of which are issued under a single indenture, differences in the interest rates or maturity dates of various series thereof shall not be deemed sufficient to constitute such series as different classes, and PROVIDED FURTHER that, in the case of unsecured evidences of indebtedness, differences in the interest rates or maturity dates thereof shall not be deemed sufficient to constitute them securities of different classes, whether or not they are issued under a single indenture.

10.9. Corporate Trustee Required; Eligibility.

There shall at all times be a Trustee hereunder which (i) shall be (A) a corporation or association organized and doing business under the laws of the United States of America, any State or Territory thereof or the District of Columbia, which is authorized under such laws to exercise corporate trust powers, and subject to supervision or examination by Federal, state, territorial or District of Columbia authority, or (B) a corporation or other Person organized and doing business under the laws of a foreign government and permitted by order of the Commission to act as a trustee under an indenture qualified or to be qualified under the TIA, which is authorized under the laws of such foreign government to exercise corporate trust powers and is subject to supervision or examination by authority of such foreign government or a political subdivision thereof substantially equivalent to supervision or examination applicable to United States institutional trustees, and (ii) shall have a combined capital and surplus of at least $50,000,000.  If such corporation or other Person publishes reports of condition at least annually, pursuant to law or to the requirements of such supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such corporation or other Person shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published.  Neither the Company nor any Person directly or indirectly controlling, controlled by or under common control with the Company shall serve as Trustee hereunder.  If at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section, it shall resign immediately in the manner and with the effect hereinafter specified in this Article.

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10.10. Resignation and Removal; Appointment of Successor.

(a)           No resignation or removal of the Trustee and no appointment of a successor Trustee pursuant to this Article shall become effective until the acceptance of appointment by the successor Trustee under Section 10.11.

(b)           The Trustee may resign at any time by giving written notice thereof to the Company.  If an instrument of acceptance by a successor Trustee shall not have been delivered to the Trustee within 30 days after the giving of such notice of resignation, the resigning Trustee may petition any court of competent jurisdiction for the appointment of a successor Trustee.

(c)           Unless an Event of Default (or an occurrence that would constitute an Event of Default upon the passage of time or the giving of notice) exists, the Company may remove the Trustee with or without cause, by delivery to the Trustee of a Board Resolution effecting such removal.  The Trustee may be removed with or without cause at any time by Act of the Holders of a majority in principal amount of the Obligations Outstanding, delivered to the Trustee and to the Company.

(d)           If at any time:

(i)           the Trustee shall fail to comply with Section 10.8(a) after written request therefor by the Company or by any Holder who has been a bona fide Holder of an Obligation for at least six months, or

(ii)           the Trustee shall cease to be eligible under Section 10.9 and shall fail to resign after written request therefor by the Company or by any such Holder, or

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(iii)           the Trustee shall become incapable of acting or shall be adjudged a bankrupt or insolvent or a receiver of the Trustee or of its property shall be appointed or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation,

then, in any such case, (1) the Company by a Board Resolution may remove the Trustee, or (2) subject to Section 9.18, any Holder who has been a bona fide Holder of an Obligation for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee.

(e)           If the Trustee shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of Trustee for any cause, the Company, by a Board Resolution, shall promptly appoint a successor Trustee.  In case all or substantially all of the Trust Estate shall be in the possession of a receiver or trustee lawfully appointed, such receiver or trustee, by written instrument, may similarly appoint a successor to fill such vacancy until a new Trustee shall be so appointed by the Holders.  If, within one year after such resignation, removal or incapability or the occurrence of such vacancy, a successor Trustee shall be appointed by Act of the Holders of a majority in principal amount of the Obligations Outstanding delivered to the Company and the retiring Trustee, the successor Trustee so appointed shall, forthwith upon its acceptance of such appointment, become the successor Trustee and supersede the successor Trustee appointed by the Company or by such receiver or trustee.  If no successor Trustee shall have been so appointed by the Company or the Holders and accepted appointment in the manner hereinafter provided, subject to Section 9.18, the Trustee or any Holder who has been a bona fide Holder of an Obligation for at least six months may, on behalf of himself and all other similarly situated, petition any court of competent jurisdiction for the appointment of a successor Trustee.

(f)           The Company shall give notice of each resignation and each removal of the Trustee and each appointment of a successor Trustee by mailing written notice of such event by first-class mail, postage prepaid, to the Holders of Obligations as their names and addresses appear in the Obligation Register and to the Holders of Notes as their addresses have been previously provided to the Trustee in writing.  Each notice shall include the name of the successor Trustee and the address of its principal corporate trust office.  Upon the appointment of a new Trustee in the place of, any Trustee named herein acting hereunder, an instrument, executed and acknowledged by the Trustee, shall be conclusive proof of the proper substitution of such successor or successors or new Trustee, who shall have all the estate powers, duties, rights and privileges of the predecessor Trustee.

(g)           Upon the resignation, removal or incapability of the Trustee, all books and records of the Trustee relating to the Trust Estate shall be sent to the successor Trustee within 60 days of such resignation, removal or incapability.  In the event (i) the Trustee resigns due to any conflict of interest or incapability, (ii) there is any change in control, merger, conversion, consolidation or succession to the assets of the Trustee or (iii) the Company is legally required to remove the Trustee as a result of any such change in control, merger, conversion, consolidation or succession, the Trustee shall pay all costs associated with transferring the Trust Estate to a successor Trustee.

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10.11. Acceptance of Appointment by Successor.

Every successor Trustee appointed hereunder shall execute, acknowledge and deliver to the Company and to the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor Trustee, without any further act, deed or conveyance, shall become vested with all the estates, properties, rights, powers, trusts and duties of the retiring Trustee; but, on request of the Company or the successor Trustee, such retiring Trustee shall, upon payment of its charges, execute and deliver an instrument conveying and transferring to such successor Trustee upon the trusts herein expressed all the estates, properties, rights, powers and trusts of the retiring Trustee, and shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder, subject nevertheless to its lien, if any, provided for in Section 10.7 and 16.14. Upon request of any such successor Trustee, the Company shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor Trustee all such estates, properties, rights, powers and trusts.

No successor Trustee shall accept its appointment unless at the time of such acceptance such successor Trustee shall be qualified and eligible under this Article, to the extent operative.

10.12. Merger, Conversion, Consolidation or Succession to Business.

Any corporation into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation succeeding to all or substantially all of the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, PROVIDED such corporation shall be otherwise qualified and eligible under this Article, to the extent operative, without the execution or filing of any paper or any further act on the part of any of the parties  hereto.  In case any Obligations shall have been authenticated, but not delivered, by the Trustee then in office, any successor by merger, conversion or consolidation to such authenticating Trustee may adopt such authentication and deliver the Obligations so authenticated with the same effect as if such successor Trustee had itself authenticated such Obligations.

10.13. Preferential Collection of Claims against Company.

(a)           Subject to Subsection (b) below, if the Trustee shall be or shall become a creditor, directly or indirectly, secured or unsecured, of the Company within three months prior to a default (as defined in paragraph (c) below), or subsequent to such a default, then, unless and until such default shall be cured, the Trustee shall set apart and hold in a special account for the benefit of the Trustee individually, the Holders of the Obligations and the holders of other indenture securities (as defined in Subsection (c) below):

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(i)            an amount equal to any and all reductions in the amount due and owing upon any claim as such creditor in respect of principal or interest, effected after the beginning of such three-month period and valid as against the Company and its other creditors, except any such reduction resulting from the receipt or disposition of any property described in clause (ii) below, or from the exercise of any right of set-off which the Trustee could have exercised if a petition in bankruptcy had been filed by or against the Company upon the date of such default; and

(ii)           all property received by the Trustee in respect of any claim as such creditor, either as security therefor, or in satisfaction or composition thereof, or otherwise, after the beginning of such three-month period, or an amount equal to the proceeds of any such property, if disposed of, SUBJECT, HOWEVER, to the rights, if any, of the Company and its other creditors in such property or such proceeds.

Nothing herein contained, however, shall affect the right of the Trustee:

(A)           to retain for its own account (i) payments made on account of any such claim by any Person (other than the Company) who is liable thereon, and (ii) the proceeds of the bona fide sale of any such claim by the Trustee to a third person, and (iii) distributions made in cash, securities or other property in respect of claims filed against the Company in bankruptcy or receivership or in proceedings for reorganization pursuant to the Federal Bankruptcy Code or applicable state law; or

(B)           to realize, for its own account, upon any property held by it as security for any such claim, if such property was so held prior to the beginning of such three-month period; or

(C)           to realize, for its own account, but only to the extent of the claim hereinafter mentioned, upon any property held by it as security for any such claim, if such claim was created after the beginning of such three-month period and such property was received as security therefor simultaneously with the creation thereof, and if the Trustee shall sustain the burden of proving that at the time such property was so received the Trustee had no reasonable cause to believe that a default would occur within three months; or

(D)           to receive payment on any claim referred to in subclause (B) or (C) above, against the release of any property held as security for such claim as provided in subclause (B) or (C) above, as the case may be, to the extent of the fair value of such property.

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For the purposes of subclauses (B), (C) and (D) above, property substituted after the beginning of such three-month period for property held as security at the time of such substitution shall, to the extent of the fair value of the property released, have the same status as the property released, and, to the extent that any claim referred to in any of said subclauses is created in renewal of or in substitution for or for the purpose of repaying or refunding any pre-existing claim of the Trustee as such creditor, such claim shall have the same status as such pre-existing claim.

If the Trustee shall be required to account, the funds and property held in such special account and the proceeds thereof shall be apportioned among the Trustee, the Holders and the holders of other indenture securities in such manner that the Trustee, the Holders and the holders of other indenture securities realize, as a result of payments from such special account and payments of dividends on claims filed against the Company in bankruptcy or receivership or in proceedings for liquidation or reorganization pursuant to the Federal Bankruptcy Code or applicable state law, the same percentage of their respective claims, figured before crediting to the claim of the Trustee anything on account of the receipt by it from the Company of the funds and property in such special account and before crediting to the respective claims of the Trustee and the Holders and the holders of other indenture securities dividends on claims filed against the Company in bankruptcy or receivership or in proceedings for liquidation or reorganization pursuant to the Federal Bankruptcy Code or applicable state law, but after crediting thereon receipts on account of the indebtedness represented by their respective claims from all sources other than from such dividends and from the funds and property so held in such special account.  As used in this paragraph, with respect to any claim, the term “dividends” shall include any distribution with respect to such claim, in bankruptcy or receivership or proceedings for reorganization pursuant to the Federal Bankruptcy Code or applicable state law, whether such distribution is made in cash, securities, or other property, but shall not include any such distribution with respect to the secured portion, if any, of such claim.  The court in which such bankruptcy, receivership or proceedings for reorganization is pending shall have jurisdiction (i) to apportion among the Trustee, the Holders and the holders of other indenture securities, in accordance with the provisions of this paragraph, the funds and property held in such special account and proceeds thereof, or (ii) in lieu of such apportionment, in whole or in part, to give to the provisions of this paragraph due consideration in determining the fairness of the distributions to be made to the Trustee and the Holders and the holders of other indenture securities with respect to their respective claims, in which event it shall not be necessary to liquidate or to appraise the value of any securities or other property held in such special account or as security for any such claim, or to make a specific allocation of such distributions as between the secured and unsecured portions of such claims, or otherwise to apply the provisions of this paragraph as a mathematical  formula.

Any Trustee which has resigned or been removed after the beginning of such three-month period shall be subject to the provisions of this Subsection (a) as though such resignation or removal had not occurred.  If any Trustee has resigned or been removed prior to the beginning of such three-month period, it shall be subject to the provisions of this Subsection (a) if and only if the following conditions exist:

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(iii)           the receipt of property or reduction of claim, which would have given rise to the obligation to account, if such Trustee had continued as Trustee, occurred after the beginning of such three-month period; and

(iv)           such receipt of property or reduction of claim occurred within three months after such resignation or removal.

(b)           there shall be excluded from the operation of Subsection (a) above a creditor relationship arising from:

(i)            the ownership or acquisition of securities issued under any indenture or any security or securities having a maturity of one year or more at the time of acquisition by the Trustee; or

(ii)           advances authorized by a receivership or bankruptcy court of competent jurisdiction, or by this Indenture, for the purpose of preserving any property which shall at any time be subject to the lien of this Indenture or of discharging tax liens or other prior liens or encumbrances thereon, if notice of such advances and of the circumstances surrounding the making thereof is given to the Holders at the time and in the manner provided in this Indenture; or

(iii)          disbursements made in the ordinary course of  business in the capacity of trustee under an indenture,  transfer agent, registrar, custodian, paying agent, fiscal agent or depositary, or other similar capacity; or

(iv)          an indebtedness created as a result of services rendered or premises rented; or an indebtedness created as a result of goods or securities sold in a cash transaction (as defined in Subsection (c) below); or

(v)           the ownership of stock or of other securities of a corporation organized under the provisions of Section 25(a) of the Federal Reserve Act, as amended, which is directly or indirectly a creditor of the Company; or

(vi)          the acquisition, ownership, acceptance or negotiation of any drafts, bills of exchange, acceptances or obligations which fall within the classification of self-liquidating paper (as defined in Subsection (c) below).

(c)           For the purposes of this Section only:

(i)            The term “default” means any failure to make payment in full of the principal of or interest on any of the Obligations or upon the other indenture securities when and as such principal or interest become due and payable;

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(ii)           The term “other indenture securities” means securities  upon which the Company is an obligor outstanding under any other indenture (A) under which the Trustee is also trustee, (B) which contains provisions substantially similar to the provisions of this Section, and (C) under which a default exists at the time of the apportionment of the funds and property held in such special account;

(iii)           The term “cash transaction” means any transaction in which full payment for goods or securities sold is made within seven days after delivery of the goods or securities in currency or in checks or other orders drawn upon banks or bankers and payable upon demand;

(iv)           The term “self-liquidating paper” means any draft, bill of exchange, acceptance or obligation which is made, drawn, negotiated or incurred by the Company for the purpose of financing the purchase, processing, manufacturing, shipment, storage or sale of goods, wares or merchandise and which is secured by documents evidencing title to, possession of, or a lien upon, the goods, wares or merchandise or the receivables or proceeds arising from the sale of the goods, wares or merchandise previously constituting the security, PROVIDED the security is received by the Trustee simultaneously with the creation of the creditor relationship with the Company arising from the making, drawing, negotiating or incurring of the draft, bill of exchange, acceptance or obligation;

(v)           The term “Company” means any obligor upon the Obligations;

(vi)          The term “Federal Bankruptcy Code” means Title 11 of the United States Code, as it may be amended from time to time; and

(vii)         The term “Trustee” includes any separate or co-trustee appointed under Section 10.14.

10.14. Co-trustees and Separate Trustees.

At any time or times, for the purpose of meeting the legal requirements of any jurisdiction in which any of the Trust Estate may at the time be located, the Company and the Trustee shall have power to appoint, and, upon the written request of the Trustee or of the Holders of at least 25% in principal amount of-the Obligations Outstanding, the Company shall for such purpose join with the Trustee in the execution, delivery and performance of all instruments and agreements necessary or proper to appoint, one or more Persons approved by the Trustee either to act as co-trustee, jointly with the Trustee, of all or any part of the Trust Estate, or to act as separate trustee of any such property, in either case with such powers as may be provided in the instrument of appointment, and to vest in such Person or Persons in the capacity aforesaid, any property, title, right or power deemed necessary or desirable, subject to the other provisions of this Section. If the Company does not join in such appointment within 15 days after the receipt by it of a request so to do, or in case an Event of Default has occurred and is continuing, the Trustee alone shall have power to make such appointment.

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Should any written instrument from the Company be required by any co-trustee or separate trustee so appointed for more fully confirming to such co-trustee or separate trustee such property, title, right or power, any and all such instruments shall, on request, be executed, acknowledged and delivered by the Company.

Every co-trustee or separate trustee shall, to the extent permitted by law, but to such extent only, be appointed subject to the following terms, namely:

(a)           The Obligations shall be authenticated and delivered, and all rights, powers, duties and obligations hereunder in respect of the custody of securities, cash and other personal property held by, or required to be deposited or pledged with, the Trustee hereunder, shall be exercised solely, by the Trustee.

(b)           The rights, powers, duties and obligations hereby conferred or imposed upon the Trustee in respect of any property covered by such appointment shall be conferred or imposed upon and exercised or performed by the Trustee or by the Trustee and such co-trustee or separate trustee jointly, as shall be provided in the instrument appointing such co-trustee or separate trustee, except to the extent that under any law of any jurisdiction in which any particular act is to be performed, the Trustee shall be incompetent or unqualified to perform such act, in which event such rights, powers, duties and obligations shall be exercised and performed by such co-trustee or separate trustee.

(c)           The Trustee at any time, by an instrument in writing executed by it, with the concurrence of the Company evidenced by a Board Resolution, may accept the resignation of or remove any co-trustee or separate trustee appointed under this Section, and, in case an Event of Default has occurred and is continuing, the Trustee shall have power to accept the resignation of, or remove, any such co-trustee or separate trustee without the concurrence of the Company.  Upon the written request of the Trustee, the Company shall join with the Trustee in the execution, delivery and performance of all instruments and agreements necessary or proper to effectuate such resignation or removal.  A successor to any co-trustee or separate trustee so resigned or removed may be appointed in the manner provided in this Section.

(d)           No co-trustee or separate trustee hereunder shall be personally liable by reason of any act or omission of the Trustee, or any other such trustee hereunder.

(e)           Any Act of Holders delivered to the Trustee shall be deemed to have been delivered to each such co-trustee and separate trustee.

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10.15. Authenticating Agent.

The Trustee may appoint an Authenticating Agent or Agents which shall be authorized to act on behalf of the Trustee to authenticate Obligations issued upon original issue and upon exchange, registration of transfer or partial redemption or pursuant to Sections 3.6, 3.7, 3.8 or  15.7, and Obligations so authenticated shall be entitled to the benefits of this Indenture and shall be valid and obligatory for all purposes as if authenticated by the Trustee hereunder.  Such Authenticating Agent shall at all times be a bank or trust company, and shall at all times be a corporation organized and doing business under the laws of the United States or of any state, territory or the District of Columbia, with a combined capital and surplus of at least $50,000,000 and authorized under  such laws to exercise corporate trust powers and subject to supervision or examination by Federal, state, territorial or District of Columbia authority.  If such corporation publishes reports of condition at least annually pursuant to law or the requirements of such supervising or examining authority, then for the purposes of this Section the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published.

Any corporation into which any Authenticating Agent may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, consolidation or conversion to which any Authenticating Agent shall be a party, or any corporation succeeding to the corporate trust business of any Authenticating Agent, shall continue to be the Authenticating Agent hereunder, provided such corporation shall otherwise be eligible under this Section, without the execution or filing of any further act on the part of the parties hereto or the Authenticating Agent or such successor corporation.

Any Authenticating Agent may at any time resign by giving written notice of resignation to the Trustee and the Company.  The Trustee may at any time terminate the agency of any Authenticating  Agent by giving written notice of termination to such Authenticating Agent and the Company.  Upon receiving such a notice of resignation or upon such a termination, or in case at any time any Authenticating Agent shall cease to be eligible under this Section, the Trustee shall promptly appoint a successor Authenticating Agent, shall give written notice of such appointment to the Company and shall mail notice of such appointment by first-class mail, postage prepaid, to all Holders of Obligations of the applicable series as the names and addresses of such Holders appear on the Obligation Register.

If at any time an Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section, such Authenticating Agent shall resign immediately in the manner and with the effect specified in this Section.

The Trustee agrees to pay to the Authenticating Agent from time to time reasonable compensation for its services under this Section and the Trustee shall be entitled to be reimbursed by the Company for such payments, subject to Section 10.7 and 16.14.  The provisions of Sections 3.10, 10.4 and 10.5 shall be applicable to any Authenticating Agent.

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Any successor Authenticating Agent upon acceptance of its appointment hereunder shall become vested with all the rights, powers and duties of its predecessor hereunder, with like effect as if originally named as an Authenticating Agent.  No successor Authenticating Agent shall be appointed unless eligible under the provisions of this Section.

The Trustee agrees to pay to each Authenticating Agent from time to time reasonable compensation for its services under this Section, and the Trustee shall be entitled to be reimbursed for such payments, subject to the provisions of Section 10.7.

If an appointment is made pursuant to this Section, the Obligations may have endorsed thereon, in lieu of the Trustee’s certificate of authentication, an alternative certificate of authentication in the following form:

This is one of the Obligations described in the within-mentioned Indenture.

	As Trustee
By:
	As Authenticating Agent
By:
	Authorized Officer

11.  HOLDERS’ LISTS AND REPORTS BY TRUSTEE AND COMPANY

11.1. Company to Furnish Trustee Semi-Annual Lists of Holders.

The Company will furnish or cause to be furnished to the Trustee semiannually, not less than 45 days nor more than 60 days after March 15 and September 15 of each year, and at such other times as the Trustee may request in writing, within 30 days after receipt by the Company of any such request, a list in such form as the Trustee may reasonably require containing all the information in the possession or control of the Company, or any of its Paying Agents other than the Trustee, as to the names and addresses of the Holders of Obligations, obtained since the date as of which the next previous list, if any, was furnished, EXCLUDING from any such list the names and addresses received by the Trustee in its capacity as Obligation Registrar.  Any such list may be dated as of a date not more than 15 days prior to the time such information is furnished and need not include information received after such date.

11.2. Preservation of Information; Communications to Holders.

(a)           The Trustee shall preserve, in as current a form as is reasonably practicable, the names and addresses of Holders of Obligations (i) contained in the most recent list furnished to the Trustee as provided in Section 11.1, (ii) received by the Trustee in the capacity of Paying Agent (if so acting) hereunder, (iii) filed with the Trustee by Holders of Obligations within the two preceding years as provided for in Section 11.3(c)(ii), or (iv) received by the Trustee in its capacity as Obligation Registrar.

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The Trustee may (1) destroy any list furnished to it under Section 11.1 upon receipt of a new list so furnished, (2) destroy any information received by it as Paying Agent (if so acting) hereunder upon delivering to itself as Trustee, not earlier than 45 days after each March 15 and September 15 of each year, a list containing the names and addresses of the Holders of Obligations obtained from such information since the delivery of the next previous list, if any, (3) destroy any list delivered to itself as Trustee which was compiled from information received by it as Paying Agent (if so acting) hereunder upon the receipt of a new list so delivered, and (4) destroy, not earlier than two years after filing, any information as to their names and addresses filed with the Trustee by Holders of Obligations as provided for in Section 11.3(c)(ii).

(b)           If three or more Holders of Obligations (hereinafter referred to as “applicants”) apply in writing to the Trustee, and furnish to the Trustee reasonable proof that each such applicant has owned an Obligation for a period of at least six months preceding the date of such application, and such application states that the applicants desire to communicate with other Holders of Obligations with respect to their rights under this Indenture or under the Obligations and is accompanied by a copy of the form of proxy or other communication which such applicants propose to transmit, then the Trustee shall, within five business days after the receipt of such application, at its election, either

(i)            afford such applicants access to the information preserved at the time by the Trustee in accordance with Section 11.2(a), or

(ii)           inform such applicants as to the approximate number of Holders of Obligations whose names and addresses appear in the information preserved at the time by the Trustee in accordance with Section 11.2(a), and as to the approximate cost of mailing to such Holders the form of proxy or other communication, if any specified in such application.

If the Trustee shall elect not to afford such applicants access to such information, the Trustee shall, upon the written request of such applicants, mail to each Holder whose name and address appear in the information preserved at the time by the Trustee in accordance with Section 11.2(a), a copy of the form of proxy or other communication which is specified in such request, with reasonable promptness after a tender to the Trustee of the material to be mailed and of payment, or provision for the payment,  of the reasonable expenses of such mailing, unless within five days after such tender, the Trustee shall mail to such applicants and file with the Commission, together with a copy of the material to be mailed, a written statement to the effect that, in the opinion of the Trustee, such mailing would be contrary to the best interests of the Holders of Obligations or would be in violation of applicable law.  Such written statement shall specify the basis of such opinion.  If the Commission, after opportunity for a hearing upon the objections specified in the written statement so filed, shall enter an order refusing to sustain any of such objections or if, after the entry of an order sustaining one or more of such objections, the Commission shall find, after notice and opportunity for hearing, that all the objections so sustained have been met and shall enter an order so declaring, the Trustee shall mail copies of such material to all such Holders with reasonable promptness after the entry of such order and the renewal of such tender; otherwise the Trustee shall be relieved of any obligation or duty to such applicants respecting their application.

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(c)           Every Holder of Obligations, by receiving and holding the same, agrees with the Company and the Trustee that neither the Company nor the Trustee nor any Paying Agent shall be held accountable by reason of the disclosure of any such information as to the names and addresses of the Holders of Obligations in accordance with Section 11.2(b), regardless of the source from which such information was derived, and that the Trustee shall not be held accountable by reason of mailing any material pursuant to a request made under Section 11.2(b).

11.3. Reports by Trustee.

This Section shall be operative only while this Indenture is required to be qualified under the TIA.

(a)           The term “reporting date” means, as used in this Section, June 30 in each year.  Within 60 days after the reporting date in each year, the Trustee shall transmit to the Holders, as provided in Subsection (c) below, a brief report dated as of such reporting date with respect to any of the following events which may have occurred within the previous twelve months (but if no such event has occurred within such period no such report need be transmitted):

(i)            any change to its eligibility under Section 10.9 and its qualifications under Section 10.8;

(ii)           the creation of or any material change to a relationship specified in clauses (i) through (x) of Subsection 10.8(c);

(iii)           the character and amount of any advances (and if the Trustee elects so to state, the circumstances surrounding the making thereof) made by the Trustee (as such) which remain unpaid on the date of such report, and for the reimbursement of which it claims or may claim a lien or charge, prior to that of the Obligations, on the Trust Estate or on any property or funds held or collected by it as Trustee, except that the Trustee shall not be required (but may elect) to report such advances if such advances so remaining unpaid aggregate not more than 1/2 of 1% of the principal amount of the Obligations Outstanding on the date of such report;

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(iv)          the amount, interest rate and maturity date of all other indebtedness owing by the Company (or by any other obligor on the Obligations) to the Trustee in its individual capacity, on the date of such report, with a brief description of any property held as collateral security therefor, except an indebtedness based upon a creditor relationship arising in any manner described in Section 10.13(b)(ii), (iii), (iv) or (vi);

(v)           any change to the property and funds, if any, physically in the possession of the Trustee as such on the date of such report;

(vi)          any release, or release and substitution, of property subject to the lien of this Indenture (and the consideration therefor, if any) which the Trustee has not previously reported; PROVIDED, HOWEVER, that to the extent that the aggregate value as shown by the release papers of any or all of such released properties does not exceed an amount equal to 1% of the principal amount of Obligations then Outstanding, the report need only indicate the number of such releases, the total value of property released as shown by the release papers, the aggregate amount of cash received and the aggregate value of property received in substitution therefor as shown by the release papers;

(vii)         any additional issue of Obligations which the Trustee has not previously reported; and

(viii)        any action taken by the Trustee in the performance of its duties hereunder which it has not previously reported and which in its opinion materially affects the Obligations or the Trust Estate, except action in respect of a default, notice of which has been or is to be withheld by the Trustee in accordance with Section 10.2.

(b)           The Trustee shall transmit to the Holders, as provided in Subsection (c) below, a brief report with respect to:

(i)           the release, or release and substitution, of property subject to the lien of this Indenture (and the consideration therefor, if any) unless the fair value of such property, as set forth in the Officers’ Certificate or certificate of an Engineer or Appraiser under Section 6.2, is less than 10% of the principal amount of Obligations Outstanding at the time of such release, or such release and substitution, such report to be so transmitted within 90 days after such time; and

(ii)           the character and amount of any advances (and if the Trustee elects so to state, the circumstances surrounding the making thereof) made by the Trustee (as such) since the date of the last report transmitted pursuant to subsection (a) above (or if no such report has yet been so transmitted, since the date of execution of this instrument) for the reimbursement of which it claims or may claim a lien or charge, prior to that of the Obligations, on the Trust Estate or on any property or funds held or collected by it as Trustee, and which it has not previously reported pursuant to this paragraph, except that the Trustee shall not be required (but may elect) to report such advances if such advances remaining unpaid at any time aggregate 10% or less of the principal amount of the Obligations Outstanding at such time, such report to be transmitted within 90 days after such time.

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(c)           Reports pursuant to this Section shall be transmitted by mail:

(i)            to all Holders of Obligations, as the names and addresses of such Holders appear in the Obligation Register;

(ii)           to such Holders as have, within the two years preceding such transmission, filed their names and addresses with the Trustee for that purpose; and

(iii)          except in the case of reports pursuant to Subsection (b) above, to all Holders whose names and addresses have been furnished to or received by the Trustee pursuant to Section 11.1 hereof.

(d)           A copy of each such report shall, at the time of such transmission to Holders, be filed by the Trustee with each stock exchange upon which any of the Obligations are listed and also with the Commission.  The Company will notify the Trustee when the Obligations are listed on any stock exchange.

11.4. Reports by Company.

This Section shall be operative only while this Indenture is required to be qualified under the TIA.  The Company shall:

(a)           file with the Trustee, within 15 days after the Company is required to file the same with the Commission, copies of the annual reports and of the information, documents and other reports (or copies of such portions of any of the foregoing as the Commission may from time to time by rules and regulations prescribe) which the Company may be required to file with the Commission pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934; or, if the Company is not required to file information, documents or reports pursuant to either of said Sections, then it will file with the Trustee and the Commission, in accordance with rules and regulations prescribed by the Commission, such of the supplementary and periodic information, documents and reports which may be required pursuant to Section 13 of the Securities Exchange Act of 1934 in respect of a security listed and registered on a national securities exchange as may be prescribed in such rules and regulations;

(b)           file with the Trustee and the Commission, in accordance with rules and regulations prescribed by the Commission, such additional information, documents and reports with respect to compliance by the Company with the conditions and covenants of this Indenture as may be required by such rules and regulations; and

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(c)           transmit to the Holders of Obligations, within 30 days after the filing thereof with the Trustee, in the manner and to the extent provided in Section 11.3(c) with respect to reports pursuant to Section 11.3(a), such summaries of any information, documents and reports required to be filed by the Company pursuant to paragraphs (a) and (b) above as may be required by rules and regulations prescribed by the Commission.

12.  CONSOLIDATION, MERGER, CONVEYANCE OR TRANSFER

12.1. Consolidation, Merger, Conveyance or Transfer only on Certain Terms.

The Company shall not consolidate with or merge into any other Person or convey or transfer all or substantially all of its properties and assets to any Person, unless:

(a)           such consolidation, merger, conveyance or transfer shall be on such terms as shall fully preserve the lien and security hereof and the rights and powers of the Trustee and the Holders of the Obligations hereunder;

(b)           the Person formed by such consolidation or into which the Company is merged or the Person which acquires by conveyance or transfer all or substantially all of the Company’s properties and assets shall be a Person organized and validly existing under the laws of the United States of America, any state thereof or the District of Columbia and shall execute and deliver to the Trustee a Supplemental Indenture in a form that is recordable and satisfactory to the Trustee, meeting the requirements of Section 13.2 and containing:

(i)            an assumption by such successor Person of the due and punctual payment of the principal of (and premium, if any) and interest on all the Obligations and the performance and observance of every covenant and condition of this Indenture and the Obligations to be performed or observed by the Company; and

(ii)           a grant, conveyance, transfer and mortgage complying with Section 12.2;

(c)           immediately after giving effect to such transaction, no Event of Default hereunder shall exist; and

(d)           the Company shall have delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel, each of which shall state that such consolidation, merger, conveyance or transfer and such Supplemental Indenture comply with this Article and that all conditions precedent herein provided for relating to such transaction have been complied with.

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12.2. Successor Person Substituted.

Upon any consolidation or merger or any conveyance or transfer of the Trust Estate substantially as an entirety in accordance with Section 12.1, the successor Person formed by such consolidation or into which the Company is merged or to which such conveyance or transfer is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture with the same effect as if such successor Person had been named as the Company herein; SUBJECT, HOWEVER, to the following limitations:

The Supplemental Indenture required by Section 12.1 shall contain a grant, conveyance, transfer and mortgage in terms sufficient to include and subject to the lien of this Indenture, subject only to Permitted Encumbrances and any Prior Liens permitted by Section 14.6, all property, rights, privileges and franchises then owned and which may be thereafter acquired by such successor Person (other than Excepted Property and Excludable Property), whereupon such successor Person may cause to be executed, in its own name or in the name of the Company prior to such succession and delivered to the Trustee for authentication,  any Obligations issuable hereunder; and upon request of such successor Person, and subject to all the terms of this Indenture, the Trustee shall authenticate and deliver any Obligations which shall have been previously executed and delivered by the Company to the Trustee for authentication, and any Obligations which such successor Person shall thereafter, in accordance with this Indenture, cause to be executed and delivered to the Trustee for such purpose. Such changes in phraseology and form (but not in substance) may be made in such Obligations as may be appropriate in view of such consolidation, merger, conveyance or transfer.

No such conveyance or transfer of the Trust Estate substantially as an entirety shall have the effect of releasing the Person named as “the Company” in the first paragraph of this instrument or any successor Person which shall theretofore have become such in the manner prescribed in this Article from its liability as obligor and maker on any of the Obligations, unless such conveyance or transfer is followed by the complete liquidation of such Person or successor Person and substantially  all its assets immediately following such conveyance or transfer are the Stock or other securities of such successor Person received in such conveyance or transfer.

13.  SUPPLEMENTAL INDENTURES

13.1. Supplemental Indentures Without Consent of Holders.

Without the consent of the Holders of any Obligations, the Company, when authorized by a Board Resolution, and the Trustee, at any time and from time to time, may enter into one or more Supplemental Indentures, in form satisfactory to the Trustee, for any of the following purposes:

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(a)           to correct or amplify the description of any property at any time subject to the lien of this Indenture, or better to assure, convey and confirm unto the Trustee any property subject or required to be subjected to the lien of this Indenture, or to subject to the lien of this Indenture additional  property; or

(b)           to add to the conditions, limitations and restrictions on the authorized amount, terms or purposes of issue, authentication and delivery of Obligations or of any series of Obligations, as herein set forth, additional conditions, limitations and restrictions thereafter to be observed; or

(c)           to create any series of Obligations and make such other provisions as provided in Section 3.3; or

(d)           to modify or eliminate any of the terms of this Indenture; PROVIDED, HOWEVER, that (i) in the event any such modification or elimination made in such Supplemental Indenture would adversely affect or diminish the rights of the Holders of any Obligations then Outstanding against the Company or its property, it shall expressly be stated in such Supplemental Indenture that any such modifications or eliminations shall become effective only when there is no Obligation Outstanding of any series created prior to, the execution of such Supplemental Indenture; and (ii) the Trustee may, in its discretion, decline to enter into any such Supplemental Indenture which, in its opinion, may not afford adequate protection to the Trustee when the same becomes operative; or

(e)           to evidence the succession of another corporation to the Company and the assumption by any such successor of the covenants of the Company herein and in the Obligations contained; or

(f)           to evidence the appointment of any successor trustee or separate trustee or trustees or co-trustee or co-trustees hereunder, and to define the rights, powers, duties and obligations conferred upon any such separate trustee or trustees or co-trustee or co-trustees; or

(g)           to add to the covenants of the Company or the Events of Default for the benefit of the Holders of all or any series of Obligations or to surrender any right or power herein conferred upon the Company; or

(h)           to cure any ambiguity, to correct or supplement any provision herein which may be inconsistent with any other provision herein or to make any other provisions, with respect to matters or questions arising under this Indenture, which shall not be inconsistent with the provisions of this Indenture, PROVIDED such action shall not in the opinion of the Company, as evidenced by an Officers’ Certificate delivered to the Trustee adversely affect the interests of the Holders of the Obligations in any material respect; or

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(i)            to modify, eliminate or add to the provisions of this Indenture to such extent as shall be necessary to effect the qualification of this Indenture under the TIA or under any similar federal statute hereafter enacted, and to add to this Indenture such other provisions as may be expressly permitted by the TIA and to modify, eliminate or add to the provisions of this Indenture to the extent that any such provisions relating to requirements under the TIA have been modified or eliminated in the TIA after the date of this instrument, EXCLUDING, HOWEVER, the provisions referred to in Section 316(a)(2) of the TIA as in effect at the date as of which this instrument was executed or any corresponding provision in any similar federal statute hereafter enacted; or

(j)            to add or change any of the provisions of this Indenture to such extent as shall be necessary to permit or facilitate the issuance of Obligations (i) in bearer form, registrable or not registrable as to principal and with or without interest coupons or (ii) in book-entry form; or

(k)           to make any change in the Indenture that, in the reasonable judgment of the Trustee, will not materially and adversely affect the rights of Holders.  For purposes of this paragraph of this Section, any Supplemental Indenture will be presumed not to materially and adversely affect the rights of the Holders if (1) this Indenture, as supplemented and amended by such Supplemental Indenture, provides equally and ratably for the payment of principal of (and premium, if any) and interest on the Outstanding Secured Obligations which are to remain Outstanding, and (2) subject to the last sentence of this paragraph, the Company shall furnish to the Trustee written evidence from one or more nationally recognized statistical rating organizations then rating the Obligations (or other obligations primarily secured by Outstanding Secured Obligations) that their respective ratings of the Outstanding Secured Obligations (or other obligations primarily secured by Outstanding Secured Obligations) that are not subject to Credit Enhancement will not be withdrawn or reduced as a result of the changes in the Indenture effected by such Supplemental Indenture; PROVIDED, HOWEVER, that the failure to qualify for the presumption set forth in this sentence shall not create any presumption to the contrary or be used to question the judgment of the Trustee and PROVIDED, FURTHER, that the provisions of this paragraph may not be used to amend or modify the items listed in paragraphs (a) through (f) of Section 13.2 hereof in any way that is inconsistent with the provisions of such Section 13.2.  The Trustee may rely on the written evidence of the nationally recognized statistical rating organizations then rating the Obligations (or other obligations primarily secured by Outstanding Obligations) with respect to credit matters relating to the Company to the extent that it deems such reliance to be appropriate.

13.2. Supplemental Indentures With Consent of Holders.

With the consent of the Holders of not less than a majority in principal amount of the Obligations of all series then Outstanding affected by such Supplemental Indenture, by Act of such Holders delivered to the Company and the Trustee, the Company, when authorized by a Board Resolution, and the Trustee may enter into a Supplemental Indenture for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture or of modifying in any manner the rights of the Holders of the Obligations under this Indenture; PROVIDED, HOWEVER, that no such Supplemental Indenture shall, without the consent of the Holder of each Outstanding Obligation affected thereby,

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(a)           change the Stated Maturity of the principal of, or any installment of interest on, any Obligation, or reduce the principal amount thereof or the interest thereon or any premium payable upon the redemption thereof, or change any Place of Payment where, or the coin or currency in which, any Obligation, or the interest thereon is payable, or impair the right to institute suit for the enforcement of any such payment on or after the Stated Maturity thereof (or, in the case of redemption, on or after the Redemption Date); or

(b)           reduce the percentage in principal amount of the Obligations Outstanding, the consent of whose Holders is required for any such Supplemental Indenture, or the consent of whose Holders is required for any waiver provided for in this Indenture of compliance with certain provisions of this Indenture or certain defaults hereunder and their consequences; or

(c)           modify or alter the provisions of the proviso to the definition of the term “Outstanding”; or

(d)           modify any of the provisions of this Section, Section 9.12 or Section 9.17, except to increase any percentage provided thereby or to provide that certain other provisions of this Indenture cannot be modified or waived without the consent of the Holder of each Outstanding Obligation affected thereby; or

(e)           permit the creation of any lien (other than as permitted in this Indenture) ranking prior to or on a parity with the lien of this Indenture with respect to all or substantially all of the Trust Estate or terminate the lien of this Indenture on all or substantially all of the Trust Estate except to the extent already permitted hereby;

(f)            modify, in the case of Obligations of any series for which a mandatory sinking fund is provided, any of the provisions of this Indenture in such manner as to affect the rights of the Holders of such Obligations to the benefits of such sinking fund; or

(g)           modify Section 9.7 of this instrument.

The Trustee may in its discretion determine whether or not any Obligation would be affected by any Supplemental Indenture and any such determination shall be conclusive upon the Holder of all Obligations, whether theretofore or thereafter authenticated and delivered hereunder, and the Trustee shall have no liability to any Holder of any Obligation for any such determination made in good faith.

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It shall not be necessary for any Act of Holders under this Section to approve the particular form of any proposed Supplemental Indenture, but it shall be sufficient if such Act shall approve the substance thereof.

13.3. Execution of Supplemental Indentures.

In executing or accepting the additional trusts created by, any Supplemental Indenture permitted by this Article or the modification thereby of the trust created by this Indenture, the Trustee shall be entitled to receive, and, subject to Section 10.1, shall be fully protected in relying upon, an Opinion of Counsel stating that the execution of such Supplemental Indenture is authorized or permitted by this Indenture.  The Trustee may, but shall not, except to the extent required in the case of a Supplemental Indenture entered into under Section 13.1(i), be obligated to enter into any such Supplemental Indenture which adversely affects the Trustee’s own rights, duties or immunities under this Indenture.

13.4. Effect of Supplemental Indentures.

Upon the execution of any Supplemental Indenture under this Article, this Indenture shall be modified in accordance therewith and such Supplemental Indenture shall form a part of this Indenture for all purposes; and every Holder of Obligations theretofore or thereafter authenticated and delivered hereunder shall be bound thereby.

13.5. Conformity With Trust Indenture Act.

After qualification of this Indenture under the TIA, every Supplemental Indenture executed pursuant to this Article thereafter shall conform to the requirements of the TIA as then in effect.

13.6. Reference in Obligations to Supplemental Indentures.

Obligations authenticated and delivered after the execution of any Supplemental Indenture pursuant to this Article may, and if required by the Trustee or the Company shall, bear a notation in form approved by the Trustee as to any matter provided for in such Supplemental Indenture.  If the Company shall so determine, new Obligations so modified as to conform, in the opinion of the Trustee and the Board of Directors, to any such Supplemental Indenture may be prepared and executed by the Company and authenticated and delivered by the Trustee in exchange for Outstanding Obligations.

14.  COVENANTS

14.1. Payment of Principal, Premium and Interest.

The Company will duly and punctually pay the principal of (and premium, if any) and interest on the Obligations in accordance with the terms of the Obligations and this Indenture.

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14.2. Maintenance of Office or Agency.

The Company will maintain an office or agency in each Place of Payment where Obligations may be presented or surrendered for payment, where Obligations entitled to be registered, transferred, exchanged or converted may be presented or surrendered for registration, transfer, exchange or conversion and where notices and demands to or upon the Company in respect of the Obligations and this Indenture may be served.  The Company will give prompt written notice to the Trustee of the location, and of any change in the location, of any such office or agency.  If at any time the Company shall fail to maintain such an office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the principal corporate trust office of the Trustee, and the Company hereby appoints the Trustee its agent to receive all such presentations, surrenders, notices and demands.

14.3. Money for Obligation Payments to be Held in Trust; Repayment of Unclaimed Money.

If the Company shall at any time act as its own Paying Agent, it will, on or before each due date of the principal of (and premium, if any) or interest on any of the Obligations, segregate and hold in trust for the benefit of the Holders of such Obligations a sum sufficient to pay the principal (and premium, if any) or interest so becoming due until such sums shall be paid to such Holders or otherwise disposed of as herein provided, and the Company will promptly notify the Trustee of its action or failure so to act.

Whenever the Company shall have one or more Paying Agents, it will, prior to each due date of the principal of (and premium, if any) or interest on any Obligations, deposit with a Paying Agent a sum sufficient to pay the principal (and premium, if any) or interest so becoming due, such sum to be held in trust for the benefit of the Holders of such Obligations entitled to such principal (and premium, if any) or interest, and (unless such Paying Agent is the Trustee) the Company will promptly notify the Trustee of its action or failure so to act.

Moneys so segregated or deposited and held in trust shall not be a part of the Trust Estate and shall not be deemed Trust Moneys but shall constitute a separate trust fund for the benefit of the Persons entitled to such principal, premium or interest.  Except in the case of moneys so segregated by the Company when acting as its own Paying Agent, moneys held in trust by the Trustee or any other Paying Agent for the payment of the principal (or premium, if any) or interest on the Obligations need not be segregated from other funds, except to the extent required by law.

The Company will cause each Paying Agent other than the Company and the Trustee to execute and deliver to the Trustee an instrument in which such Paying Agent shall agree with the Trustee, subject to the provisions of this Section, that such Paying Agent will

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(a)           hold all sums held by it for the payment of principal of (and premium, if any) or interest on Obligations in trust for the benefit of the Holders of such Obligations until such sums shall be paid to the Holders or otherwise disposed of as herein provided;

(b)           give the Trustee notice of any default by the Company (or any other obligor upon the Obligations) in the making of any payment of principal (and premium, if any) or interest; and

(c)           at any time during the continuance of any such default, upon the written request of the Trustee, forthwith pay to the Trustee all sums so held in trust by such Paying Agent.

The Company may at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other purpose, pay, or by Company Order direct any Paying Agent to pay, to the Trustee all money held in trust by the Company or such Paying Agent, such money to be held by the Trustee upon the same trusts as those upon which such money was held by the Company or such Paying Agent; and, upon such payment by the Company, the Company shall be discharged from such trust, and, upon such payment by any Paying Agent to the Trustee, such Paying Agent shall be released from all further liability with respect to such money.

Any money deposited with the Trustee or any Paying Agent or held by the Company in trust for the payment of the principal of (and premium, if any) or interest on any Obligation and remaining unclaimed for two years after such principal (and premium, if any) or interest has become due and payable shall be paid to the Company on Company Request, or (if then held by the Company) shall be discharged from such trust; and the Holder of such Obligation shall thereafter, as an unsecured general creditor, look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Company as trustee thereof, shall thereupon cease.

14.4. Warranty of Title.

At the time of the execution and delivery of this instrument, the Company has good and valid title to the real property specifically described in paragraph (a) of Granting Clause First as owned in fee (other than Excludable Property) and good and valid title to the interests in other real property specifically described in Granting Clauses First and Second (other than Excludable Property), subject to no mortgage, lien, charge or encumbrance (other than Permitted Encumbrances) except as stated therein or in the Subject clause to the Granting Clauses, and has full power and lawful authority to grant, bargain, sell, alienate, remise, release, convey, assign, transfer, mortgage, pledge, set over and confirm said real property and interests in real property in the manner and form aforesaid.

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At the time of the execution and delivery of this instrument, the Company lawfully owns and is possessed of the personal property and securities specifically described in Granting Clauses First and Second, subject to no mortgage, lien, charge or encumbrance (other than Permitted Encumbrances) except as stated therein or in the Subject clause to the Granting Clauses, and has full power and lawful authority to mortgage, assign, transfer, deliver and pledge said personal property and securities in the manner and form aforesaid.

The Company hereby does and will forever warrant and defend the title to the property specifically described in Granting Clause First and Second (other than property that is released from the lien of this Indenture pursuant to the provisions hereof) against the claims and demands of all persons whomsoever, except Permitted Encumbrances.

14.5. After-Acquired Property; Further Assurances; Recording.

All property of every kind, other than Excepted Property and Excludable Property, acquired by the Company after the date hereof, shall, immediately upon the acquisition thereof by the Company, and without any further mortgage, conveyance or assignment, become subject to the lien of this Indenture; SUBJECT, HOWEVER, to the exceptions, if any, permitted by Section 12.2.  Nevertheless, the Company will do, execute, acknowledge and deliver all and every such further acts, conveyances, mortgages, financing statements and assurances as the Trustee shall require for accomplishing the purposes of this Indenture.

The Company will cause this instrument and all Supplemental Indentures and other instruments of further assurance, including all financing statements and continuation statements covering security interests in personal property, and all mortgages securing purchase money obligations delivered to the Trustee or to the trustee, mortgagee or other holder of a Prior Lien under Section 6.2 to be promptly recorded, registered and filed, and at all times to be kept recorded, registered and filed, and will execute and file such financing statements and cause to be issued and filed such continuation statements, all in such manner and in such places as may be required by law fully to preserve and protect the rights of the Holders and the Trustee hereunder to all property comprising the Trust Estate.  Furthermore, the Company will use its best efforts to cause all contracts and contract rights of the type set forth in paragraph (c) of Granting Clause First and acquired by the Company after the date hereof (other than Excludable Property) to become subject to the lien of this Indenture.  The Company will furnish to the Trustee:

(a)           promptly after the execution and delivery of this instrument and of each Supplemental Indenture or other instrument of further assurance, an Opinion of Counsel stating that, in the opinion of such counsel, this instrument and all such Supplemental Indentures and other instruments of further assurance have been properly recorded, registered and filed, or have been received for recording, filing or registration, to the extent necessary to make effective the lien intended to be created by this Indenture, and reciting the details of such action or referring to prior Opinions of Counsel in which such details are given, and stating that all financing statements and continuation statements have been executed and filed that are necessary fully to preserve and protect the rights of the Holders and the Trustee hereunder, or stating that, in the opinion of such counsel, no such action is necessary to make such lien effective; and

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(b)           within 30 days after January 1 in each year, an Opinion of Counsel, dated as of such date, either stating that, in the opinion of such counsel, during the preceding calendar year, such action has been taken with respect to the recording, registering, filing, re-recording, re-registering and re-filing of this instrument and of all Supplemental Indentures, financing statements, continuation statements or other instruments of further assurance as is necessary to maintain the lien of this Indenture (including the lien on any property acquired by the Company after the execution and delivery of this instrument and owned by the Company at the end of the preceding calendar year) and reciting the details of such action or referring to prior Opinions of Counsel in which such details are given, and stating that, during the preceding calendar year, all financing statements and continuation statements have been executed and filed that are necessary fully to preserve and protect the rights of the Holders and the Trustee hereunder, or stating that, in the opinion of such counsel, during the preceding calendar year, no such action is necessary to maintain such lien.

Upon the cancellation and discharge of any Prior Lien, the Company may receive all cash, obligations and securities then held by the trustee, mortgagee or other holder of such Prior Lien, which were received by such trustee, mortgagee or other holder on account of the release or the taking by eminent domain or the purchase by a public authority or the sale by virtue of a designation or order of a public authority or any other disposition of, or insurance on, the Trust Estate, or any part thereof (including all proceeds of or substitutions for any thereof).

14.6. Limitations on Liens; Payment of Taxes.

The Company will not create or incur or suffer or permit to be created or incurred or to exist any mortgage, lien, charge or encumbrance on or pledge of any of the Trust Estate, prior to or upon a parity with the lien of this Indenture except Permitted Encumbrances and except that:

(a)           The Company may create, incur or suffer to exist purchase money mortgages or other purchase money liens upon any real property purchased by the Company or acquire real property subject to mortgages and liens existing thereon at the date of acquisition, or acquire or agree to acquire and own personal property subject to or upon chattel mortgages, security agreements, conditional sales agreements or other title retention agreements; PROVIDED that

(i)             the principal amount of the indebtedness secured by each such mortgage, lien or agreement shall not exceed 90% of the Cost or Fair Value to the Company at the time of the acquisition thereof by the Company, whichever is less, as evidenced by an Officers’ Certificate, of the property subject thereto; PROVIDED that if the property subject to such mortgage, lien or agreement is not necessary to the operations of the remaining portion of the Company’s business, the principal amount thereby secured shall not exceed 100% of such Cost or Fair Value to the Company, whichever is less;

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(ii)           the aggregate principal amount of all indebtedness of the Company at the time outstanding secured by such mortgages, liens and agreements (including extensions, renewals and replacements thereof, as provided by the following Subsection (b), and also the indebtedness then being incurred) shall not exceed 10% of the aggregate principal amount of all Outstanding Secured Obligations; and

(iii)           each such mortgage, lien or agreement shall apply only to the property originally subject thereto and fixed improvements erected on such real property or affixed to such personal property or equipment  used in connection with such real or personal property.

(b)           The Company may modify, extend, renew or replace any mortgage, lien or agreement permitted by Subsection (a) above upon the same property theretofore subject thereto, or modify, replace, renew or extend the indebtedness secured thereby, PROVIDED that in any such case the principal amount of such indebtedness so modified, replaced, extended or renewed shall not be increased.

The Company will pay or cause to be paid as they become due and payable all taxes, assessments and other governmental charges lawfully levied or assessed or imposed upon the Trust Estate or any part thereof or upon any income therefrom, and also (to the extent that such payment will not be contrary to any applicable laws) all taxes, assessments and other governmental charges lawfully levied, assessed or imposed upon the lien or interest of the Trustee or of the Holders in the Trust Estate, so that (to the extent aforesaid) the lien of this Indenture shall at all times be wholly preserved at the cost of the Company and without expense to the Trustee or the Holders; PROVIDED, HOWEVER, that the Company shall not be required to pay and discharge or cause to be paid and discharged any such tax, assessment or governmental charge to the extent that the amount, applicability or validity thereof shall currently be contested in good faith by appropriate proceedings and the Company shall have established and shall maintain adequate reserves on its books for the payment of the same.

14.7. Maintenance of Properties.

The Company will cause all its properties used or useful in the conduct of its business to be maintained and kept in good condition, repair and working order and supplied with all necessary equipment and will cause to be made all necessary repairs, renewals, replacements,  betterments and improvements thereof, all as in the judgment of the Company may be necessary so that the business carried on in connection therewith may be properly and advantageously conducted at all times; PROVIDED, HOWEVER, that nothing in this Section shall prevent the Company from discontinuing the operation and maintenance of any of its properties if such discontinuance is, in the judgment of the Company, desirable in the conduct of its business and not disadvantageous in any material respect to the Holders.

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The Company will promptly classify, and record on its books, as retired, all property that has permanently ceased to be used or useful in the business of the Company.

14.8. To Insure.

The Company will at all times keep all its property of an insurable nature and of the character usually insured by companies operating similar properties, insured in amounts customarily carried, and against loss or damage from such causes as are customarily insured against, by similar companies.  All such insurance shall be effected with responsible insurance carriers.  All policies or other contracts for such insurance upon any part of the Trust Estate shall provide that the proceeds of such insurance (except in the case of any particular casualty resulting in damage or destruction not exceeding $1,000,000 in the aggregate) shall be payable, subject to the requirements of any Prior Lien, to the Trustee as its interest may appear (by means of a standard mortgagee clause or other similar clause acceptable to the Trustee, without contribution).  Each policy or other contract for such insurance, or such mortgagee clause, shall contain an agreement by the insurer that, notwithstanding any right of cancellation reserved to such insurer, such policy or contract shall continue in force for the benefit of the Trustee for at least 30 days after written notice to the Trustee of cancellation; PROVIDED, HOWEVER, that in the event of cancellation due to non-payment of premiums said notice shall be 10 days.  As soon as practicable after the execution of this Indenture, and within 90 days after the close of each calendar year thereafter, and at any time upon the request of the Trustee, the Company will deliver to the Trustee an Officers’ Certificate containing a detailed list of the insurance in force upon the Trust Estate on a date therein specified (which date shall be within 30 days of the delivery of such Certificate), including the names of the insurers with which the policies and other contracts of insurance on the Trust Estate are carried, the numbers, amounts and expiration dates of such policies and other contracts and the property and hazards covered thereby, and stating that the insurance so listed complies with this Section.

Any appraisement or adjustment or any loss or damage of or to any part of the Trust Estate and any settlement in respect thereof which may be agreed upon between the Company and any insurer, as evidenced by an Officers’ Certificate, shall be accepted by the Trustee.

All proceeds of insurance received by the Trustee shall be held and paid over or applied by the Trustee as provided in Article 7.

All proceeds of any insurance on any part of the Trust Estate not payable to the Trustee or the trustee, mortgagee or other holder of a Prior Lien shall be applied by the Company to the repair, rebuilding or replacement of the property destroyed or damaged or shall be deposited with the Trustee to be held and paid over or applied by it as provided in Article 7.

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14.9. Corporate Existence.

Subject to Article 12, the Company will do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence, rights (charter and statutory) and franchises; PROVIDED, HOWEVER, that the Company shall not be required to preserve any right or franchise if the Board of Directors shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Company and that the loss thereof is not disadvantageous in any material respect to the Holders, as evidenced by an Officers’ Certificate delivered to the Trustee certifying the action of the Board of Directors and containing an explanation of the factors considered by the Board of Directors in taking such action.

14.10. To Keep Books; Inspection by Trustee.

The Company will keep proper books of record and account, in which full and correct entries shall be made of all dealings or transactions of or in relation to the Obligations and the plant, properties, business and affairs of the Company in accordance with Accounting Requirements.  The Company will, upon reasonable written notice by the Trustee to the Company and at the expense of the Company, permit the Trustee by its representatives to inspect the plants and properties, books of account, records, reports and other papers of the Company, and to take copies and extracts therefrom, and will afford and procure a reasonable opportunity to make any such inspection, and the Company will furnish to the Trustee any and all information as the Trustee may reasonably request, with respect to the performance by the Company of its covenants in this Indenture; PROVIDED, HOWEVER, the Company shall not be required to make available any information supplied to it by a third party which is subject to a confidentiality agreement with such third party except to the extent allowed by, and subject to the terms of, such confidentiality agreement.

14.11. Use of Trust Moneys and Advances by Trustee.

If the Company shall fail to perform any of its covenants in this Indenture, the Trustee may, at any time and from time- to- time, after notice to the Company, make advances to effect performance of any such covenant on behalf of the Company; and all moneys so used or advanced by the Trustee, together with interest at the “prime rate” as quoted by and in effect from time to time by the Trustee plus one percent (1%) per annum (such rate to be recomputed, and as so recomputed to take effect, as of the day immediately following the date on which the Trustee publicly announces any change in its “prime rate”), shall be repaid by the Company upon demand.  Nothing contained herein shall be deemed to obligate the Trustee to advance its own monies for any purpose.

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14.12. Statement as to Compliance.

The Company will deliver to the Trustee, within 120 days after the end of each calendar year, a written statement signed by the principal executive officer and by the principal financial officer or principal accounting officer of the Company stating that a review of the Company’s activities during the preceding calendar year has been made under their supervision and that the Company has fulfilled its obligations hereunder in all material respects during such calendar year.

Promptly after any Officer of the Company may reasonably be deemed to have knowledge of a default (as defined in Section 10.2) hereunder, the Company will deliver to the Trustee a written notice specifying the nature and period of existence thereof and the action the Company is taking and proposes to take with respect thereto.

Promptly upon becoming aware of the ownership of any Obligation by any Affiliate of the Company, any other obligor under such Obligation or any Affiliate of such obligor, the Company shall give the Trustee notice thereof.

14.13. Waiver of Certain Covenants.

The Company may omit in any particular instance to comply with any covenant or condition set forth in this Article except Sections 14.1, 14.2, 14.3, 14.9, 14.10, 14.11 and the first sentence of Section 14.14 if before or after the time for such compliance the Holders of at least a majority in principal amount of all Obligations then Outstanding shall, by Act of such Holders, either waive in writing such compliance in such instance or generally waive in writing such compliance with such covenant or condition, but no such waiver shall extend to or affect such covenant or condition except to the extent so expressly waived and, until such waiver shall become effective, the obligations of the Company and the duties of the Trustee in respect of any such covenant or condition shall remain in full force and effect.

14.14. Rate Covenant.

The Company shall establish and collect rates, rents, charges, fees and other compensation (collectively, “Rates”) for the use or the sale of the output, capacity or service of the System that, together with other moneys available to the Company, produce moneys sufficient to enable the Company to comply with all its covenants under this Indenture.  Subject to any necessary regulatory approval or determination, the Company also shall establish and collect Rates for the use or the sale of output, capacity or service of the System that, together with other revenues available to the Company, are reasonably expected to yield Margins for Interest for each fiscal year of the Company equal to at least 1.10 times Interest Charges for such period.  Promptly upon any material change in the circumstances which were contemplated at the time such Rates were most recently reviewed, but not less frequently than once every twelve months, the Company shall review the Rates so established and shall promptly establish or revise such Rates as necessary to comply with the foregoing requirements; PROVIDED, HOWEVER, that if (i) upon any such review of Rates based on a material change in circumstances, the Company determines that Rates are required to be established or revised in order for the Company to comply with this Section 14.14 and (ii) there are less than six calendar months remaining in the current fiscal year, it will be sufficient for purposes of complying with this Section 14.14 if the Company establishes or revises its Rates so as to reasonably expect to meet the covenant for the next succeeding twelve-month period commencing with the first day of the calendar month  next succeeding the date of any such revision, subject in the case of the foregoing Margins for Interest requirement to any necessary regulatory approval or determination.

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14.15. Distributions to Members.

The Company shall not directly or indirectly declare or pay any dividend or make any payments of, distributions of, or retirements of patronage capital to its members (each a “Distribution”) if, at the time thereof or after giving effect thereto, (i) an Event of Default shall exist, or (ii) the Company’s equities and margins (determined in accordance with Accounting Requirements) as of the end of the Company’s most recent fiscal quarter would be less than thirty percent (30%) of the Company’s total long-term debt and equities and margins (determined in accordance with Accounting Requirements) at such time; PROVIDED, HOWEVER, that, so long as no Event of Default shall exist, the Company may, in any fiscal year, make a Distribution of up to the lesser of (x) five percent (5%) of the Company’s aggregate equities and margins on the books of the Company as of the end of the immediately preceding fiscal year or (y) fifty percent (50%) of the prior fiscal year’s assignable margins (determined in accordance with the definition of Margins for Interest), whether or not allocated to members.  For purposes of this Section, determination of aggregate margins and equities and total long-term debt and equities shall not include any amount on account of earnings retained in any Subsidiary or Affiliate of the Company and any such determination of total long-term debt and equities shall exclude the debt of any Subsidiary or Affiliate.

15.  REDEMPTION OF OBLIGATIONS; SINKING FUNDS

15.1. General Applicability of Sections 15.1 through 15.7.

Obligations which by their express terms are redeemable before their Stated Maturity shall be redeemable in accordance with their terms and (except as otherwise provided with respect to the Obligations of any particular series by the provisions of a Supplemental Indenture creating such series) in accordance with Sections 15.1 through  15.7, inclusive.

15.2. Election to Redeem; Notice to Trustee.

The election of the Company to redeem any Obligations shall be evidenced by a Board Resolution.  In case of any redemption at the election of the Company of less than all the Outstanding Obligations of any series, the Company shall, at least 45 days prior to the Redemption Date fixed by the Company (unless a shorter notice shall be satisfactory to the Trustee in the sole discretion of the Trustee) notify the Trustee in writing of such Redemption Date and of the principal amount of Obligations of such series to be redeemed and of the numbers of any Outstanding Obligations of such series then owned by the Company.

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If at the time the Company provides notice of redemption to the Trustee pursuant to this Section, the Trustee or a Paying Agent does not have on deposit (which, if the Company is the Paying Agent, shall be segregated and held in trust as provided in Section 14.3) sufficient available funds to pay the Redemption Price for the Obligations so called for redemption, then the notice of redemption shall be conditional and revocable; that is, the Company shall be under no obligation to deposit or provide, or cause to be deposited or provided, to the Trustee funds to effect such redemption and, if it does not elect to do so by 2:00 p.m., New York City time, on the Redemption Date, then the Obligations called for redemption shall not be redeemed pursuant to the above-mentioned notice of redemption or the notice of redemption given to the Holders pursuant to Section 15.4.

If the Obligations of any series to be redeemed consist of Obligations having different Stated Maturities or different rates of interest (or methods of computing interest), then the Company may, in the notice delivered to the Trustee pursuant to this Section, direct that the Securities of such series to be redeemed shall be selected from among groups of such Obligations having specified Stated Maturities or rates of interest (or methods of computing interest) and the Trustee shall thereafter select the particular Obligations to be redeemed in the manner set forth below from among the groups of Obligations so specified.

15.3. Selection by Trustee of Obligations to be Redeemed.

Unless otherwise provided in a Supplemental Indenture authorizing a particular series of Obligations, if less than all the Outstanding Obligations of any series or maturity within a series are to be redeemed, the particular Obligations to be redeemed shall be selected not more than 60 days prior to the Redemption Date by the Trustee from the Outstanding Obligations of such series or maturity within a series which have not previously been called for redemption by such method as the Trustee shall deem fair and appropriate.  In any such selection pursuant to this Section, the Trustee shall make such adjustments, reallocations and eliminations as it shall deem proper to the end that the principal amount of Obligations of such series or maturity within a series so selected shall be equal to the greater of $1,000 and the smallest authorized denomination of the Obligations of such series, or a multiple thereof, by increasing or decreasing or eliminating the amount which would otherwise be allocable to any Holder by an amount not exceeding such minimum.  The Trustee in its discretion may determine the particular Obligations (if there is more than one) registered in the name of any Holder which are to be redeemed, in whole or in part.  In any case where any Obligations of such series are registered in the same name, the Trustee in its discretion may treat the aggregate principal amount so registered as if it were represented by one Obligation of such series.

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The Trustee shall promptly notify the Company in writing of the Obligations selected for redemption and, in the case of any Obligation selected for partial redemption, the principal amount thereof to be redeemed.

For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to the redemption of Obligations shall relate, in the case of any Obligation redeemed or to be redeemed only in part, to the portion of the principal of such Obligation which has been or is to be redeemed.

15.4. Notice of Redemption.

Except as otherwise provided in a Supplemental Indenture, notice of redemption shall be given by first-class mail, postage prepaid, mailed not less than 30 nor more than 60 days prior to the Redemption Date, to each Holder of Obligations of such series to be redeemed, at his address appearing in the Obligation Register.

Except as otherwise provided in a Supplemental Indenture, all notices of redemption shall state:

(a)           the CUSIP number (if any) of all Obligations to be redeemed,

(b)           the Redemption Date,

(c)           the Redemption Price,

(d)           the principal amount of Obligations of each series to be redeemed, and, if less than all Outstanding Obligations of a series are to be redeemed, the identification (and, in the case of partial redemption, the respective principal amounts) of the Obligations of such series to be redeemed,

(e)           that on the Redemption Date the Redemption Price of each of the Obligations to be redeemed will become due and payable and that the interest thereon shall cease to accrue from and after said Redemption Date if the Redemption Price is then paid,

(f)            the place or places where the Obligations of each series to be redeemed are to be surrendered for payment of the Redemption Price, which shall be the office or agency of the Company in each Place of Payment for such series,

(g)           if it be the case, that such Obligations are to be redeemed by the application of certain specified Trust Moneys,

(h)           if it be the case, that such redemption is to satisfy sinking fund requirements,

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(i)             if it be the case that the notice of redemption for such Obligations is conditional and revocable, (i) that the redemption of such Obligations is conditional upon the Company depositing or providing, or causing to be deposited or provided, to the Trustee or the Paying Agent, by 2:00 p.m. New York City time on the redemption date, funds (which, if the Company is the Paying Agent, shall be segregated and held in trust pursuant to Section 14.3) sufficient to effect such redemption, (ii) that if such funds are not so provided, such Obligations will not be redeemed on such date and the notice of the redemption of such Obligations will be of no force or effect, (iii) that the Company is under no obligation to deposit or provide, or cause to be deposited or provided, such funds, and (iv) that neither the Company nor the Trustee shall be liable to any Holder if the Company does not deposit or provide, or cause to be deposited or provided, funds sufficient to effect such redemption with the result that such Obligations are not redeemed on the Redemption Date specified in such notice, and

(j)            if it be the case that the notice of redemption is unconditional and irrevocable, (i) that the Trustee or the Paying Agent has on deposit sufficient funds to effect such redemption (which, if the Company is acting as its own Paying Agent, shall be segregated and held in trust as provided in Section 14.3), and (ii) that such Obligations shall become due and payable at the Redemption Price on the Redemption Date specified in the notice.

Notice of redemption of Obligations to be redeemed at the election of the Company shall be given by the Company or, at the Company’s request, by the Trustee in the name and at the expense of the Company.

15.5. Deposit of Redemption Price.

Neither the Company (if the notice of redemption for such Obligations is conditional and revocable) nor the Trustee shall be liable to any Holder if the Company does not deposit or provide, or cause to be deposited or provided, funds sufficient to effect redemption of any Obligations with the result that such Obligations are not redeemed on the Redemption Date specified in such notices.  If such funds shall not have been so received, the Trustee shall give notice to the Holders, in the manner in which the notice of redemption was given to the Holders, that such funds were not so received.

If, at the time notice of redemption is delivered to the Holders, the Trustee or Paying Agent has on deposit (which, if the Company is acting as its own Paying Agent, is segregated and held in trust as provided in Section 14.3) an amount of money sufficient to pay the Redemption Price of all the Obligations which are to be redeemed on the Redemption Date, then the notice of redemption is unconditional and irrevocable and the Obligations specified in the notice of redemption shall become due and payable at the specified Redemption Price on the specified Redemption Date.  Such money shall be held in trust for the benefit of the Persons entitled to such Redemption Price and shall not be deemed to be part of the Trust Estate or Trust Moneys.

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Subject to the requirements of any Supplemental Indenture, the Company may determine what sinking fund requirements (if any) to apply redeemed Obligations against.

15.6. Obligations Payable on Redemption Date.

Notice of redemption having been given as aforesaid, the Obligations so to be redeemed shall, on the Redemption Date, become due and payable at the Redemption Price therein specified and from and after such date (unless the Company shall default in the payment of the Redemption Price) such Obligations shall cease to bear interest.  Upon surrender of any such Obligation for redemption in accordance with said notice or compliance with such other terms as may be provided in any Supplemental Indenture relating thereto, such Obligation shall be paid by the Company at the Redemption Price.  Installments of interest with a Stated Maturity on or prior to the Redemption Date shall be payable to the Holders of the Obligations registered as such on the relevant Record Dates according to the terms of such Obligations and the provisions of Section 3.9.

If any Obligation called for redemption shall not be so paid upon surrender thereof for redemption or as otherwise provided under Section 15.7 in lieu of surrender, the principal (and premium, if any) shall, until paid, bear interest from the Redemption Date at the rate prescribed therefor in the Obligation.

15.7. Obligations Redeemed in Part.

Unless otherwise provided in any Supplemental Indenture, any Obligation which is to be redeemed only in part shall be surrendered at a Place of Payment therefor (with, if the Company or the Trustee so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Company and the Trustee duly executed by, the Holder thereof or his attorney duly authorized in writing) and the Company shall execute and the Trustee shall authenticate and deliver to the Holder of such Obligation, without service charge, a new Obligation or Obligations of the same series and maturity of any authorized denomination or denominations as requested by such Holder in aggregate principal amount equal to and in exchange for the unredeemed portion of the principal of the Obligation so surrendered.

In lieu of surrender under the preceding paragraph, payment of the Redemption Price of a portion of any Obligation held in the Book-Entry System may be made directly to the Holder thereof without surrender thereof if there shall have been filed with the Trustee either (i) a written agreement between the Company and such Holder and, if such Holder is a nominee, the Person for whom such Holder is a nominee, that payment shall be so made and that such Holder will not sell, transfer or otherwise dispose of such Obligation unless prior to delivery thereof such Holder shall present such Obligation to the Trustee for notation thereon of the portion of the principal thereof redeemed or shall surrender such Obligation in exchange for a new Obligation or Obligations for the unredeemed balance of the principal of the surrendered Obligation or (ii) a certificate of the Company that such an agreement has been entered into and remains in force.

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15.8. Applicability of Sections 15.8 through 15.10.

The provisions of Sections 15.8 through 15.10 shall be applicable to any sinking fund for the retirement of Obligations of a series except as otherwise specified as contemplated by Section 3.3 for Obligations of a particular series.

The minimum amount of any sinking fund payment provided for by the terms of Obligations of any series is herein referred to as a “mandatory sinking fund payment”, and any payment in excess of such minimum amount provided for by the terms of Obligations of any series is herein referred to as an “optional sinking fund payment”.  If provided for by the terms of Obligations of any series, the cash amount of any sinking fund payment may be subject to reduction as provided in Section 15.9.  Each sinking fund payment shall be applied to the redemption of Obligations of any series as provided for by the terms of Obligations of such series.

15.9. Satisfaction of Sinking Fund Payments with Obligations.

The Company (a) may deliver Outstanding Obligations of a series (other than any previously called for redemption) and (b) may apply, as a credit, Obligations of a series which have been redeemed either at the election of the Company pursuant to the terms of such Obligations or through the application of permitted optional sinking fund payments pursuant to the terms of such Obligations, in each case in satisfaction of all or any part of any sinking fund payment with respect to the Obligations of such series required to be made pursuant to the terms of such Obligations as provided for by the terms of such series; PROVIDED that such Obligations have not been previously so credited.  Such Obligations shall be received and credited for such purpose by the Trustee at the Redemption Price specified in such Obligations for redemption through operation of the sinking fund and the amount of such sinking fund payment shall be reduced accordingly.

15.10. Redemption of Obligations for Sinking Fund.

Not less than 60 days prior to each sinking fund payment date for any series of Obligations, the Company will deliver to the Trustee an Officers’ Certificate specifying the amount of the next ensuing sinking fund payment for that series pursuant to the terms of that series, the portion thereof, if any, which is to be satisfied by payment of cash and the portion thereof, if any, which is to be satisfied by delivering and crediting Obligations of that series pursuant to Section 15.9 and will also deliver to the Trustee any Obligations to be so delivered.  Not less than 30 days before each such sinking fund payment date the Trustee shall select the Obligations to be redeemed upon such sinking fund payment date in the manner specified in Section 15.3 and cause notice of the redemption thereof to be given in the name of and at the expense of the Company in the manner provided in Section 15.4.  Such notice having been duly given, the redemption of such Obligations shall be made upon the terms and in the manner stated in Sections 15.6 and  15.7.

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16.  CONTROL OF PLEDGED SECURITIES

16.1. Pledged Securities Deposited With Trustee.

Any Stock and certificates representing the same and any obligations and indebtedness and evidences thereof and any other securities which are at the time deposited with the Trustee or required to be deposited and pledged with the Trustee, except Undesignated Qualifying Securities and Designated Qualifying Securities, are herein sometimes collectively called the “Pledged Securities.”

As and when any Pledged Securities shall come into the possession of the Company or under its control, the Company shall forthwith deposit and pledge the same with the Trustee, together with such proper instruments of assignment and transfer as the Trustee may reasonably require, which shall include express authority to the Trustee to vote any Stock included therein to the extent herein provided or permitted and to cause such authority to be recorded in the entry of transfer of such Stock on the books of the entity issuing the same.

The Trustee shall not be obliged at any time to accept any Pledged Securities or to cause or to permit a transfer thereof to be made to it, if, in the opinion of the Trustee, such action would subject it to the risk of any liability or expense, unless the Trustee shall be indemnified to its satisfaction for so doing.

The Trustee shall not be under any duty to examine into or pass upon the validity or genuineness of any of the Pledged Securities.  The Trustee shall be entitled to assume that any Pledged Securities are genuine and valid and what they purport to be and that any endorsements or assignments thereof are genuine and valid.

16.2. Form of Holding.

The Trustee may hold any Pledged Securities in bearer form or in the name of the Trustee or any nominee or nominees of the Trustee or (unless an Event of Default exists or the Holders of a majority in principal amount of the Obligations then Outstanding otherwise direct) in the name of the Company or any nominee or nominees of the Company, endorsed or assigned in blank or in favor of the Trustee.  The Trustee may deliver any of the Pledged Securities to the Company for a period of not more than 21 days or to the issuer thereof for the purpose of making exchanges or registrations or transfers or for such other purposes in furtherance of this trust as the Trustee may deem advisable.

16.3. Right of Trustee to Preserve Issuers; Directors’ Qualifying Shares.

The Trustee may do whatever in its judgment may be necessary for the purpose of preserving or extending the legal existence of any Person whose Stock is included in the Pledged Securities, but (subject to Section 10.1) it shall be under no duty to take any action in respect thereof.  Upon Company Request stating that the Company has no shares for the purpose under its control other than shares held hereunder, the Trustee shall transfer or permit the Company to transfer as many shares of stock as may be necessary to qualify the requisite number of persons to act as directors of or in any other official relation to the corporation issuing such shares; PROVIDED, HOWEVER, that no such transfer of the stock of any Pledged Subsidiary shall be made which would change the status of the issuing corporation as a Pledged Subsidiary. In every such case the Trustee may make such arrangements as it shall deem necessary for the protection of the trust hereunder in respect of the shares so transferred.  While such shares remain so transferred they shall not be deemed to be Pledged Securities, but when such shares are no longer needed for such qualification purposes they shall immediately be redeposited and repledged and thereupon again become Pledged Securities.

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16.4. Income Before Event of Default.

Unless an Event of Default exists, the Company from time to time shall be entitled to receive and collect for its own use all interest paid on any Pledged Security (other than any such interest which shall have been collected or paid out of the proceeds of any sale or condemnation or expropriation of any property covered by a mortgage or other lien securing such Pledged Security) and all dividends on any Pledged Security which are paid in cash out of the net profits or earned surplus of the issuing corporation accrued since the date of deposit and pledge of such Pledged Security with the Trustee hereunder. The Trustee from time to time shall execute and deliver upon Company Request suitable orders in favor of the Company or its nominee for the payment of such interest and cash dividends and shall deliver upon Company Request any and all coupons held by the Trustee representing such interest as the date of the maturity thereof approaches.  The Trustee shall likewise pay over all sums which are received or collected by it as such interest or cash dividends.  Until actually paid, all rights to such interest or cash dividends shall remain subject to the lien hereof.

The Trustee shall be entitled (subject to Section 10.1) to assume that any cash dividend received by it on any Pledged Security is paid out of the net profits or earned surplus of the issuing corporation accrued since the date of deposit and pledge of such Pledged Security with the Trustee hereunder and that any interest has not been collected or paid out of the proceeds of any such sale or condemnation or expiration, unless and until notified in writing to the contrary by any Holder or the Company or the person making such payment, in which event the Trustee may (subject to Section 10.1) accept an Officers’ Certificate stating any pertinent facts in connection with any such dividend or interest as conclusive evidence of such facts.

16.5. Income After Event of Default.

If an Event of Default exists, in addition to the other remedies herein provided, the Trustee shall collect and receive all interest and dividends on Pledged Securities and shall cancel and revoke all interest and dividend orders in favor of the Company or its nominee.  All money so received by the Trustee which, in the absence of an Event of Default, would be receivable by the Company under Section 16.4, shall be applied in accordance with Section 9.7.

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In every such case, after all Events of Default have been cured, the right of the Company to receive and collect interest and dividends, and the duty of the Trustee with respect thereto, under Section 16.4, shall revive and continue; and the Trustee shall pay over upon Company Request any such interest or dividends received by it which, in the absence of an Event of Default, would be receivable by the Company under Section 16.4 and then remain unexpended in its hands.

16.6. Principal and Other Payments.

In case any sum shall be paid on account of:

(a)            the principal of (or premium, if any, on) any Pledged Security, or

(b)           any dividend upon any Pledged Security other than a cash dividend paid out of the net profits or earned surplus of the issuing corporation accrued since the date of deposit and pledge of such Pledged Security with the Trustee hereunder, or

(c)           the liquidation or dissolution or reduction of capital of the corporation issuing any Pledged Security, or

(d)           interest on any Pledged Security which shall have been collected or paid out of the proceeds of any sale or condemnation or expropriation of any property covered by a mortgage or other lien securing such Pledged Security,

or in case any other distribution (including stock dividends but excluding any dividend excluded by Subsection (b)) shall be made in respect of any Pledged Security, such sum or other distribution shall be paid or delivered to the Trustee to be held as a part of the Trust Estate.

In case the Company or the Trustee shall receive rights to subscribe to additional securities in respect of any Pledged Securities, the Company may exercise or (subject to Section 16.8) sell such rights in its discretion; PROVIDED, HOWEVER, that (i) all securities acquired by exercise of such rights shall forthwith be deposited and pledged with the Trustee hereunder, (ii) all net proceeds from the sale of any such rights shall forthwith be paid to the Trustee, (iii) if the Company shall not have elected to exercise or sell such rights by the fifth business day prior to the expiration thereof, it shall give the Trustee notice thereof and the Trustee shall forthwith sell or, in the event that Section 16.8 is applicable, may exercise such rights in such manner as in its uncontrolled discretion it may deem advisable and (iv) if an Event of Default exists, the Trustee shall be entitled at any time in its discretion to exercise or sell such rights.

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16.7. Voting.

Unless an Event of Default exists, the Company shall have the right to vote and give consents with respect to all Pledged Securities and from time to time, in case any Pledged Securities have been transferred into the name of the Trustee or its nominee or nominees, the Trustee, upon Company Request, shall execute and deliver or cause to be executed and delivered to the Company or its nominee appropriate powers of attorney or proxies to vote such Pledged Securities or to execute a waiver or consent with respect thereto, for such purpose or purposes as may be specified in such request; PROVIDED, HOWEVER, that such right of the Company shall not include (and every such power of attorney or proxy shall be limited, either generally or specifically, to provide in effect that the powers thereby conferred do not include) any power to vote for or to authorize or consent to any act or thing inconsistent with or in avoidance of the Company’s obligations under this Indenture.

If an Event of Default exists, the Trustee may in its discretion, and if requested by the Holders of a majority in principal amount of the Obligations then Outstanding shall, revoke all such powers of attorney and proxies and the Trustee may in its discretion vote and exercise, or cause the nominee or nominees of the Trustee to vote and exercise, all the powers of an owner with respect to any Pledged Securities.  In so voting and exercising the powers of an owner with respect to any Pledged Securities, the Trustee shall not be required to attend any meeting of security holders, but the Trustee may vote or act by power of attorney or proxy and such power of attorney or proxy may be granted to any person selected by the Trustee, including an officer of the Company.  The Trustee may so vote and exercise the powers of an owner with respect to any Pledged Securities for any purpose or purposes which the Trustee, in its discretion, shall deem advisable and in the interest of the Holders, whether or not such action may involve a change in the character of any Pledged Security or in the corporate identity or business of the issuer thereof or in the proportionate interest or voting power represented by such security.  In every such case, after all Events of Default have been cured, the right of the Company to vote and give consents with respect to the Pledged Securities, and the duty of the Trustee to execute powers of attorney and proxies as hereinabove provided, shall revive and continue.

16.8. Limitations on Issuance of Voting Stock or Grant Membership Interests of Pledged Subsidiaries.

The Company will not permit any Pledged Subsidiary to issue any additional shares of Voting Stock, other than stock dividends, unless simultaneously there shall be made effective provision that certificates for all such additional Voting Stock, forthwith upon the issue thereof, will be deposited and pledged with the Trustee; PROVIDED, HOWEVER, that, if the, holders of any stock of such Pledged Subsidiary not then included in the Pledged Securities shall have a preemptive right to subscribe for and purchase their pro rata share of such additional shares of Voting Stock, then such part of such additional shares as shall be actually subscribed for and purchased by such stockholders pursuant to such preemptive right may be issued to them and need not be deposited and pledged with the Trustee.

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16.9. Increase, Reduction or Reclassification of Stock; Dissolution; Consolidation, Etc.

Except as otherwise provided in Article 14 or this Article, the capital stock of any corporation whose shares are included in the Pledged Securities may be increased (subject to Section 16.8) or reduced or reclassified (other than a reclassification resulting in the creation of a preferred stock of any Pledged Subsidiary or a reclassification reducing the proportionate voting power of any Pledged Securities in any corporation) and any such corporation may be dissolved; PROVIDED, HOWEVER, that effective provision shall (to the extent the Company has any control of such matters) be made that, in the case of any such increase, whether by stock dividend or otherwise (subject to Section 16.8), certificates for such part of each class of additional stock as shall be proportionate to the part of the entire issued and outstanding capital stock of such class of such corporation previously deposited and pledged with the Trustee and, in the case of any such reclassification, any distribution in connection therewith shall be deposited and pledged with the Trustee and that, in the case of any such reduction, there shall continue to be deposited and pledged with the Trustee certificates for not less than the same proportion of such class of capital stock deposited and pledged with the Trustee before such reduction. The Trustee may make any exchange, substitution, cancellation or surrender of certificates of stock held by it for the purpose of such increase, reduction, reclassification or dissolution.  Prior to any such cancellation or surrender of stock certificates for the purpose of dissolution, the share, if any, of all the assets of the corporation so dissolved which is distributable in respect of the Pledged Securities (excluding Excepted Property) shall be subjected to the lien of this Indenture.  The Trustee shall be entitled to receive and shall (subject to Section 10.1) be fully protected in relying upon an Officers’ Certificate as to the amount of the share of the assets of any corporation dissolved as aforesaid which is so distributable to the holder of such Pledged Securities.

The deposit and pledge with the Trustee at any time of any shares of stock of any corporation shall not prevent any one or more of the following transactions:

(a)           subject to the provisions of Articles 12 and 14, the merger or consolidation of any Pledged Subsidiary into or with the Company or the conveyance or transfer of all or any of the assets of any Pledged Subsidiary to the Company, or

(b)           the merger or consolidation of any corporation, any of whose shares may be Pledged Securities, into or with any other corporation other than the Company, or the conveyance or transfer of all or any of the assets of any corporation, any of whose shares may be Pledged Securities, to any other corporation other than the Company; PROVIDED, HOWEVER, that no such action involving a Pledged Subsidiary shall be taken unless the corporation resulting from such consolidation, or into which such merger shall be made, or which shall have acquired the assets of a Pledged Subsidiary, shall thereupon be a Pledged Wholly-Owned Subsidiary.

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16.10. Enforcement.

In case default shall be made in the payment of the principal of or interest on any Pledged Security or in the due performance of any covenant contained in any Pledged Security or the instrument securing the same, then and in any such case (without prejudice, however, to any right to claim a default under this Indenture or to assert any right consequent upon such default) the Trustee, upon Company Request, may, in its discretion and upon receipt of indemnity to its satisfaction, cause, or join with other owners of like securities in causing, such proceedings as may be approved by the Trustee to be instituted and prosecuted to collect such principal and interest or enforce the performance of such covenant.  If an Event of Default exists, the Trustee may, and upon the written request of the Holders of a majority in principal amount of the Obligations then Outstanding shall, upon receipt of indemnity to its satisfaction, institute such proceedings without Company Request.

16.11. Acquisition of Property of Issuers of Pledged Securities.

In case, at any time, all or any of the property of any corporation, any of whose securities are at the time Pledged Securities, shall be sold upon insolvency or foreclosure or otherwise, then and in such event, if the property of such corporation or the property sold can be acquired by crediting on any of the Pledged Securities any sum accruing or to be received thereon out of the proceeds of such property, the Trustee in its discretion may, and if requested by Company Request or by the Holders of a majority in principal amount of the Obligations then Outstanding and provided by the Company or such Holders with the amount of any cash necessary therefor shall, purchase such property or cause the same to be purchased, either in the name of the Trustee or the Company or a purchasing trustee or trustees as the Trustee may determine, and shall use or permit the Company or such purchasing trustees to use such Pledged Securities so far as necessary to make payment for such property. In case of any such purchase the Trustee shall take such steps as it may deem proper to cause the property so purchased to be vested in the Company subject to the lien of this Indenture, or in some other corporation organized or to be organized with power to acquire and manage such property, or partly in the Company and partly in such other corporation, as the Company may deem advisable, PROVIDED that all debt of such corporation with a maturity more than one year from date of issuance (except such, if any, as shall represent a lien existing upon the property at the time it was acquired) and certificates for all the capital stock (except directors’ qualifying shares) of such corporation shall be deposited and pledged with the Trustee.  In case the property so sold shall not be purchased in the manner hereinabove in this Section provided, the Trustee shall receive the proceeds of sale accruing on and apportioned to such Pledged Securities and such proceeds shall be held and paid over or applied by the Trustee as provided in Article 7.

16.12. Reorganization.

With Company Consent, the Trustee may join in any plan of voluntary or involuntary reorganization or readjustment or rearrangement in respect of any Pledged Securities and may accept or authorize the acceptance of new securities issued in exchange therefor under any such plan.  If an Event of Default exists, the Trustee shall be entitled to take such steps without Company Consent.

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Any new securities so issued shall be deposited and pledged with the Trustee under this Indenture.  If the Trustee does not join in such plan or reorganization or readjustment or rearrangement, the Trustee shall receive any moneys accruing on or apportioned to such Pledged Securities and such moneys shall be held and paid over or applied by the Trustee as provided in Article 7.

16.13. Renewal and Refunding.

Nothing contained in this Article shall prevent

(a)           the renewal or extension, without impairment of lien or security, at the same or at a lower or higher rate of interest, of any of the obligations or indebtedness of any corporation included in the Pledged Securities, or

(b)           the issue in substitution for any such obligations or indebtedness of other obligations or indebtedness of such corporation for equivalent amounts and of substantially equal or superior rank as to security, if any;

PROVIDED, HOWEVER, that every such obligation or indebtedness as so renewed or extended shall continue to be subject to the lien hereof and every substituted obligation or indebtedness and the evidence thereof shall be deposited and pledged with the Trustee.

Except as otherwise provided in Article 14, unless an Event of Default exists, the Trustee upon receipt of a Company Request shall, and if an Event of Default exists the Trustee may without such Company Request, consent to any such renewal, extension or substitution.

16.14. Expenses.

On demand of the Trustee, the Company forthwith will pay or satisfactorily provide for all expenses incurred by the Trustee under this Article, including all expenditures (except as otherwise provided in Section 16.11) made to acquire the ownership and title to any property which the Trustee shall purchase or shall cause or authorize to be purchased under this Article.  Without impairment of or prejudice to any of its rights hereunder by reason of any default of the Company, the Trustee in its discretion may advance all such expenses and other sums required or may procure such advances to be made by others.  The Company will repay all such advances, with interest thereon at the rate of 10% per annum, and for all such advances the Trustee shall be secured by a lien on the Trust Estate prior to the Obligations.  For the repayment of all such advances the Trustee shall have the right to use and apply any Trust Moneys held by it under Article 7 as part of the Trust Estate.

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16.15. Opinion of Counsel.

The Trustee shall be entitled, before taking any action under this Article, to receive an Opinion of Counsel stating the legal effect of any transaction relating to the Pledged Securities and the steps necessary to be taken to consummate the same and stating also that such action is in compliance with the provisions hereof and will not materially adversely impair the security of the Holders hereunder in contravention of the provisions hereof.  Such Opinion of Counsel shall (subject to Section 10.1) be full protection to the Trustee for any action taken or omitted to be taken by it in reliance thereon.

17.  QUALIFYING SECURITIES; QUALIFYING SECURITIES INDENTURES

17.1. Registration and Ownership of Designated Qualifying Securities.

Designated Qualifying Securities delivered to the Trustee pursuant to Sections 5.5, 5.6, 5.8, 6.2, 7.4 and 17.3 shall be registered in the name of the Trustee or its nominee and shall be owned and held by the Trustee, subject to the provisions of this Indenture, for the benefit of the Holders of all Obligations from time to time Outstanding, and the Company shall have no interest therein.  The Trustee shall be entitled to exercise all rights of security holders under each Qualifying Securities Indenture in its discretion except as otherwise provided in this Article or in Article 9.

17.2. Payments on Qualifying Securities.

Unless an Event of Default shall have occurred and be continuing:

(a)           Any payment of principal of Designated Qualifying Securities shall be applied by the Trustee to the payment of the principal of the Obligations which were authenticated and delivered on the basis of such Qualifying Securities which is then due, and, to the extent of such application, the obligation of the Company to make such payment in respect of such Obligations shall be deemed to have been satisfied and discharged;

(b)           If, at the time of any such payment of principal of Designated Qualifying Securities, the principal then due in respect of the Obligations which were authenticated and delivered on the basis of such Qualifying Securities, if any, shall be less than such payment, the excess of such payment shall constitute Trust Moneys and shall be held by the Trustee as part of the Trust Estate, to be withdrawn, used or applied in the manner, to the extent and for the purposes, and subject to the conditions, provided in Article 7.  Any Outstanding Obligations, which were authenticated and delivered on the basis of Designated Qualifying Securities which have been paid, shall be thereafter deemed not to have been authenticated and delivered on the basis of Designated Qualifying Securities;

(c)           Any payment of premium or interest on Designated Qualifying Securities shall be applied by the Trustee to the payment of premium or interest, as the case may be, on the Obligations which were authenticated and delivered on the basis of such Designated Qualifying Securities, if any, which is then due, and, to the extent of such application, the obligation of the Company to make such payment in respect of such Obligations shall be deemed to have been satisfied and discharged;

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(d)           If, at the time of any such payment of premium or interest on Designated Qualifying Securities, the premium or interest, as the case may be, then due in respect of the Obligations which were authenticated and delivered on the basis of such Designated Qualifying Securities, if any, shall be less than such payment, the excess of such payment shall be remitted to the Company upon receipt by the Trustee of a Company Request requesting the same; and

(e)           Any payment to the Trustee of principal of, or premium or interest on, any Undesignated Qualifying Securities shall be remitted to the Company upon receipt by the Trustee of a Company Request requesting the same.

17.3. Surrender or Redesignation of Designated Qualifying Securities.

(a)           At the time any Obligations of any series, which shall have been authenticated and delivered upon the basis of the issuance and delivery to the Trustee of Designated Qualifying Securities, shall cease to be Outstanding (other than as a result of the application of the proceeds of the payment or redemption of such Designated Qualifying Securities), the Company, by notice to the Trustee, may designate an equal principal amount of such Designated Qualifying Securities as Undesignated Qualifying Securities.  Upon Company Request, the Trustee shall surrender for cancellation any Undesignated Qualifying Securities.

(b)           Upon Company Request and receipt of the opinions required by paragraphs (f) and (g) of Section 5.5, the Trustee shall surrender for cancellation any Designated Qualifying Securities specified in such request in exchange for an equal principal amount of substitute Qualifying Securities, which substitute Qualifying Securities shall comply with Section 5.5(c) (except that, if the Designated Qualifying Securities to be surrendered were delivered other than as the basis for the authentication and delivery of Additional Obligations, the maturity date or dates for such substitute Qualifying Securities may be as determined by the Company) and which the Company shall designate as the basis for such surrender.  Upon receipt of a notice of an event of default under a Qualifying Securities Indenture, the Trustee shall surrender for cancellation all Undesignated Qualifying Securities issued under such Qualifying Securities Indenture.

(c)           Upon receipt of a notice of a meeting of bondholders under a Qualifying Securities Indenture, the Trustee shall surrender for cancellation all Undesignated Qualifying Securities issued under such Qualifying Securities Indenture.  Upon delivery to the Trustee of (i) the relevant documents specified in Subsections (b) through (g), inclusive, of Section 5.2 for delivery whenever requesting the use of Bondable Additions as the basis for the surrender or redesignation of Designated Qualifying Securities, or (ii) the relevant documents and Obligations specified in Subsections (b), (d) and (e) of Section 5.3 for the delivery to the Trustee whenever requesting the use of retired or defeased Obligations or payments on Obligations as the basis for the surrender or redesignation of Designated Qualifying Securities, in each case with such omissions and variations as are appropriate in view of the fact that the Application involves the surrender or redesignation of Designated Qualifying Securities and not the authentication and delivery of Additional Obligations, and in each case together with an Opinion of Counsel stating that all conditions precedent provided for in this Indenture relating to such surrender or redesignation of Qualifying Securities have been complied with, the Trustee shall, upon Company Request surrender to the Company or redesignate Designated Qualifying Securities as Undesignated Qualifying Securities in a principal amount equal to the principal amount of the Obligations that could have been issued on the basis thereof.  Upon receipt by the Trustee of the documents specified in this Section, all Obligations then Outstanding which were authenticated and delivered on the basis of such surrendered or redesignated Qualifying Securities shall thereafter be deemed not to have been authenticated and delivered on the basis of Designated Qualifying Securities.

- 159 -

17.4. No Transfer of Qualifying Securities.

The Trustee shall, as a holder of Qualifying Securities Outstanding under each Qualifying Securities Indenture, attend such meeting or meetings of bondholders under such Qualifying Securities Indenture, or, at its option, deliver its proxy in connection therewith, as relates to matters with respect to which it is entitled to vote or consent.  So long as no Event of Default shall have occurred and be continuing, either at any such meeting or meetings, or otherwise when the consent of the holders of the Qualifying Securities Outstanding under any Qualifying Securities Indenture is sought without a meeting, the Trustee shall vote as holder of such Qualifying Securities, or shall consent with respect thereto.  The Trustee shall vote all Qualifying Securities Outstanding under such Qualifying Securities Indenture then held by it, or consent with respect thereto, as the Trustee reasonably believes will be in the best interests of the Holders; PROVIDED, HOWEVER, that the Trustee shall not so vote in favor of, or so consent to, any amendment or modification of a Qualifying Securities Indenture which, if it were an amendment or modification of this Indenture, would require the consent of Holders, without the prior consent, obtained in the manner prescribed in Section 13.2, of Holders of Securities which would be required under Section 13.2 for such an amendment or modification of this Indenture.

17.5. Reorganization.

With Company Consent, the Trustee may join in any plan of voluntary or involuntary reorganization or readjustment or rearrangement in respect of any Qualifying Securities and may accept or authorize the acceptance of new securities issued in exchange therefor under any such plan.  If an Event of Default exists, the Trustee shall be entitled to take such steps without Company Consent.

- 160 -

Any new securities so issued shall be deposited and pledged with the Trustee under this Indenture.  If the Trustee does not join in such plan or reorganization or readjustment or rearrangement, the Trustee shall receive any moneys accruing on or apportioned to such Qualifying Securities and such moneys shall be held and paid over or applied by the Trustee as provided in Article 7.

*   *   *

This instrument may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument.

- 161 -

IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed as of the day and year first above written.

CHUGACH ELECTRIC ASSOCIATION, INC.,
an Alaska electric cooperative
By:	/s/ Michael R. Cunningham
	Name:	Michael R. Cunningham
	Title:	Sr. Vice President and
		Chief Financial Officer

STATE OF ALASKA	)
	) ss.
THIRD JUDICIAL DISTRICT	)

On this 17th day of January, 2011, before me, a Notary Public in and for the State of Alaska, personally appeared Michael R. Cunningham, to me known to be the Sr. Vice President and Chief Financial Officer of Chugach Electric Association, Inc., the electric cooperative that executed the within and foregoing instrument, and acknowledged said instrument to be the free and voluntary act and deed of said electric cooperative for the uses and purposes therein mentioned and on oath stated that s/he was authorized to execute said instrument on behalf of said electric cooperative.

IN WITNESS WHEREOF, I have hereunto set my hand and official seal the day and year first above written.

Thomas M. Schulman

Print name:

/s/ Thomas M. Schulman

Notary Public in and for the State of Alaska, residing at Anchorage, Alaska

My commission expires:

10-10-11

Second Amended and Restated Indenture of Trustee – Company Signature Page

U.S. BANK NATIONAL ASSOCIATION,
a national banking association,
as Trustee
By:	/s/ Thomas Zrust
	Name:	Thomas Zrust
	Title:	Vice President

STATE OF WASHINGTON	)
	) ss.
COUNTY OF KING	)

On this 14th day of  January, 2011, before me, a Notary Public in and for the State of Washington, personally appeared Thomas Zrust, to me known to be the Vice President of U.S. Bank National Association, the national banking association that executed the within and foregoing instrument, and acknowledged said instrument to be the free and voluntary act and deed of said national banking association for the uses and purposes therein mentioned and on oath stated that s/he was authorized to execute said instrument on behalf of said national banking association.

IN WITNESS WHEREOF, I have hereunto set my hand and official seal the day and year first above written.

/s/ Kim J. Kropp

Print name:

Kim J. Kropp

Notary Public in and for the State of Washington, residing at

Sammamish

My commission expires:

12/19/2011

Second Amended and Restated Indenture of Trustee – Company Signature Page

EXHIBIT A

REAL PROPERTY

Parcel 1:  (460870-1)

Tract S-2, Spenard Lake Tracts, according to the official plat thereof, filed under Plat Number 85-288, Records of the Anchorage Recording District, Third Judicial District, State of Alaska.

Parcel 2:  (460870-2)

C.E.A. Baxter Lake Substation Tract, according to the official plat thereof, filed under Plat Number 92-133, Records of the Anchorage Recording District, Third Judicial District, State of Alaska.

Parcel 3:  (460870-4)

Tracts C and D, Beluga C.E.A. Generation Site Subdivision, according to the official plat thereof, filed under Plat Number 92-124, Records of the Anchorage Recording District, Judicial District, State of Alaska.

Excepting therefrom the subsurface estate but together with all sand and gravel.

Parcel 4:  (460870-5)

Tract B, Beluga C.E.A. Auxiliary Site Subdivision, according to the official plat thereof, filed under Plat Number 89-5, Records of the Anchorage Recording District, Third Judicial District, State of Alaska.

Excepting therefrom the subsurface estate but together with all sand and gravel.

Parcel 5:  (460870-6)

That portion of the Southeast one-quarter (SE) of Section 24, Township 8 North, Range 11 West, Seward Meridian, lying northwesterly of the centerline of the North Kenai Road, as shown on the State of Alaska Department of Public Works, Division of Highway Right-of-Way Plat for the Project No. S0490 (3), Sheet 8 of 10, dated July 1961, as described in the Warranty Deed recorded at Book 208 at Page 189, located in the Kenai Recording District, Third Judicial District, State of Alaska.

Exhibit A - 1

Parcel 6:  (460870-7)

Lot 1-A-1, Century Village Unit No. 3, according to the official plat thereof, filed under Plat Number 75-207, Records of the Anchorage Recording District, Third Judicial District, State of Alaska.

Parcel 7:  (460870-8)

C.E.A. Substation Reserve, according to the official plat thereof, filed under Plat Number 76-160, Records of the Anchorage Recording District, Third Judicial District, State of Alaska.

Parcel 8:  (460870-9)

Lot 6, Block 12, Debarr Vista Subdivision, Seventh Addition, according to the official plat thereof, filed under Plat Number P-242H, Records of the Anchorage Recording District, Third Judicial District, State of Alaska.

Parcel 9:  (460870-10)

Lots 17 and 18, Block 3, Girdwood Townsite, U.S. Survey 1177, according to the official plat thereof, Records of the Anchorage Recording District, Third Judicial District, State of Alaska.

Parcel 10:  (460870-12)

That portion of Government Lot 2, Section 30, Township 12 North, Range 2 West, Seward Meridian, records of the Anchorage Recording District, Third Judicial District, State of Alaska, more particularly described as follows:

Commencing at the Northeast corner of Lot 2, which is the point of beginning; thence West 417.72 feet; thence South 208.71 feet; thence East 417.72 feet; thence North 208.71 feet to the point of beginning.

Exhibit A - 2

Parcel 11:  (460870-13)

Tract A, C.E.A. Hillside Substation Subdivision, according to the official plat thereof, filed under Plat Number 91-8, Records of the Anchorage Recording District, Third Judicial District, State of Alaska.

Excepting therefrom that portion conveyed to the State of Alaska, Department of transportation and Public Facilities by Warranty Deed recorded April 21, 1999 in Book 3458 at Page 879.

Parcel 12:  (460870-14)

Lot 1A-1, Block 1, WEST ADDITION-KNIK HEIGHTS SUBDIVISION, according to the official plat thereof, filed under Plat Number 2010-91, Records of the Anchorage Recording District, Third Judicial District, State of Alaska.

Parcel 13:  (460870-16)

Tract 2, International Industrial Center Subdivision, according to the official plat thereof, filed under Plat Number 69-17, Records of the Anchorage Recording District, Third Judicial District, State of Alaska.

Parcel 14:  (460870-17)

Tract 4, International East, according to the official plat thereof, filed under Plat Number 87-28, Records of the Anchorage Recording District, Third Judicial District, State of Alaska.

Parcel 15:  (460870-19)

Unsubdivided parcel within the Southwest one-quarter of Section 11, Township 12 North, Range 4 West, Seward Meridian, located within the Anchorage Recording District, Third Judicial District, State of Alaska, as set forth and described in that certain Warranty Deed recorded February 25, 1965 in Book 296 at Page 351 and further described as:

Beginning at the Northeast corner of the Northwest quarter of the Southwest quarter (NW1/4 SW1/4) of Section 11, Township 12 North, Range 4 West, Seward Meridian; thence South 30 feet to the true point of beginning; thence, due West 100 feet to a point; thence, due South 65 feet to a point; thence due East 100 feet to a point; thence, due North 65 feet to the true point of beginning.

Exhibit A - 3

Parcel 16:  (460870-20)

Lots 1 and 2, Block 3, Highland Subdivision, according to the official plat thereof, filed under Plat Number P-302, Records of the Anchorage Recording District, Third Judicial District, State of Alaska.

Parcel 17:  (460870-21)

Lot 3A, Block 3, Highland Subdivision, according to the official plat thereof, filed under Plat Number 93-84, Records of the Anchorage Recording District, Third Judicial District, State of Alaska.

Parcel 18:  (460870-22)

Lot E-3B, Campbell Creek Commercial Park, according to the official plat thereof, filed under Plat Number 94-38, Records of the Anchorage Recording District, Third Judicial District, State of Alaska.

Parcel 19:  (460870-23)

Tract A, Spring Forest Subdivision, according to the official plat thereof, filed under Plat Number 76-231, Records of the Anchorage Recording District, Third Judicial District, State of Alaska.

Parcel 20:  (460870-26)

The East 100 feet of the West 200 feet of the North one-half of the Northeast one-quarter of Section 5, Township 13 North, Range 4 West, Seward Meridian, Palmer Recording District, Third Judicial District, State of Alaska, shown as Tract C on that certain Right of Way Dedication Plat entitled Chugach Electric Association Inc. R.O.W. Plat, filed under Plat Number 73-22A, Records of the Palmer Recording District, Third Judicial District, State of Alaska.

Parcel 21:  (460870-27)

The West 200 feet of the South one-half of the Northeast one-quarter (also known as the West 200 feet of Section Lot 2) of Section 5, Township 13 North, Range 4 West, Seward Meridian, Palmer Recording District, Third Judicial District, State of Alaska, shown as Tract A on that certain Right of Way Dedication Plat entitled Chugach Electric Association Inc. R.O.W. Plat, filed under Plat Number 73-22A, Records of the Palmer Recording District, Third Judicial District, State of Alaska.

Exhibit A - 4

Parcel 22:  (460870-28)

The West 100 feet of the North one-half of the Northeast one-quarter of Section 5, Township 13 North, Range 4 West, Seward Meridian, Palmer Recording District, Third Judicial District, State of Alaska, shown as Tract B on that certain Right of Way Dedication Plat entitled Chugach Electric Association Inc. R.O.W. Plat, filed under Plat Number 73-22A, Records of the Palmer Recording District, Third Judicial District, State of Alaska.

Parcel 23:  (460870-29)

A parcel of land within Section 5, Township 13 North, Range 4 West, Seward Meridian, Palmer Recording District, Third Judicial District, State of Alaska, more particularly described as follows:

Beginning at the North quarter corner of Section 5, Township 13 North, Range 4 West, Seward Meridian, Alaska, thence East a distance of 200 feet to a brass cap, which is the true point of beginning; thence East a distance of 200 feet to a second brass cap; thence South 0º08'30" East a distance of 2,011.36 feet to a third brass cap; thence South 89º51'30" West a distance of 200 feet to a fourth brass cap; thence North 0º08'30" West for a distance of 2,011.85 feet to the true point of beginning; being also known as Tract G on that certain Right of Way Dedication Plat entitled Chugach Electric Association Inc. R.O.W. Plat, filed under Plat Number 73-22A, Records of the Palmer Recording District, Third Judicial District, State of Alaska.

Parcel 24:  (460870-30)

The East 100 feet of the West 500 feet of the North one-half of the Northeast quarter; and the East 100 feet of the West 500 feet of the North 528 feet of Government Lot 2 of Section 5, Township 13 North, Range 4 West, Seward Meridian, Palmer Recording District, Third Judicial District, State of Alaska, shown as Tract H on that certain Record of Survey filed under Plat Number 95-21, Records of the Palmer Recording District, Third Judicial District, State of Alaska.

Exhibit A - 5

Parcel 25:  (460870-31; 460870-32; 460870-33; 460870-34)

Parcel No. 2 of Matanuska Susitna Borough Platting Board Waiver Resolution Serial No. 95-6-PWd, as recorded March 8, 1995 in Book 798 at Page 218, and further described as the West 500 feet of the Northeast one-quarter of Section 32, Township 14 North, Range 4 West, Seward Meridian, Palmer Recording District, Third Judicial District, State of Alaska.

Parcel 26:  (460870-36; 460870-37; 460870-38; 460870-39; 460870-40)

Parcel No. 2 of Matanuska Susitna Borough Platting Board Waiver Resolution Serial No. 95-7-PWd, as recorded March 8, 1995 in Book 798 at Page 220, and further described as the West 500 feet of the Southeast one-quarter of Section 32, Township 14 North, Range 4 West, Seward Meridian, Palmer Recording District, Third Judicial District, State of Alaska.

Parcel 27:  (460870-41)

The West 1/2 of the West 1/2 of the Northeast 1/4 of the Northeast 1/4, and the South 1/2 of the East 1/2 of the West 1/2 of the Northeast 1/4 of the Northeast 1/4 of Section 18, Township 12 North, Range 3 West, SEWARD MERIDIAN, Anchorage Recording District, Third Judicial District, State of Alaska;

Excepting that portion of said land lying within the Alaska Railroad right of way.

Parcel 28:  (460870-42)

Lot 2, Block 1, Vans Subdivision, according to the official plat thereof, filed under Plat Number 78-180, Records of the Anchorage Recording District, Third Judicial District, State of Alaska.

Parcel 28A:  (460870-42)

Access Rights as granted in that certain Agreement to Provide Access recorded September 13, 2000 in Book 3737 at Page 124 and amended by instrument recorded October 6, 2004 under Serial Number 2004-075521-0, as it affects the following:

Lot 1, Block 1, VANS SUBDIVISION, according to the official plat thereof, filed under Plat Number 78-180, Records of the Anchorage Recording District, Third Judicial District, State of Alaska.

Exhibit A - 6

Parcel 29:  (460870-43)

Tract 2-B, North Star Subdivision, according to the official plat thereof, filed under Plat Number 71-272, Records of the Anchorage Recording District, Third Judicial District, State of Alaska.

Parcel 30:  (460870-44)

Teeland Substation Tract as described in Matanuska-Susitna Borough Planning Commission Waiver Resolution Serial No. 74-17 filed January 30, 1979 as 79-94W, located in the Northeast one-quarter (NE) of Section 34, Township 17 North, Range 2 West, Seward Meridian, Palmer Recording District, Third Judicial District, State of Alaska.

Parcel 31:  (460870-45)

Lot 28, Block 2, SETTLERS BAY SUBDIVISION UNIT NO. 1, according to the official plat thereof, filed under Plat Number 75-61, Records of the Palmer Recording District, Third Judicial District, State of Alaska.

Parcel 32:  (460870-47)

Lot 24, McRae Homestead, according to the official plat thereof, filed under Plat Number P- 49C, Records of the Anchorage Recording District, Third Judicial District, State of Alaska.

Parcel 33:  (460870-49)

Lots 29N, 30N, 31N, and 32N, Woodland Park Addition, according to the official plat thereof, filed under Plat Number P-61B, Records of the Anchorage Recording District, Third Judicial District, State of Alaska.

Parcel 34:  (460870-11)

Lots 19, 20, and 21, Block 3, GIRDWOOD TOWNSITE, U.S. SURVEY 1177, according to the official plat thereof, Records of the Anchorage Recording District, Third Judicial District, State of Alaska.

Permitted Exceptions

Exhibit A - 7

(Affects Parcel 1, File Number 460870-1)

1. Reservations or exceptions in patents or in acts authorizing the issuance thereof.

2. Taxes due the Municipality of Anchorage are EXEMPT for 2010.

Tax Account No.: 010-301-15-000

3. Permit for Underground Telephone Cable including the terms and provisions thereof:

Dated: June 30, 1966

Recorded: July 22, 1966, Miscellaneous Book 129 at Page 345

Executed by: United States Department of the Interior, acting through the Alaska Rail and the City of Anchorage

4. Easements as dedicated and shown on the plat of said subdivision.

5. Slope easements as dedicated and reserved on the plat of said subdivision as follows; 

"There shall be reserved adjacent to the dedicated streets shown hereon a slope reservation easement sufficient to contain cut and fill slopes of 1.5 feet horizontal for each 1 foot vertical (1.5 to 1) of cut or fill for the purpose of providing and maintaining the lateral support of the constructed streets.  There is reserved to the grantors, their successors and assigns, the right to use such areas at any time upon providing and maintaining other adequate lateral support, as approved by the Municipality."

6. The effect of the notes which appear on the plat of said subdivision.

7. Memorandum of Understanding, including the terms and provisions thereof: 

Dated: March 15, 2001

Recorded: March 20, 2001, Book 3792 Page 160

Executed By: State of Alaska, Department of Transportation and Chugach Electric Association, Inc.

8. [Intentionally deleted.]

9. [Intentionally deleted.]

(Affects Parcel 2, File Number 460870-2)

10. Reservations or exceptions in patents or in acts authorizing the issuance thereof.

Exhibit A - 8

11. Taxes due the Municipality of Anchorage are EXEMPT for 2010.

Tax Account No: 007-172-83-000

12. Reservation of section line easement 33 feet in width along each side of section line as provided by 43 USC 932 and reenacted by 1721 CLA 1933.

Affects: East 3 feet

13. Right of Way Easement, including the terms and provisions thereof, granted to Chugach Electric Association, Inc., and its assigns and/or successors in interest, to construct, operate and maintain an electric transmission and/or telephone distribution line or system by instrument

Recorded: August 6, 1952

Recording Information: Book 76 Page 370

Affects: Blanket Easement

14. Right of Way Easement, including the terms and provisions thereof, granted to Chugach Electric Association, Inc., and its assigns and/or successors in interest, to construct, operate and maintain an electric transmission and/or telephone distribution line or system by instrument

Recorded: September 3, 1952

Recording Information: Book 78 Page 190

Affects: Blanket Easement

15. Contract and Grant of Easement, including terms and provisions contained therein:

Recording Information: November 5, 1953 

In Favor of: United States of America 

For Electric transmission lines and appurtenances thereto 

Affects: Portion along the North boundary as set forth in said instrument 

Assignment and Transfer of Easement, including the terms and provisions thereof, from the United States of America to the Municipality of Anchorage, doing business as Municipal Light and Power, the Chugach Electric Association, Inc., and the Matanuska Electric Association, Inc., collectively referred to as Eklutna Partners, by instrument recorded October 2, 1997 in Book 3133 at Page 538.

16. Easement, including terms and provisions contained therein:

Recording Information: July 14, 1982 

In Favor of: State of Alaska, Department of Transportation and Public Facilities 

For: Underground utilities and appurtenances thereto 

Affects: Portion along the North boundary as set forth in said instrument 

Exhibit A - 9

17. Right of Way Easement, including the terms and provisions thereof, granted to Chugach Electric Association, Inc., and its assigns and/or successors in interest, to construct, operate and maintain an electric transmission and/or telephone distribution line or system by instrument

Recorded: February 7, 1986

Recording Information: Book 1382 Page 787

Affects: Blanket Easement

18. Notice of Zoning Action, including the terms and provisions thereof: 

Recorded: September 10, 1992, Book 2315 Page 23

Executed by: Municipality of Anchorage

19. Easements as dedicated and shown on the plat of said subdivision. 

20. Slope easements as dedicated and reserved on the plat of said subdivision as follows;

"There shall be reserved adjacent to the dedicated streets shown hereon a slope reservation easement sufficient to contain cut and fill slopes of 1.5 feet horizontal for each 1 foot vertical (1.5 to 1) of cut or fill for the purpose of providing and maintaining the lateral support of the constructed streets.  There is reserved to the grantors, their successors and assigns, the right to use such areas at any time upon providing and maintaining other adequate lateral support, as approved by the Municipality."

21. The effect of the notes which appear on the plat of said subdivision.

22. Memorandum of Understanding, including the terms and provisions thereof:

Dated: March 15, 2001

Recorded: March 20, 2001, Book 3792 Page 160

Executed by: State of Alaska, Department of Transportation and Chugach Electric Association, Inc.

23. [Intentionally deleted.]

24. [Intentionally deleted.]

Exhibit A - 10

(Affects Parcel 3, File Number 460870-4)

25. Terms, reservations, conditions and provisions contained in the interim conveyance from the United States of America as herein noted,

Recorded: February 7, 1979

Recording Information: Book 377 Page 871

And Re-Recorded: March 16, 1984

Recording Information: Book 1065 Page 244

26. The terms, covenants, conditions and provisions, including rights-of-way and easements as contained in the Alaska Native Claims Settlement Act, dated December 18, 1971, U.S. Public Law 92-203, 85 Stat. 688, 43 U.S.C.A. 1601, et seq.

27. Reservation of the subsurface estate in said land including, but not limited to, rights of entry to explore, develop or remove minerals from said subsurface estate, as set forth in Sections 14(f) and 14(g) of the Alaska Native Claims Settlement Act referred to hereinabove. 

NOTE: No assurance is given as to the vertical delineation of the surface and subsurface estates in said land as provided in said act.

28. Taxes due the Kenai Peninsula Borough are EXEMPT for 2010.

Tax Account No: 20129039 (Tract C)

Tax Account No: 20129038 (Tract D)

29. Rights of the public and of governmental bodies in and to that portion of the premises herein described lying below the high water mark of unnamed creek.

30. Any prohibition or limitation on the use, occupancy or improvements of the land resulting from the right of the public or riparian owners to use any waters which may cover the land or to use any portion of the land which is now or may formerly have been covered by water.

31. Reservation of section line easement 50 feet in width along each side of section line as provided by A.S. 19.10.010.

32. Indemnification Agreement and the terms and conditions thereof:

Between: Cook Inlet Region, Inc.

And: Chugach Electric Association, Inc.

Recording Information: May 18, 1990, Book 2032 Page 466

33. Easement, including terms and provisions contained therein:

Recording Information: January 28, 1992, Book 2234 Page 627 

In Favor of: Marathon Oil Company 

For: Utility right of way and easement for a buried natural gas pipeline 

Affects: 50 feet in width as set forth in said instrument 

Exhibit A - 11

The interest of Marathon Oil Company was assigned to Beluga Pipe Line Company by instrument recorded September 8, 1993 in Book 2491 at Page 995.

34. Right-of-Way Lease, including terms and provisions contained therein:

Recording Information: June 12, 1992, Book 2283 Page 199 

In Favor of: Marathon Oil Company 

For: Construction, operation, maintenance and termination of a natural gas pipeline 

Affects: 50 feet in width as set forth in said instrument 

The interest of Marathon Oil Company was assigned to Beluga Pipe Line Company by instrument recorded September 8, 1993 in Book 2491 at Page 995.

35. Easements as dedicated and shown on the plat of said subdivision. 

36. The effect of the notes which appear on the plat of said subdivision.

37. Memorandum of Understanding, including the terms and provisions thereof:

Dated: March 15, 2001

Recorded: March 20, 2001, Book 3792 Page 160

Executed by: State of Alaska, Department of Transportation and Chugach Electric Association, Inc.

38. [Intentionally deleted.]

39. [Intentionally deleted.]

(Affects Parcel 4, File Number 460870-5)

40. Terms, reservations, conditions and provisions contained in the interim conveyance from the United States of America as herein noted,

Recorded: February 7, 1979

Recording Information: Book 377 Page 871

And Re-Recorded: March 16, 1984

Recording Information: Book 1065 Page 244

Exhibit A - 12

41. The terms, covenants, conditions and provisions, including rights-of-way and easements as contained in the Alaska Native Claims Settlement Act, dated December 18, 1971, U.S. Public Law 92-203, 85 Stat. 688, 43 U.S.C.A. 1601, et seq.

42. Reservation of the subsurface estate in said land including, but not limited to, rights of entry to explore, develop or remove minerals from said subsurface estate, as set forth in Sections 14(f) and 14(g) of the Alaska Native Claims Settlement Act referred to hereinabove.

NOTE: No assurance is given as to the vertical delineation of the surface and subsurface estates in said land as provided in said act.

43. Taxes due the Kenai Peninsula Borough are EXEMPT for 2010.

Tax Account No.: 20129031

44. Rights of the public and/or governmental agencies in and to any portion of the above described real property lying within any roadway or public easement areas.

45. Reservation of section line easement 50 feet in width along each side of section line as provided by A.S. 19.10.010.

46. Indemnification Agreement and the terms and conditions thereof:

Between: Cook Inlet Region, Inc.

And: Chugach Electric Association, Inc.

Recording Information: June 19, 1989, Book 1914 Page 725

47. Right of Way Easement, including the terms and provisions thereof, granted to Matanuska Telephone Association, Inc. , and its assigns and/or successors in interest, to construct, operate and maintain an electric transmission and/or telephone distribution line or system by instrument

Recorded: November 21, 1991

Recording Information: Book 2214 Page 483

Affects: A strip of land ten (10) feet in width. (exact location not defined of record)

48. Easements as dedicated and shown on the plat of said subdivision.

49. The effect of the notes which appear on the plat of said subdivision.

50. Memorandum of Understanding, including the terms and provisions thereof:

Dated: March 15, 2001

Recorded: March 20, 2001, Book 3792 Page 160

Executed by: State of Alaska, Department of Transportation and Chugach Electric Association, Inc.

Exhibit A - 13

51. [Intentionally deleted.]

52. [Intentionally deleted.]

(Affects Parcel 5, File Number 460870-6)

53. Reservations or exceptions in patents or in acts authorizing the issuance thereof.

Said patent, among other things, reserves all oil, gas and other minerals together with the privileges, mining and drilling rights and immunities.

54. Taxes due the Municipality of Anchorage are EXEMPT for 2010.

Tax Account No.: 20129031

55. Right of Way Easement, including the terms and provisions thereof, granted to Homer Electric Association, Inc., and it's assigns and/or successor's in interest, to construct, operate and maintain an electric transmission and/or telephone distribution line or system by instrument

Recorded: June 5, 1968

Recording Information: Book 31 Page 161

Affects: Blanket Easement

Exhibit A - 14

56. Right of Way Grant to Nikiski Alaska Pipeline Company including the terms and provisions thereof:

Dated: March 10, 1976

Recorded: March 25, 1976, Book 93 Page 710

Executed by: Price Lake Associates, a Partnership

57. Easements, building setback lines, notes and dedications, as set forth and delineated on the face of the plat of Bernice Lake Repeater Site, according to Plat No. 85-115.

58. [Intentionally deleted.]

59. [Intentionally deleted.]

(Affects Parcel 6, File Number 460870-7)

60. Reservations or exceptions in patents or in acts authorizing the issuance thereof.

61. Taxes due the Municipality of Anchorage are EXEMPT for 2010.

Tax Account No.: 007-201-86-000

62. Right of Way Easement, including the terms and provisions thereof, granted to Chugach Electric Association, Inc., and its assigns and/or successors in interest, to construct, operate and maintain an electric transmission and/or telephone distribution line or system by instrument

Recorded: July 23, 1952

Recording Information: Book 75 Page 350

Affects: Blanket Easement

63. Easements as dedicated and shown on the plat of said subdivision. 

64. Slope easements as dedicated and reserved on the plat of said subdivision as follows;

 "There shall be reserved adjacent to the dedicated streets shown hereon a slope reservation easement sufficient to contain cut and fill slopes of 1.5 feet horizontal for each 1 foot vertical (1.5 to 1) of cut or fill for the purpose of providing and maintaining the lateral support of the constructed streets.  There is reserved to the grantors, their successors and assigns, the right to use such areas at any time upon providing and maintaining other adequate lateral support, as approved by the Municipality."

65. The effect of the notes which appear on the plat of said subdivision.

66. Covenants, conditions and restrictions, as shown on the Plat of said subdivision.

Exhibit A - 15

67. Right-of-Way Agreement and the terms and conditions thereof:

Between: State of Alaska, Department of Natural Resources

And: Chugach Electric Association

Recording Information: April 24, 2000, Book 3622 Page 974

68. Memorandum of Understanding, including the terms and provisions thereof:

Dated: March 15, 2001

Recorded: March 20, 2001, Book 3792 Page 160

Executed by: State of Alaska, Department of Transportation and Chugach Electric Association, Inc.

69. [Intentionally deleted.]

70. [Intentionally deleted.]

(Affects Parcel 7, File Number 460870-8)

71. Reservations or exceptions in patents or in acts authorizing the issuance thereof.

72. Taxes due the Municipality of Anchorage are EXEMPT for 2010.

Tax Account No.: 012-531-03-000

73. Right of Way Easement, including the terms and provisions thereof, granted to Chugach Electric Association, Inc., and its assigns and/or successors in interest, to construct, operate and maintain an electric transmission and/or telephone distribution line or system by instrument

Recorded: July 25, 1952

Recording Information: Book 76 Page 95

Affects: Blanket Easement

74. Reservation of all oil, gas and mineral rights as reserved in an instrument

Recorded: May 24, 1965

Recording Information: Book 302 Page 212

Exhibit A - 16

75. Covenants, conditions and restrictions, including terms and provisions thereof, as set forth or referred to in the deed but deleting any covenant, condition or restriction indicating a preference, limitation or discrimination based on race, color, religion, sex, handicap, familial status, or national origin to the extent such covenants, conditions or restrictions violate 42 U.S.C. 3604(c):

Recorded: May 24, 1965

Recording Information: Book 302 Page 212 

76. Reservation of all oil, gas and mineral rights as reserved in an instrument

Recorded: July 17, 1968

Recording Information: Book 368 Page 172

Note: Title to the mineral estate, as it pertains to said oil, gas and mineral rights, has not been further searched and assurance thereto is not covered under this Policy.

77. Right of Way Easement, including the terms and provisions thereof, granted to Chugach Electric Association, Inc., and its assigns and/or successors in interest, to construct, operate and maintain an electric transmission and/or telephone distribution line or system by instrument

Recorded: June 3, 1976

Recording Information: Book 105 Page 891

Affects: The West 20 feet of the East 62 feet

78. Easements as dedicated and shown on the plat of said subdivision. 

79. Slope easements as dedicated and reserved on the plat of said subdivision as follows;

"There shall be reserved adjacent to the dedicated streets shown hereon a slope reservation easement sufficient to contain cut and fill slopes of 1.5 feet horizontal for each 1 foot vertical (1.5 to 1) of cut or fill for the purpose of providing and maintaining the lateral support of the constructed streets.  There is reserved to the grantors, their successors and assigns, the right to use such areas at any time upon providing and maintaining other adequate lateral support, as approved by the Municipality."

80. The effect of the notes which appear on the plat of said subdivision.

Exhibit A - 17

81. Memorandum of Understanding, including the terms and provisions thereof:

Dated: March 15, 2001

Recorded: March 20, 2001, Book 3792 Page 160

Executed by: State of Alaska, Department of Transportation and Chugach Electric Association, Inc.

82. [Intentionally deleted.]

83. [Intentionally deleted.]

(Affects Parcel 8, File Number 460870-9)

84. Reservations or exceptions in patents or in acts authorizing the issuance thereof.

85. Taxes due the Municipality of Anchorage are EXEMPT for 2010.

Tax Account No.: 006-143-28-000

86. Reservation of section line easement 33 feet in width along each side of section line as provided by 43 USC 932 and reenacted by 1721 CLA 1933. 

Affects: East 3 feet

87. Right of Way Easement, including the terms and provisions thereof, granted to Chugach Electric Association, Inc., and its assigns and/or successors in interest, to construct, operate and maintain an electric transmission and/or telephone distribution line or system by instrument 

Recorded: February 11, 1952

Recording Information: Book 67 Page 377

Affects: Blanket Easement

88. Right of Way Easement, including the terms and provisions thereof, granted to Chugach Electric Association, Inc., and its assigns and/or successors in interest, to construct, operate and maintain an electric transmission and/or telephone distribution line or system by instrument 

Recorded: July 14, 1952

Recording Information: Book 75 Page 134

Affects: Blanket Easement

89. Easements as dedicated and shown on the plat of said subdivision.

90. The effect of the notes which appear on the plat of said subdivision.

91. Covenants, conditions and restrictions, as shown on the Plat of said subdivision.

Exhibit A - 18

92. Memorandum of Understanding, including the terms and provisions thereof: 

Dated: March 15, 2001

Recorded: March 20, 2001, Book 3792 Page 160

Executed by: State of Alaska, Department of Transportation and Chugach Electric Association, Inc.

93. [Intentionally deleted.]

94. [Intentionally deleted.]

(Affects Parcel 9, File Number 460870-10)

95. Reservations or exceptions in patents or in acts authorizing the issuance thereof.

96. Taxes due the Municipality of Anchorage are EXEMPT for 2010.

Tax Account No.: 075-153-40-000 (Lot 17)

Tax Account No.: 075-153-41-000 (Lot 18)

97. Memorandum of Understanding, including the terms and provisions thereof: 

Dated: March 15, 2001

Recorded: March 20, 2001, Book 3792 Page 160

Executed by: State of Alaska, Department of Administration and Chugach Electric Association, Inc.

98. Resolution No. 2000-111 (S) for Sanitary Sewer Improvements in Old Girdwood Lateral Sewer Special Improvement District Special Assessment District Number (LID) 60-9, including the terms, provisions and assessments therein, 

Recorded: April 23, 2001

Recording Information: Book 3818 Page 491

99. [Intentionally deleted.]

100. [Intentionally deleted.]

(Affects Parcel 10, File Number 460870-12)

101. Reservations or exceptions in patents or in acts authorizing the issuance thereof.

102. Taxes due the Municipality of Anchorage are EXEMPT for 2010.

Tax Account No.: 021-011-12-000

Exhibit A - 19

103. Matters as shown on Record of Survey according to Plat No. 2008-39.

104. Memorandum of Understanding including the terms and provisions thereof:

Dated: March 15, 2001

Recorded: March 20, 2001, Book 3792 Page 160

Executed by: State of Alaska, Department of Administration and Chugach Electric Association, Inc.

105. [Intentionally deleted.]

106. [Intentionally deleted.]

(Affects Parcel 11, File Number 460870-13)

107. Reservations or exceptions in patents or in acts authorizing the issuance thereof.

108. Taxes due the Municipality of Anchorage are EXEMPT for 2010.

Tax Account No.: 017-112-99-000

109. Right of Way Easement, including the terms and provisions thereof, granted to Chugach Electric Association, Inc., and its assigns and/or successors in interest, to construct, operate and maintain an electric transmission and/or telephone distribution line or system by instrument

Recorded: September 15, 1963

Recording Information: Book 96 Page 35

Affects: Blanket Easement

110. Right of Way Easement, including the terms and provisions thereof, granted to Chugach Electric Association, Inc., and its assigns and/or successors in interest, to construct, operate and maintain an electric transmission and/or telephone distribution line or system by instrument

Recorded: May 3, 1965

Recording Information: Misc. Book 103 Page 143

Affects: West 10 feet of former Lot 7, Fairmont Subdivision (now within Tract A)

Exhibit A - 20

111. Notice of Zoning Action, including the terms and provisions thereof:

Dated: October 30, 1989

Recorded: November 8, 1989, Book 1966 Page 310

Executed by: Anchorage Municipal Planning and Zoning Commission

112. Easements as dedicated and shown on the plat of said subdivision. 

113. Slope easements as dedicated and reserved on the plat of said subdivision as follows;

"There shall be reserved adjacent to the dedicated streets shown hereon a slope reservation easement sufficient to contain cut and fill slopes of 1.5 feet horizontal for each 1 foot vertical (1.5 to 1) of cut or fill for the purpose of providing and maintaining the lateral support of the constructed streets.  There is reserved to the grantors, their successors and assigns, the right to use such areas at any time upon providing and maintaining other adequate lateral support, as approved by the Municipality."

114. The effect of the notes which appear on the plat of said subdivision. 

115. Memorandum of Understanding, including the terms and provisions thereof:

Dated: March 15, 2001

Recorded: March 20, 2001, Book 3792 Page 160

Executed by: State of Alaska, Department of Administration and Chugach Electric Association, Inc.

116. [Intentionally deleted.]

117. [Intentionally deleted.]

(Affects Parcel 12, File Number 460870-14)

118. Reservations or exceptions in patents or in acts authorizing the issuance thereof.

119. Taxes due the Municipality of Anchorage are EXEMPT for 2010.

Tax Account No.: 017-035-20-000

Exhibit A - 21

120. Right of Way Easement, including the terms and provisions thereof, granted to Chugach Electric Association, Inc., and its assigns and/or successors in interest, to construct, operate and maintain an electric transmission and/or telephone distribution line or system by instrument

Recorded: March 3, 1958

Recording Information: Book E3 Page 167

Affects: Blanket Easement

121. Covenants, conditions, restrictions and/or easements; but deleting any covenant, condition or restriction indicating a preference, limitation or discrimination based on race, color, religion, sex, handicap, family status, or national origin to the extent such covenants, conditions or restrictions violate Title 42, Section 3604(c), of the United States Codes:

Recording Information: July 22, 1958, Book M4 Page 27

122. Easement, including terms and provisions contained therein:

Recording Information: July 13, 1960, Misc. Book 15 Page 120 

In Favor of: Alaska Pipeline Company 

For: Right of way for pipelines and appurtenances thereto 

Affects: Exact location not defined of record 

Said easement has been assigned to Alaska Gas and Service Company, Division of Alaska Interstate Company by assignment recorded February 29, 1972 in Misc. Book 207 at Page 201.

123. Easements as dedicated and shown on the plat of said subdivision. 

124.           Slope easements as dedicated and reserved on the plat of said subdivision as follows;

"There shall be reserved adjacent to the dedicated streets shown hereon a slope reservation easement sufficient to contain cut and fill slopes of 1.5 feet horizontal for each 1 foot vertical (1.5 to 1) of cut or fill for the purpose of providing and maintaining the lateral support of the constructed streets. There is reserved to the grantors, their successors and assigns, the right to use such areas at any time upon providing and maintaining other adequate lateral support, as approved by the Municipality."

125. The effect of the notes which appear on the plat of said subdivision.

Exhibit A - 22

126. Notice of Zoning Action, including the terms and provisions thereof:

Dated: May 26, 1992

Recorded: September 4, 1992, Book 2313 Page 307

Executed by: Municipality of Anchorage Planning and Zoning Commission

127. Memorandum of Understanding, including the terms and provisions thereof:

Dated: March 15, 2001

Recorded: March 20, 2001, Book 3792 Page 160

Executed by: State of Alaska, Department of Administration and Chugach Electric Association, Inc.

128. [Intentionally deleted.]

129. [Intentionally deleted.]

(Affects Parcel 13, File Number 460870-16)

130. Reservations or exceptions in patents or in acts authorizing the issuance thereof.

131. Taxes due the Municipality of Anchorage are EXEMPT for 2010.

Tax Account No.: 010-351-02-000

132. Reservation of section line easement 33 feet in width along each side of section line as provided by 43 USC 932 and reenacted by 1721 CLA 1933.

133. Right of Way Easement, including the terms and provisions thereof, granted to Chugach Electric Association, Inc., and its assigns and/or successors in interest, to construct, operate and maintain an electric transmission and/or telephone distribution line or system by instrument

Recorded: July 3, 1952

Recording Information: Book 74 Page 326

Affects: Blanket Easement

Exhibit A - 23

134. Right of Way Easement, including the terms and provisions thereof, granted to City of Anchorage, and its assigns and/or successors in interest, to construct, operate and maintain an electric transmission and/or telephone distribution line or system by instrument

Recorded: July 27, 1966

Recording Information: Misc. Book 130 Page 69

Affects: Portion along the Westerly boundary as set forth in said instrument

135. The effect of the notes which appear on the plat of said subdivision.

136. Easement, including terms and provisions contained therein:

Recording Information: November 5, 1973, Misc. Book 220 Page 662 

In Favor of: Greater Anchorage Area Borough 

For: Public use 

Affects: Northerly 30 feet 

137. Easement, including terms and provisions contained therein:

Recording Information: June 12, 1978, Book 305 Page 240 

In Favor of: Alaska Pipeline Company, a subsidiary of Alaska Interstate Company 

For: Right-of-way for pipelines and appurtenances thereto 

Affects: West 10 feet 

138. Easement, including terms and provisions contained therein:

Recording Information: November 22, 1978, Book 357 Page 406 

In Favor of: Anchorage, a municipal corporation 

For: Public right-of-way 

Affects: South 25 feet of the East 896 feet 

139. Easement, including terms and provisions contained therein:

Recording Information: December 16, 1988, Book 1833 Page 251 

In Favor of: ENSTAR Natural Gas Company 

For: Right-of-way for pipelines and appurtenances thereto 

Affects: A strip of land 10 feet in width as set forth in said instrument 

Exhibit A - 24

140. Memorandum of Understanding, including the terms and provisions thereof:

Dated: March 15, 2001

Recorded: March 20, 2001, Book 3792 Page 160

Executed by: State of Alaska, Department of Administration and Chugach Electric Association, Inc.

141. [Intentionally deleted.]

142. [Intentionally deleted.]

(Affects Parcel 14, File Number 460870-17)

143. Reservations or exceptions in patents or in acts authorizing the issuance thereof.

144. Reservations and exceptions as contained in the State of Alaska Patent, as recorded February 19, 1979 in Book 461 at Page 649.

Amended by instrument recorded December 7, 2004 under Serial Number 2004-090755-0

145. Taxes due the Municipality of Anchorage are EXEMPT for 2010.

Tax Account No.: 010-531-02-000

146. Reservation of section line easement 50 feet in width along each side of section line as provided by A.S. 19.10.010.

147. Easements as dedicated and shown on the plat of said subdivision. 

148. Slope easements as dedicated and reserved on the plat of said subdivision as follows;

"There shall be reserved adjacent to the dedicated streets shown hereon a slope reservation easement sufficient to contain cut and fill slopes of 1.5 feet horizontal for each 1 foot vertical (1.5 to 1) of cut or fill for the purpose of providing and maintaining the lateral support of the constructed streets.  There is reserved to the grantors, their successors and assigns, the right to use such areas at any time upon providing and maintaining other adequate lateral support, as approved by the Municipality."

149. The effect of the notes which appear on the plat of said subdivision. 

Exhibit A - 25

150. Memorandum of Understanding including the terms and provisions thereof:

Dated: March 15, 2001

Recorded: March 20, 2001 in Book 3792 at Page 160

Executed by: The State of Alaska Department of Administration and Chugach Electric Association, Inc.

151. [Intentionally deleted.]

152. [Intentionally deleted.]

(Affects Parcel 15, File Number 460870-19)

153. Reservations or exceptions in patents or in acts authorizing the issuance thereof.

154. Taxes due the Municipality of Anchorage are EXEMPT for 2010.

Tax Account No: 012-272-05-000

155. Right of Way Easement, including the terms and provisions thereof, granted to Chugach Electric Association, Inc., and its assigns and/or successors in interest, to construct, operate and maintain an electric transmission and/or telephone distribution line or system by instrument

Recorded: December 12, 1955

Recording Information: Book 126 at page 58

Affects: Blanket Easement

156. Reservation of all rights to sub-surface minerals, oil, and gas oil, gas and mineral rights as reserved in an instrument

Recorded: February 25, 1965

Recording Information: Book 269 at Page 351

157. Easement, including terms and provisions contained therein:

Recording Information: November 2, 1966 in Misc. Book 135 at Page 171 

In Favor of: the City of Anchorage 

For: telephone system 

Affects: The North 5 feet 

Exhibit A - 26

158. Memorandum of Understanding, including the terms and provisions thereof:

Dated: March 15, 2001

Recorded: March 20, 2001 in Book 3792 at Page 160

Executed by: State of Alaska, Department of Administration and Chugach Electric Association, Inc.

159. [Intentionally deleted.]

160. [Intentionally deleted.]

(Affects Parcel 16, File Number 460870-20)

161. Reservations or exceptions in patents or in acts authorizing the issuance thereof.

162. Taxes due the Municipality of Anchorage are EXEMPT for 2010.

Tax Account No.: 016-161-35-000 (Lot 1)

Tax Account No.: 016-161-34-000 (Lot 2)

163. Right of Way Easement, including the terms and provisions thereof, granted to Chugach Electric Association, Inc., and its assigns and/or successors in interest, to construct, operate and maintain an electric transmission and/or telephone distribution line or system by instrument

Recorded: July 1962

Recording Information: Book 75, Page 186

Affects: Blanket Easement

164. Easement, including terms and provisions contained therein:

Recording Information: June 5, 1986 in Book 1433, Page 379 

In Favor of: Anchorage, a municipal corporation 

For: Trail and walkway easement 

Affects: The North 15 feet of Lot 1 and a portion of Lot 2 more particularly described as follows: 

Commencing at the northeast (NE) corner of said Lot 2 Block 3, Highland Subdivision; thence S 0º 08' 00" W, along the easterly property line of said Lot 2, a distance of Fifteen Feet (15'); thence S 89º 53' 00" W, a distance of 40.28 feet, to a point; thence S 60º 00' 00" W a distance of 40.14 feet, to a point on the westerly property line of said lot 2; thence N 0º 08'00" E, along the westerly property line of said Lot 2 a distance of 35 feet; thence N 89º 53' 00" E. along the northerly property line of said Lot 2, a distance of 75 Feet to the true point of beginning.

Exhibit A - 27

165. Memorandum of Understanding, including the terms and provisions thereof:

Dated: March 15, 2001

Recorded: March 20, 2001, Book 3792 Page 160

Executed by: State of Alaska, Department of Administration and Chugach Electric Association, Inc.

166. Easement, including terms and provisions contained therein:

Recording Information: August 5, 2009, Serial Number 2009-052062-0 

In Favor of: ENSTAR Natural Gas Company 

For: Gas Pipelines and appurtenances thereto 

Affects: North 10 Feet of Lot 1 and Lot 2 

167. [Intentionally deleted.]

168. [Intentionally deleted.]

(Affects Parcel 17, File Number 460870-21)

169. Reservations or exceptions in patents or in acts authorizing the issuance thereof.

170. Taxes due the Municipality of Anchorage are EXEMPT for 2010.

Tax Account No.: 016-161-55-000

171. Right of Way Easement, including the terms and provisions thereof, granted to Chugach Electric Association, Inc., and its assigns and/or successors in interest, to construct, operate and maintain an electric transmission and/or telephone distribution line or system by instrument

Recorded: July 16, 1952

Recording Information: Book 75 at Page 186

Affects: Blanket Easement

172. Easement, including terms and provisions contained therein:

Recording Information: July 19, 1985 in Book 1295 at Page 758 

In Favor of: Anchorage, a municipal corporation 

For: Right of way and easement 

Affects: the Northerly 30 feet as set forth therein 

173. The effect of the notes which appear on the plat of said subdivision. 

174. Slope easements as dedicated and reserved on the plat of said subdivision as follows;

"There shall be reserved adjacent to the dedicated streets shown hereon a slope reservation easement sufficient to contain cut and fill slopes of 1.5 feet horizontal for each 1 foot vertical (1.5 to 1) of cut or fill for the purpose of providing and maintaining the lateral support of the constructed streets.  There is reserved to the grantors, their successors and assigns, the right to use such areas at any time upon providing and maintaining other adequate lateral support, as approved by the Municipality."

Exhibit A - 28

175. Easements as dedicated and shown on the plat of said subdivision. 

176. Easement, including terms and provisions contained therein:

Recording Information: July 9, 1993 in Book 2454 at Page 516 

In Favor of: Anchorage, an Alaska municipal corporation 

For: Public use as set forth therein 

Affects: The Northernmost 30 feet 

177. Joint Well Agreement and the terms and conditions thereof:

Between: Chugach Electric Association, Inc. as Owner of Lot 3A

And: G & J Flooring Contractors, Inc. as Owner of Lot 4A

Recording Information: October 15, 1993 in Book 2516 at Page 768

178. Municipality of Anchorage Covenant to Provide No Build Easement and the terms and conditions thereof:

Between: Frontier Paving Corporation as Owner of Lot 4A

And:

And: Chugach Electric Association, Inc. as Owner of Lot 3A The Municipality of Anchorage

Recording Information: March 5, 1997, Book 3034 Page 622

Affects: The South 14 feet of the East 82 feet

179. Memorandum of Understanding, including the terms and provisions thereof:

Dated: March 15, 2001

Recorded: March 20, 2001 in Book 3792 at Page 160

Executed by: The State of Alaska, Department of Administration and Chugach Electric Association, Inc.

180. [Intentionally deleted.]

Exhibit A - 29

181. [Intentionally deleted.]

(Affects Parcel 18, File Number 460870-22)

182. Reservations or exceptions in patents or in acts authorizing the issuance thereof.

183. Taxes due the Municipality of Anchorage are EXEMPT for 2010.

Tax Account No.: 009-252-24-000

184. Right of Way Easement, including the terms and provisions thereof, granted to Chugach Electric Association, Inc., and its assigns and/or successors in interest, to construct, operate and maintain an electric transmission and/or telephone distribution line or system by instrument

Recorded: February 11, 1952

Recording Information: Book 67 at Page 392

Affects: Blanket Easement

185. The effect of the notes which appear on the plat of said subdivision.

186. Slope easements as dedicated and reserved on the plat of said subdivision as follows;

"There shall be reserved adjacent to the dedicated streets shown hereon a slope reservation easement sufficient to contain cut and fill slopes of 1.5 feet horizontal for each 1 foot vertical (1.5 to 1) of cut or fill for the purpose of providing and maintaining the lateral support of the constructed streets.  There is reserved to the grantors, their successors and assigns, the right to use such areas at any time upon providing and maintaining other adequate lateral support, as approved by the Municipality."

187. Easements as dedicated and shown on the plat of said subdivision. 

188. Memorandum of Understanding, including the terms and provisions thereof:

Dated: March 15, 2001

Recorded: March 20, 2001 in Book 3792 at Page 160

Executed by: The State of Alaska, Department of Administration and Chugach Electric Association, Inc.

189. [Intentionally deleted.]

190. [Intentionally deleted.]

(Affects Parcel 19, File Number 460870-23)

191. Reservations or exceptions in patents or in acts authorizing the issuance thereof.

Exhibit A - 30

192. Taxes due the Municipality of Anchorage are EXEMPT for 2010.

Tax Account No.: 015-321-03-000

193. Right of Way Easement, including the terms and provisions thereof, granted to Chugach Electric Association, Inc., and its assigns and/or successors in interest, to construct, operate and maintain an electric transmission and/or telephone distribution line or system by instrument

Recorded: July 25, 1952

Recording Information: Book 76 at Page 84

Affects: Blanket Easement

194. The effect of the notes which appear on the plat of said subdivision. 

195. Slope easements as dedicated and reserved on the plat of said subdivision as follows;

"There shall be reserved adjacent to the dedicated streets shown hereon a slope reservation easement sufficient to contain cut and fill slopes of 1.5 feet horizontal for each 1 foot vertical (1.5 to 1) of cut or fill for the purpose of providing and maintaining the lateral support of the constructed streets.  There is reserved to the grantors, their successors and assigns, the right to use such areas at any time upon providing and maintaining other adequate lateral support, as approved by the Municipality."

196. Easements as dedicated and shown on the plat of said subdivision. 

197. Memorandum of Understanding, including the terms and provisions thereof:

Dated: March 15, 2001

Recorded: March 20, 2001 in Book 3792 at Page 160

Executed by: State of Alaska, Department of Administration and Chugach Electric Association, Inc.

198. [Intentionally deleted.]

199. [Intentionally deleted.]

(Affects Parcel 20, File Number 460870-26)

200. Reservations or exceptions in patents or in acts authorizing the issuance thereof, as recorded May 18, 1973 in Book 72 at Page 67.

201. Taxes due the Matanuska-Susitna Borough are EXEMPT for 2010.

Tax Account No.: 13N04W05A004

Exhibit A - 31

202. Reservation of section line easement 33 feet in width along each side of section line as provided by 43 USC 932 and reenacted by 1721 CLA 1933.

203. Rights of access and egress from said premises. We find no Notice in the records of any dedicated or improved roadways abutting subject property.

204. Reservation of all oil, gas and other minerals lying below 100 feet vertically in depth beneath the surface as reserved in an instrument 

Recorded: December 23, 1970

Recording Information: Book 86D at Page 252

205. Matters as shown on that certain Right of Way Plat filed May 2, 1973 under Plat No. 73-22A.

206. Matters as shown on that certain Record of Survey filed March 8, 1995 under Plat No. 95-21.

207. [Intentionally deleted.]

208. [Intentionally deleted.]

(Affects Parcel 21, File Number 460870-27)

209. Reservations or exceptions in patents or in acts authorizing the issuance thereof, as recorded May 19, 1973 in Book 72 at Page 67.

210. Taxes due the Matanuska-Susitna Borough are EXEMPT for 2010.

Tax Account No.: 13N04W05A002

211. Rights of access and egress from said premises. We find no Notice in the records of any dedicated or improved roadways abutting subject property.

212. Reservation of all oil, gas and other minerals lying below 100 feet vertically in depth beneath the surface as reserved in an instrument 

Recorded: January 30, 1967

Recording Information: Book 64D at Page 208

Exhibit A - 32

213. Condition and restriction contained in instrument 

Recorded: January 30, 1967

Recording Information: Book 64D at Page 208

As Follows: "...the substation which may be constructed as a part of the transmission line from Grantee's Beluga Station shall be located at least 275 feet north of the present bluff line of said property; and under the further special condition and restriction that any submarine cable used for said transmission line will be buried beneath the ground for the same distance of said 275 feet."

214. Matters as shown on that certain Right of Way Plat filed May 2, 1973 under Plat No. 73-22A.

215. Matters as shown on that certain Record of Survey filed March 8, 1995 under Plat No. 95-21.

216. [Intentionally deleted.]

217. [Intentionally deleted.]

(Affects Parcel 22, File Number 460870-28)

218. Reservations or exceptions in patents or in acts authorizing the issuance thereof, as recorded May 18, 1973 in Book 72 at Page 67.

219. Taxes due the Matanuska-Susitna Borough are EXEMPT for 2010.

Tax Account No.: 13N04W05A002

220. Rights of access and egress from said premises. We find no Notice in the records of any dedicated or improved roadways abutting subject property.

221. Reservation of section line easement 33 feet in width along each side of section line as provided by 43 USC 932 and reenacted by 1721 CLA 1933.

222. Reservation of all oil, gas and other minerals lying below 100 feet vertically in depth beneath the surface as reserved in an instrument 

Recorded: January 30, 1967

Recording Information: Book 64D at Page 208

223. Matters as shown on that certain Right of Way Plat filed May 2, 1973 under Plat No. 73-22A.

Exhibit A - 33

224. Matters as shown on that certain Record of Survey filed March 8, 1995 under Plat No. 95-21.

225. [Intentionally deleted.]

226. [Intentionally deleted.]

(Affects Parcel 23, File Number 460870-29)

227. Reservations or exceptions in patents or in acts authorizing the issuance thereof, as recorded May 18, 1973 in Book 72 at Page 67.

228. Taxes due the Matanuska-Susitna Borough are EXEMPT for 2010.

Tax Account No.: 13N04W05A006

229. Reservation of section line easement 33 feet in width along each side of section line as provided by 43 USC 932 and reenacted by 1721 CLA 1933.

230. Rights of access and egress from said premises. We find no Notice in the records of any dedicated or improved roadways abutting subject property.

231. Reservation of all oil, gas and other minerals lying below 100 feet vertically in depth beneath the surface as set forth therein as reserved in an instrument 

Recorded: May 10, 1973

Recording Information: Book 71 at Page 819

232. Matters as shown on that certain Right of Way Plat filed May 2, 1973 under Plat No. 73-22A.

233. Matters as shown on that certain Record of Survey filed March 8, 1995 under Plat No. 95-21.

234. [Intentionally deleted.]

235. [Intentionally deleted.]

(Affects Parcel 24, File Number 460870-30)

236. Reservations or exceptions in patents or in acts authorizing the issuance thereof, as recorded May 19, 1973 in Book 72 at Page 67.

237. Taxes due the Matanuska-Susitna Borough are EXEMPT for 2010.

Tax Account No.: 13N04W05A008

Exhibit A - 34

238. Reservation of section line easement 33 feet in width along each side of section line as provided by 43 USC 932 and reenacted by 1721 CLA 1933.

239. Rights of access and egress from said premises. We find no Notice in the records of any dedicated or improved roadways abutting subject property.

240. Reservation of all oil, gas and other minerals lying below 100 feet vertically in depth beneath the surface as set forth therein as reserved in an instrument 

Recorded: July 3, 1980

Recording Information: Book 215 at Page 420

241. Matters as shown on that certain Record of Survey filed March 8, 1995 under Plat No. 95-21.

242. Matanuska Susina Borough Platting Board Waiver Resolution Serial No. 95-5-PWd, including the terms and provisions thereof, recorded March 8, 1995 in Book 798 at Page 215.  (Affects a portion of said property.)

243. [Intentionally deleted.]

244. [Intentionally deleted.]

(Affects Parcel 25, File Number 460870-31; 460870-32; 460870-33; 460870-34)

245. Reservations or exceptions in patents or in acts authorizing the issuance thereof, as recorded April 11, 1962 in Book 41 at Page 289.

246. Reservations or exceptions in patents or in acts authorizing the issuance thereof wherein the State of Alaska has selected the minerals reserved to the United States:

Recorded: November 26, 1968 in Book 73D at Page 207 

And recorded:  April 11, 2006 under Serial Number 2006-009230-0

Note: Title to the mineral estate, as it pertains to said mineral rights, has not been further searched and assurance thereto is not covered under this Policy.

247. Taxes due the Matanuska-Susitna Borough are EXEMPT for 2010.

Tax Account No.: 14N04W32A011

248. Reservation of section line easement 33 feet in width along each side of section line as provided by 43 USC 932 and reenacted by 1721 CLA 1933.

249. Rights of access and egress from said premises.  We find no Notice in the records of any dedicated or improved roadways abutting subject property.

Exhibit A - 35

250. Right of Way Easement, including the terms and provisions thereof, granted to Chugach Electric Association, Inc., and its assigns and/or successors in interest, to construct, operate and maintain an electric transmission and/or telephone distribution line or system by instrument

Recorded: July 26, 1966

Recording Information: Misc. Book 9 at Page 41

Affects: Blanket Easement as to the West 100 feet

251. Matanuska Susitna Borough Platting Board Waiver Resolution Serial No. 95-6-PWd, including the terms and provisions thereof, as recorded March 8, 1995 in Book 798 at Page 218.

PLEASE NOTE:

The Plat Waiver hereinabove created the description of the parcel as set forth on Schedule A.  It combined the parcel commonly referred to as Tract F with the East 100 feet of the West 300 feet, the East 100 feet of the West 400 feet, and the East 100 feet of the West 500 feet.  Together they are assessed under one tax parcel number, 14N04W32A011.

252. [Intentionally deleted.]

253. [Intentionally deleted.]

(Affects Parcel 26, File Number 460870-36; 460870-37; 460870-38; 460870-39; 460870-40)

254. Reservations or exceptions in patents or in acts authorizing the issuance thereof, as recorded October 21, 1964 in Book 54 at Page 294.

255. Reservations or exceptions in patents or in acts authorizing the issuance thereof wherein the State of Alaska has selected the minerals reserved to the United States: 

Recorded: November 26, 1968 in Book 73D at Page 207 

And recorded:  April 11, 2006 under Serial Number 2006-009230-0

Note: Title to the mineral estate, as it pertains to said mineral rights, has not been further searched and assurance thereto is not covered under this Policy. 

256. Taxes due the Matanuska-Susitna Borough are EXEMPT for 2010.

Tax Account No.: 14N04W32D012

257. Reservation of section line easement 33 feet in width along each side of section line as provided by 43 USC 932 and reenacted by 1721 CLA 1933.

Exhibit A - 36

258. Rights of access and egress from said premises. We find no Notice in the records of any dedicated or improved roadways abutting subject property.

259. Easement, including terms and provisions contained therein: 

Recording Information: December 29, 1966 in Misc. Book 9 at Page 340 

In Favor of: DeMaris Baldwin 

For: "The right to use that road which may be built" as set forth therein 

Affects: The West 15 feet 

Amendment No. 1 thereto recorded November 3, 1971 in Book Misc. 17 at Page 303. 

260. Matanuska Susitna Borough Platting Board Waiver Resolution Serial No. 95-7-PWd, including the terms and provisions thereof, as recorded March 8, 1995 in Book 798 at Page 220.

Please Note:

The Plat Waiver hereinabove created the description of the parcel as set forth on Schedule A. It combined the parcels commonly referred to as Tracts D and E, with the East 100 feet of the West 300 feet, the East 100 feet of the West 400 feet, and the East 100 feet of the West 500 feet. Together they are assessed under one tax parcel number, 14N04W32D012.

261. [Intentionally deleted.]

[Intentionally deleted.]

(Affects Parcel 27, File Number 460870-41)

263. Reservations or exceptions in patents or in acts authorizing the issuance thereof.

Recorded: November 24, 1950 

Recording Information: Volume 52 Page 233

264. Reservations and exceptions as contained in the State of Alaska Patent recorded February 19, 1985, Book 1229 Page 458.

265. Taxes due the Municipality of Anchorage are EXEMPT for 2010.

Tax Account No.: 016-021-31-000

266. Rights of the public and/or governmental agencies in and to any portion of the above described real property lying within any roadway or public easement areas.

Exhibit A - 37

267. Reservation of section line easement 33 feet in width along each side of section line as provided by 43 USC 932 and reenacted by 1721 CLA 1933.

268. Right of Way Easement, including the terms and provisions thereof, granted to Chugach Electric Association, Inc., and its assigns and/or successors in interest, to construct, operate and maintain an electric transmission and/or telephone distribution line or system by instrument

Recorded: February 11, 1952

Recording Information: Book 67 Page 384

Affects: Blanket Easement

269. Easement, including terms and provisions contained therein:

Recording Information: August 25, 1969, Misc. 178 Page 56 

In Favor of: Public 

For Public use 

Affects: See instrument for exact location 

270. An easement reserved in a deed, including the terms and provisions thereof;

Recorded: December 3, 1969, Book 395 Page 243 

From: Henry F. Wollf and Myrle Wollf, husband and wife

To: Norman S. Stone, Jr. and Marguerite R. Stone, husband and wife and Donald L. Williams and

Shelia S. Williams, husband and wife 

For: Ingress and egress 

Affects: See instrument for exact location 

271. Easement, including terms and provisions contained therein:

Recording Information: May 12, 1980, Book 494 Page 371 

In Favor of: The Municipality of Anchorage 

For: Sanitary sewer line 

Affects: The West 20 feet 

272. Memorandum of Understanding, including the terms and provisions thereof:

Dated: March 15, 2001

Recorded: March 20, 2001

Executed by: State of Alaska, Department of Administration and Chugach Electric Association, Inc.

273. [Intentionally deleted.]

Exhibit A - 38

274. [Intentionally deleted.]

(Affects Parcel 28 and 28A, File Number 460870-42)

275. Reservations or exceptions in patents or in acts authorizing the issuance thereof.

276. Taxes due the Municipality of Anchorage are EXEMPT for 2010.

Tax Account No.: 014-202-79-000

277. Reservation of an easement for highway purposes as disclosed by Public Land Order No. 601, dated August 10, 1949 and amended by Public Land Order No. 757, dated October 10, 1959; Public Land Order No. 1613, dated April 7, 1958; and Department of the Interior Order No. 2665, dated October 16, 1951, Amendment No. 1, thereto, dated July 17, 1952 and Amendment No. 2, thereto, dated September 15, 1956, filed in the Federal Register.

278. Right of Way Easement, including the terms and provisions thereof, granted to Chugach Electric Association, Inc., and its assigns and/or successors in interest, to construct, operate and maintain an electric transmission and/or telephone distribution line or system by instrument 

Recorded: April 24, 1952

Recording Information: Book 71 Page 169

Affects: Blanket Easement

279. Easements as dedicated and shown on the plat of said subdivision.

280. The effect of the notes which appear on the plat of said subdivision.

281. Slope easements as dedicated and reserved on the plat of said subdivision as follows;

"There shall be reserved adjacent to the dedicated streets shown hereon a slope reservation easement sufficient to contain cut and fill slopes of 1.5 feet horizontal for each 1 foot vertical (1.5 to 1) of cut or fill for the purpose of providing and maintaining the lateral support of the constructed streets. There is reserved to the grantors, their successors and assigns, the right to use such areas at any time upon providing and maintaining other adequate lateral support, as approved by the Municipality."

282. The terms and provisions contained in the document entitled "Agreement to Provide Access" 

Recorded: December 19, 2000

Recording No.: Book 3737 Page 124

And amendments thereto,

Recorded: October 6, 2004 

Recording No.: Serial Number 2004-075521-0

Exhibit A - 39

283. Any failure to comply with the terms and provisions of the Agreement to Provide Access referred to in Schedule A herein.

284. Memorandum of Understanding, including the terms and provisions thereof: 

Dated: March 15, 2001

Recorded: March 20, 2001, Book 3792 Page 160

Executed by: State of Alaska, Department of Administration and Chugach Electric Association, Inc.

285. [Intentionally deleted.]

286. [Intentionally deleted.]

(Affects Parcel 29, File Number 460870-43)

287. Reservations or exceptions in patents or in acts authorizing the issuance thereof. 

Recorded: April 16, 1938 

Recording Information: Book 32 Page 134

288. Taxes due the Municipality of Anchorage are EXEMPT for 2010.

Tax Account No.: 010-231-29-000

Exhibit A - 40

289. Right of Way Easement, including the terms and provisions thereof, granted to Chugach Electric Association, Inc., and its assigns and/or successors in interest, to construct, operate and maintain an electric transmission and/or telephone distribution line or system by instrument 

Recorded: February 11, 1952

Recording Information: Volume 67 Page 353

Affects: Blanket Easement

290. Easements as dedicated and shown on the plat of said subdivision.

291. Memorandum of Understanding, including the terms and provisions thereof: 

Dated: March 15, 2001

Recorded: March 20, 2001, Book 3792 Page 160

Executed by: State of Alaska, Department of Administration and Chugach Electric Association, Inc.

292. [Intentionally deleted.]

293. [Intentionally deleted.]

(Affects Parcel 30, File Number 460870-44)

294. Reservations or exceptions in patents or in acts authorizing the issuance thereof. 

Recorded: January 23, 1923 

Recording Information: Vol. 1 Page 5

295. Taxes due the Matanuska-Susitna Borough are EXEMPT for 2010.

Tax Account No.: 17N02W34A004

296. Right of Way Easement, including the terms and provisions thereof, granted to Matanuska Electric Association, Inc., and its assigns and/or successors in interest, to construct, operate and maintain an electric transmission and/or telephone distribution line or system by instrument 

Recorded: August 27, 1958

Recording Information: Book 21 Page 125

Affects: Blanket Easement

297. Any matters as shown on Record of Survey 2006-54.

298. [Intentionally deleted.]

299. [Intentionally deleted.]

Exhibit A - 41

(Affects Parcel 32, File Number 460870-47)

300. Reservations or exceptions in patents or in acts authorizing the issuance thereof. 

Recorded: November 14, 1942 

Recording Information: Volume 80 Page 392

301. Taxes due the Municipality of Anchorage are EXEMPT for 2010.

Tax Account No.: 010-032-39-000

302. Right of Way Easement, including the terms and provisions thereof, granted to Chugach Electric Association, Inc., and its assigns and/or successors in interest, to construct, operate and maintain an electric transmission and/or telephone distribution line or system by instrument 

Recorded: June 20, 1952

Recording Information: Volume 74 Page 42

Affects: Blanket Easement

303. Easement, including terms and provisions contained therein: 

Recording Information: January 30, 1957, Book E-1 Page 58 

In Favor of: City of Anchorage, a municipal corporation 

For: Right of way for a telephone distribution system 

Affects: Blanket Easement 

304. Easement, including terms and provisions contained therein: 

Recording Information: May 26, 1969, Misc. 173 Page 163 

In Favor of: Greater Anchorage Area Borough 

For: Temporary easement and right of way for completing construction of sewer of line 

Affects: The West 20 feet 

305. The terms and provisions contained in the document entitled "Notice of Availability of Water Service" 

Recorded: January 16, 1978

Recording No.: Book 264 Page 694

Exhibit A - 42

306. Easement, including terms and provisions contained therein: 

Recording Information: January 6, 1983, Book 831 Page 953 

In Favor of: The Municipality of Anchorage, a municipal corporation 

For: Right of way of underground street lighting circuits 

Affects: See instrument for exact location 

307. Easement, including terms and provisions contained therein: 

Recording Information: August 31, 1994, Book 2700 Page 626 

In Favor of: Anchorage, an Alaska municipal corporation 

For: Public use 

Affects: See instrument for exact location 

308. Easement, including terms and provisions contained therein: 

Recording Information: August 31, 1994, Book 2700 Page 627 

In Favor of: Anchorage, an Alaska municipal corporation 

For: Slope 

Affects: See instrument for exact location 

309. Memorandum of Understanding, including the terms and provisions thereof: 

Dated: March 15, 2001

Recorded: March 20, 2001, Book 3792 Page 160

Executed by: State of Alaska, Department of Administration and Chugach Electric Association, Inc.

310. [Intentionally deleted.]

311. [Intentionally deleted.]

(Affects Parcel 33, File Number 460870-49)

312. Reservations or exceptions in patents or in acts authorizing the issuance thereof.

313. Taxes due the Municipality of Anchorage are EXEMPT for 2010.

Tax Account No.: 010-022-30-000 (Lot 29N)

Tax Account No.: 010-022-31-000 (Lot 30N)

Tax Account No.: 010-022-32-000 (Lot 31N)

Tax Account No.: 010-022-33-000 (Lot 32N)

Exhibit A - 43

314. Memorandum of Understanding, including the terms and provisions thereof: 

Dated: March 15, 2001

Recorded: March 20, 2001, Book 3792 Page 160

Executed by: State of Alaska, Department of Administration and Chugach Electric Association, Inc.

315. [Intentionally deleted.]

316. [Intentionally deleted.]

(Affects Parcel 34, File Number 460870-11)

317. Reservations or exceptions in patents or in acts authorizing the issuance thereof.

318. Taxes due the Municipality of Anchorage are EXEMPT for 2010.

Tax Account No.: 075-153-42-000 (Lot 19)

Tax Account No.: 075-153-43-000 (Lot 20)

Tax Account No.: 075-153-44-000 (Lot 21)

319. Memorandum of Understanding, including the terms and provisions thereof: 

Dated: March 15, 2001

Recorded: March 20, 2001, Book 3792 Page 160

Executed by: State of Alaska, Department of Administration and Chugach Electric Association, Inc.

320. Resolution No. 2000-111 (S) for Sanitary Sewer Improvements in Old Girdwood Lateral Sewer Special Improvement District Special Assessment District Number (LID) 60-9, including the terms, provisions and assessments therein, 

Recorded: April 23, 2001

Recording Information: Book 3818 Page 491

321. [Intentionally deleted.]

322. [Intentionally deleted.]

(Affects Parcel 31, File Number 460870-45)

323. Reservations or exceptions in patents or in acts authorizing the issuance thereof.

324. Taxes due the Matanuska-Susitna Borough are EXEMPT for 2010.

Tax Account No.: 6661B02L028

Exhibit A - 44

325. Right of Way Easement, including the terms and provisions thereof, granted to Matanuska Electric Association, Inc., and its assigns and/or successors in interest, to construct, operate and maintain an electric transmission an electric transmission and/or telephone distribution line or system by instrument 

Recorded: August 27, 1958

Recording Information: Book 21 Page 125

Affects: Blanket Easement

326. Reservation of all oil, gas and mineral rights as reserved in an instrument 

Recorded: December 27, 1974

Recording Information: Book 92 Page 268

And amendments thereto,

Recorded: January 20, 1975

Recording Information: Book 92 Page 973

Note: Title to the mineral estate, as it pertains to said subject property, has not been further searched and assurance thereto is not covered under this Policy. 

327. The effect of the notes which appear on the plat of said subdivision.

328. Easements as dedicated and shown on the plat of said subdivision.

Vacation Resolution Serial number 2007-193-Vac and amendments thereto,

Recorded: November 30, 2007

Recording Information: Serial Number 2007-030493-0

329. Covenants, conditions, restrictions and/or easement; but deleting any covenant, condition or restriction indicating a preference, limitation or discrimination based on race, color, religion, sex, handicap, family status, or national origin to the extent such covenants, conditions or restrictions violate Title 42, Section 3604(c), of the United States Codes: 

Recording Information: December 10, 1975, Book 108 Page 482

And amendments thereto,

Recorded: May 13, 1981

Recording Information: Book 233 Page 455

Exhibit A - 45

And amendments thereto,

Recorded: January 8, 1982

Recording Information: Book 252 page 892

And amendments thereto,

Recorded: February 8, 1982

Recording Information: Book 255 Page 49

And amendments thereto,

Recorded: July 29, 1982

Recording Information: Book 269 Page 606

And amendments thereto,

Recorded: December 13, 1982

Recording Information: Book 285 Page 939

And amendments thereto,

Recorded: October 25, 1996

Recording Information: Book 870 Page 814

And amendments thereto,

Recorded: December 30, 2003

Recording Information: 2003-038698-0

And Re-Recorded: January 28, 2004

Recording Information: 2004-002308-0

And amendments thereto,

Recorded: June 30, 2005

Recording Information: 2005-016992-0

Exhibit A - 46

330. Right of Way Easements, including the terms and provisions thereof, granted to Matanuska Electric Association, Inc., and it's assigns and/or successor's in interest, to construct, operate and maintain an electric transmission and/or telephone distribution line or system by instrument 

Recorded: May 11, 1976

Recording Information: Book 116 page 15

Affects: See Document (Various Locations)

331. The terms and provisions contained in the document entitled "Notice of Annual Assessments" 

Recorded: July 21, 1997

Recording No.: Book 903 Page 529

And amendments thereto,

Recorded: July 19, 2002

Recording Information: 2002-015138-0

And amendments thereto,

Recorded: February 11, 2004

Recording Information: 2004-003529-0

332. The terms and provisions contained in the document entitled "Architectural Control Committee Rules and Regulations" 

Recorded: March 16, 2000

Recording No.: Book 1059 Page 982

And amendments thereto,

Recorded: January 23, 2004

Recording Information: 2004-001881-0

333. Subject to any unpaid dues or assessments now due or owing the Settlers bay Homeowners Association.

334. Uniform Common Interest Ownership Act, including the terms, conditions and provisions provided therein, and in any supplements or amendments thereof, of the State of Alaska.

335. [Intentionally deleted.]

336. [Intentionally deleted.]

Exhibit A - 47

EXHIBIT B

CONTRACTS

1. Modified Agreement for the Sale and Purchase of Electric Power and Energy by and among Chugach Electric Association, Inc., Matanuska Electric Association, Inc., and Alaska Electric Generation and Transmission Cooperative, Inc. dated April 5, 1989.

2. First Amendment to Modified Agreement for the Sale and Purchase of Electric Power and Energy dated April 5, 1989 by and among Chugach Electric Association, Inc., Matanuska Electric Association, Inc., and Alaska Electric Generation and Transmission Cooperative, Inc. effective February 10, 1995.

3. Second Amendment to Modified Agreement for the Sale and Purchase of Electric Power and Energy dated April 5, 1989 by and among Chugach Electric Association, Inc., Matanuska Electric Association, Inc. and Alaska Electric Generation and Transmission Cooperative, Inc. filed with the Regulatory Commission of Alaska on July 28, 2008.

4. Agreement for Sale of Electric Power and Energy between Chugach Electric Association, Inc., Alaska Electric Generation and Transmission Cooperative, Inc., and Homer Electric Association, Inc., signed by the parties on September 25, 27, and 10, 1985, respectively.

5. 2006 Agreement for the Sale and Purchase of Electric Power and Energy between Chugach Electric Association, Inc., and the City of Seward effective February 27, 2007.

6. Amendment No. 1 to the 2006 Agreement for the Sale and Purchase of Electric Power and Energy between Chugach Electric Association, Inc. and the City of Seward effective February 27, 2007.

Exhibit B - 1

7. Order on Offer of Settlement and Issuing New License between Chugach Electric Association, Inc. and the Federal Energy Regulatory Commission dated effective August 24, 2007.

8. Agreement for the Sale and Purchase of Natural Gas between Chugach Electric Association, Inc. and ARCO Alaska, Inc. dated April 21, 1989.

9. Amendment No. 1 to Agreement for the Sale and Purchase of Natural Gas between Chugach Electric Association, Inc. and ARCO Alaska, Inc., dated August 1, 1990.

10. Letter Agreement dated April 23, 1999, regarding Chugach Electric Association Inc.’s consent to the assignment to ARCO Beluga, Inc. of the Agreement for the Sale and Purchase of Natural Gas between Chugach Electric Association, Inc. and ARCO Alaska, Inc.

11. Amendment No. 2 to Agreement for the Sale and Purchase of Natural Gas between Chugach Electric Association, Inc. and ARCO Beluga, Inc., dated May 6, 1999.

12. Agreement for the Sale and Purchase of Supplemental Natural Gas between Chugach Electric Association, Inc. and ARCO Alaska, Inc. dated October 3, 1991.

13. Agreement for the Sale and Purchase of Natural Gas between Chugach Electric Association, Inc. and ConocoPhillips Alaska, Inc. and ConocoPhillips, Inc. (collectively, ConocoPhillips) effective August 21, 2009.

14. Agreement for the Sale and Purchase of Natural Gas between Chugach Electric Association, Inc. and Marathon Alaska Production, LLC (MAP) effective May 17, 2010.

15. Gas Transportation Agreement by and among Chugach Electric Association, Inc., Alaska Pipeline Company and ENSTAR Natural Gas Company dated December 7, 1992.

Exhibit B - 2

16. Transportation Agreement between Chugach Electric Association, Inc. and Beluga Pipeline Company dated effective October 1, 2010.

17. Transportation Agreement for Interruptible Transportation of Natural Gas between Chugach Electric Association, Inc. and Kenai Nikiski Pipeline dated effective October 1, 2010.

18. Engineering, Procurement and Construction Contract between Chugach Electric Association, Inc. and SNC-Lavalin Constructors, Inc. dated effective June 18, 2010.

19. Bradley Lake Agreement for the Sale and Purchase of Electric Power by and among Chugach Electric Association, Inc., the Alaska Power Authority, Golden Valley Electric Association, Inc., the Municipality of Anchorage, the City of Seward, the Alaska Electric Generation and Transmission Cooperative, Inc., Homer Electric Association, Inc. and Matanuska Electric Association, Inc. dated December 8, 1987.

Exhibit B - 3

EXHIBIT C

CERTAIN EXCEPTED PROPERTY

Baxter Lake Substation Addition

Legal:  Tract D-1, Foxhall South Subdivision, Plat 92-13

Anchorage Recording District, Third Judicial District, State of Alaska

Huffman Substation Addition

Legal:  Lot 1A, Block 1, West Addition-Knik Heights Subdivision, Plat 75-140

On file in the office of the District Recorder, Anchorage Recording District, Third Judicial District, State of Alaska

Patricia Subdivision

Legal:  Lot 15, Block 3, Patricia Subdivision, Plat 69-54

Anchorage Recording District, Third Judicial District, State of Alaska

Patricia Subdivision

Legal:  Lot 19, Block 2, Patricia Subdivision, Plat 69-54

Anchorage Recording District, Third Judicial District, State of Alaska

Former Tudor Substation Site

Legal:  Lot 12, Block 2, O.H. Fast Subdivision, Plat P-156

Anchorage Recording District, Third Judicial District, State of Alaska

Wonder Park Site

Legal:  Tract 2, Wonder Park School Subdivision, Plat 69-221

Anchorage Recording District, Third Judicial District, State of Alaska

Former Fairview Substation Site

Legal:  Lot 4, Block 18D, Anchorage Townsite Subdivision of Block 18-Third Add.

Plat C-10A, Anchorage Recording District, Third Judicial District, State of Alaska

Girdwood Substation Addition

Legal:  Lot 22, Block 3, Girdwood Townsite, U.S. Survey 1177

Statutory Warranty Deed Recorded at Book 2867 Page 304

Anchorage Recording District, Third Judicial District, State of Alaska

Bernice Lake Repeater Site

Legal:  That portion of the SE1/4 of Section 24, T8N, R11W, S.M., Alaska, lying northwesterly of the centerline of the north Kenai Road, as shown on the State of Alaska Department of Public Works, Division of Highways Right-of-Way Plat for the Project No. S0490 (3), Sheet 8 of 10, dated July 1961, as described in the Warranty Deed recorded at Book 208 Page 189 in the Kenai Recording District, Third Judicial District, State of Alaska

Exhibit C - 1

International South Addition

Legal:  The West One-half of the Northeast One-quarter of the Northwest One-quarter (W ½ of the NE ¼ of the NW 1/4) of Section 1, Township 12 North, Range 4 West, Seward Meridian; Records of the Anchorage Recording District, Third Judicial District, State of Alaska.

Excepting therefrom that portion conveyed to State of Alaska, Department of Transportation and Public Facilities by Trustee’s Deed recorded August 23, 1979 in Book 429 at Page 596.

The specific equipment described as collateral in the UCC financing statements filed with the Alaska Department of Natural Resources, under the following filing numbers:

2008-654537-5, 2008-669161-5, 2009-678314-3, 2009-680741-2, 2010-692590-8, 2010-693742-2, 2010-694402-3, 2010-697798-3, 2010-697895-9 and 2010-707193-4.

Exhibit C - 2

EX-4.19

Exhibit 4.19

After Recording Return to:

Davis Wright Tremaine, LLP

1201 Third Avenue, Suite 2200

Seattle, WA  98101

Attention:  Donald E. Percival

FIRST SUPPLEMENTAL INDENTURE

(to that certain Second Amended and Restated Indenture of Trust,

dated as of January 20, 2011)

Dated as of January 20, 2011

between

CHUGACH ELECTRIC ASSOCIATION, INC.,

5601 Electron Drive, Anchorage, Alaska 99519,

TRUSTOR

AND

U.S. BANK NATIONAL ASSOCIATION,

1420 Fifth Avenue, 7th Floor, Seattle, Washington 98101

Attn:  Corporate Trust Services,

TRUSTEE

FIRST MORTGAGE OBLIGATIONS

THIS INSTRUMENT CONSTITUTES A DEED OF TRUST, SECURITY AGREEMENT AND FIXTURE FILING COVERING REAL AND PERSONAL PROPERTY (INCLUDING AFTER-ACQUIRED PROPERTY) OF A TRANSMITTING UTILITY, AND CONTAINS A FUTURE ADVANCE PROVISION

THIS FIRST SUPPLEMENTAL INDENTURE, dated as of January 20, 2011, is between CHUGACH ELECTRIC ASSOCIATION, INC., an Alaska electric cooperative, as Trustor (hereinafter called the “Company”), and U.S. BANK NATIONAL ASSOCIATION, a national banking association organized under the laws of the United States, as Trustee (hereinafter called the “Trustee”).

WHEREAS, the Company has heretofore executed and delivered to the Trustee a Second Amended and Restated Indenture of Trust, dated as of January 20, 2011 (the “Original Indenture”), for the purpose of providing for the authentication and delivery of Obligations (capitalized terms used but not otherwise defined herein shall have the meanings ascribed to them in the Original Indenture) by the Trustee from time to time under the Original Indenture (the Original Indenture, as heretofore, hereby and hereafter supplemented being sometimes referred to as the “Indenture”) which is filed of record as shown on Exhibit A hereto;

WHEREAS, the Board of Directors of the Company has authorized and approved actions necessary for the Company to establish a new series of Obligations to be designated the First Mortgage Bonds, 2011 Series A, which, as provided herein, shall consist of an aggregate principal amount of Ninety Million Dollars ($90,000,000) of 2011 Series A Bonds due March 15, 2031 and an aggregate principal amount of One Hundred Eighty-Five Million Dollars ($185,000,000) of 2011 Series A Bonds due March 15, 2041.  (collectively, the “2011 Series A Bonds”); such 2011 Series A Bonds being issued pursuant to this First Supplemental Indenture to the parties set forth in Schedule A of the Bond Purchase Agreement described below (and their successors or assigns of the 2011 Series A Bonds, each individually, a “2011 Series A Holder” or collectively, the “2011 Series A Holders”) to secure the Company’s obligations under the Bond Purchase Agreement, dated as of January 21, 2011, between the Company and the original 2011 Series A Holders (the “Bond Purchase Agreement”), and the Company has complied or will comply with all provisions required to issue Obligations provided for in the Indenture;

WHEREAS, the Company desires to execute and deliver this First Supplemental Indenture, in accordance with the provisions of the Indenture, for the purpose of (i) providing for the creation and designation of the 2011 Series A Bonds as Obligations and specifying the form and provisions of the 2011 Series A Bonds;

WHEREAS, Section 13.1 of the Indenture provides that, without the consent of the Holders of any of the Obligations at the time Outstanding, the Company, when authorized by a Board Resolution, and the Trustee, may enter into supplemental indentures for the purposes of and subject to the conditions set forth in such Section 13.1, and this First Supplemental Indenture is permitted pursuant to provisions of Section 13.1(c);

WHEREAS, Sections 5.2 and 5.4 of the Indenture provides that the Company may enter into this First Supplemental Indenture when authorized by a Board Resolution, and the Trustee shall authenticate and deliver the 2011 Series A Bonds upon delivery of a Company Request as provided under the Indenture and satisfaction of all other conditions precedent thereto under the Indenture; and

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WHEREAS, all acts and proceedings required by law and by the Articles of Incorporation and Bylaws of the Company necessary to secure the payment of the principal of and interest on the 2011 Series A Bonds, to make the 2011 Series A Bonds issued under the Indenture, when executed by the Company, authenticated and delivered by the Trustee and duly issued, the valid, binding and legal obligations of the Company, and to constitute under the Indenture a valid and binding lien for the security of the 2011 Series A Bonds, in accordance with its terms, have been done and taken, and the execution and delivery of this First Supplemental Indenture has been in all respects duly authorized;

NOW, THEREFORE, THIS FIRST SUPPLEMENTAL INDENTURE WITNESSES, that, to secure the payment of the principal of (and premium, if any) and interest on the Outstanding Secured Obligations, including, when issued, the 2011 Series A Bonds, to confirm the lien of the Indenture upon the Trust Estate, including property purchased, constructed or otherwise acquired by the Company since the date of execution of the Original Indenture, to secure performance of the covenants therein and herein contained, to confirm the terms and conditions on which the 2011 Series A Bonds are secured, and in consideration of the premises thereof and hereof, the Company by these presents does grant, bargain, sell, alienate, remise, release, convey, assign, transfer, mortgage, hypothecate, pledge, set over and confirm to the Trustee, and its successors and assigns in the trust created thereby and hereby, in trust, all property, rights, privileges and franchises (other than Excepted Property and Excluded Property) of the Company, whether now owned or hereafter acquired, of the character described in the Granting Clauses of the Indenture, including all such property, rights, privileges and franchises acquired since the date of execution of the Original Indenture, including, without limitation, all of those fee and leasehold interests in real property, if any, which may hereafter be constructed or acquired by it, but subject to all exceptions, reservations and matters of the character therein referred to, and expressly excepting and excluding from the lien and operation of the Indenture all properties of the character specifically excepted as “Excepted Property” or “Excludable Property” in the Indenture to the extent contemplated thereby.

PROVIDED, HOWEVER, that if, upon the occurrence of an Event of Default under the Indenture, the Trustee, or any separate trustee or co-trustee appointed under Section 10.14 of the Indenture or any receiver appointed pursuant to statutory provision or order of court, shall have entered into possession of all or substantially all of the Trust Estate, all the Excepted Property described or referred to in paragraphs (a) through (g), inclusive, of “Excepted Property” in the Indenture then owned or thereafter acquired by the Company, shall immediately, and, in the case of any Excepted Property described or referred to in paragraphs (h) through (k), inclusive, of “Excepted Property” in the Indenture, upon demand of the Trustee or such other trustee or receiver, become subject to the lien of the Indenture to the extent permitted by law, and the Trustee or such other trustee or receiver may, to the extent permitted by law, at the same time likewise take possession thereof, and whenever all Events of Default shall have been cured and the possession of all or substantially all of the Trust Estate shall have been restored to the Company, such Excepted Property shall again be excepted and excluded from the lien of the Indenture to the extent and otherwise as hereinabove set forth and as set forth in the Indenture.

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The Company may, however, pursuant to Granting Clause Third of the Indenture, subject to the lien of the Indenture any Excepted Property, whereupon the same shall cease to be Excepted Property.

TO HAVE AND TO HOLD all said property, rights, privileges and franchises hereby and hereafter (by a Supplemental Indenture or otherwise) granted, bargained, sold, alienated, remised, released, conveyed, assigned, transferred, mortgaged, hypothecated, pledged, set over or confirmed as aforesaid, or intended, agreed or covenanted so to be, together with all the tenements, hereditaments and appurtenances thereto appertaining (said properties, rights, privileges and franchises, including any cash and securities hereafter deposited or required to be deposited with the Trustee (other than any such cash which is specifically stated in the Indenture not to be deemed part of the Trust Estate) being part of the Trust Estate), unto the Trustee, and its successors and assigns in the trust herein created, forever.

SUBJECT, HOWEVER, to (i) Permitted Encumbrances, (ii) to the extent permitted by Section 14.6 of the Indenture, as to property hereafter acquired, (a) any duly recorded or perfected Prior Lien that may exist thereon at the date of the acquisition thereof by the Company, and (b) purchase money mortgages, other purchase money liens, chattel mortgages, security agreements, conditional sales agreements or other title retention agreements created by the Company at the time of acquisition thereof, and (iii) defects of title to and encumbrances on property as shown on Exhibit A of the Indenture and existing on the date hereof.

BUT IN TRUST, NEVERTHELESS, with power of sale, for the equal and proportionate benefit and security of the Holders from time to time of all the Outstanding Secured Obligations without any priority of any such Obligation over any other such Obligation and for the enforcement of the payment of such Obligations in accordance with their terms.

UPON CONDITION that, until the happening of an Event of Default and subject to the provisions of Article 6 and not in limitation of the rights elsewhere provided in this Indenture, the Company shall be permitted and have the right to possess, use, operate and enjoy the Trust Estate, except cash, securities and other personal property deposited, or required to be deposited, with the Trustee and to explore for, mine, extract, produce and dispose of coal, ore, gas, oil and other minerals or natural resources, to harvest standing timber and to collect, receive and use the rents, issues, profits, revenues and other income, products and proceeds of the Trust Estate or the operation of the property constituting part of the Trust Estate.

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AND IT IS HEREBY COVENANTED AND DECLARED that the 2011 Series A Bonds are to be authenticated and delivered and the Trust Estate is to be held and applied by the Trustee, subject to the covenants, conditions and trusts set forth herein and in the Indenture, and the Company does hereby covenant and agree to and with the Trustee, for the equal and proportionate benefit of all Holders of the Outstanding Secured Obligations, as follows:

ARTICLE I

DEFINITIONS

Section 1.1           Definitions.

All words and phrases defined in the Indenture shall have the same meaning in this First Supplemental Indenture, including any exhibit hereto, except as otherwise appears herein and in this Article or unless the context clearly requires otherwise.  In addition, the following terms have the following meaning in this First Supplemental Indenture unless the context clearly requires otherwise.

“Business Day” means any day other than a Saturday, a Sunday or a day on which commercial banks in New York, New York, Seattle, Washington, or the city in which the principal corporate trust office of the Trustee is located are required or authorized to be closed.

“Closing Date” means January 21, 2011.

“Default Rate” means with respect to any 2011 Series A Bond, that rate of interest that is the greater of (i) 2% per annum above the rate of interest stated in clause (a) of the first paragraph of such 2011 Series A Bond or (ii) 2% over the rate of interest publicly announced by Bank of America, N.A. in New York, New York or its successor, as its “prime” rate.

“Make-Whole Amount” is defined in Section 2.9.

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ARTICLE II

THE 2011 SERIES A BONDS AND

CERTAIN PROVISIONS RELATING THERETO

Section 2.1           Authentication and Terms of the 2011 Series A Bonds.  Pursuant to the provisions of Article 5 of the Original Indenture, there has been established a series of Obligations known as and entitled the “First Mortgage Bonds, 2011 Series A.”

The aggregate principal amount of the 2011 Series A Bonds which may be authenticated and delivered and Outstanding at any one time is limited to Two Hundred Seventy Five Million Dollars ($275,000,000.00).  The 2011 Series A Bonds shall consist of an aggregate principal amount of Ninety Million Dollars ($90,000,000) of 2011 Series A Bonds due March 15, 2031 and an aggregate principal amount of One Hundred Eighty Five Million Dollars ($185,000,000) of 2011 Series A Bonds due March 15, 2041.  The 2011 Series A Bonds shall originally be registered in the names of the 2011 Series A Holders, and shall be dated the date of authentication.

The 2011 Series A Bonds due March 15, 2031 shall bear interest from their date of issuance, payable semi-annually on March 15 and September 15 of each year commencing on September 15, 2011, at the rate of 4.2%.  The 2011 Series A Bonds due March 15, 2041 shall bear interest from their date of issuance, payable semi-annually on March 15 and September 15 of each year commencing on September 15, 2011, at a rate of 4.75%.  Interest on the 2011 Series A Bonds shall be computed on the basis of a 360-day year of twelve 30-day months.

The principal of, premium (including the Make-Whole Amount), if any, and interest on the 2011 Series A Bonds shall be paid to the 2011 Series A Holders thereof in immediately available funds as described in such Bonds.  Any payment of principal of or premium (including the Make-Whole Amount, if any) or interest on any 2011 Series A Bond that is due on a date other than a Business Day shall be made on the next succeeding Business Day without including the additional days elapsed in the computation of the interest payable on such next succeeding Business Day; provided that if the maturity date of any 2011 Series A Bond is a date other than a Business Day, the payment otherwise due on such maturity date shall be made on the next succeeding Business Day and shall include the additional days elapsed in the computation of interest payable on such next succeeding Business Day.

If the Company fails to make any payment with respect to the 2011 Series A Bonds when due, then such payment shall be due and payable on demand, and shall accrue interest from the date due until the date paid at the Default Rate.

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Section 2.2           Form of the 2011 Series A Bonds.The 2011 Series A Bonds shall each be a bond substantially in the form of Exhibit B hereto, and the Trustee’s authentication certificate to be executed on the 2011 Series A Bonds shall be substantially in the form attached thereto, with such appropriate insertions, omissions, substitutions and other variations as are required or permitted in the Indenture.

Section 2.3           Required Prepayments.

(a)           On March 15, 2012 and on each March 15th thereafter to and including March 15, 2030, the Company will prepay a portion of the aggregate principal amount of the 2011 Series A Bonds due March 15, 2031 at par and without payment of any premium (including the Make-Whole Amount), provided that upon any partial prepayment of such 2011 Series A Bonds pursuant to Section 2.4 or partial purchase of such 2011 Series A Bonds permitted by Section 2.8, the principal amount of each required prepayment of such 2011 Series A Bonds becoming due under this Section 2.3(a) on and after the date of such prepayment or purchase shall be reduced in the same proportion as the aggregate unpaid principal amount of such 2011 Series A Bonds is reduced as a result of such prepayment or purchase.  The aggregate principal amount of the 2011 Series A Bonds due March 15, 2031 to be prepaid and the dates of such prepayments, as well as the principal amount payable on the maturity date, are set forth below:

Date	Amount
March 15, 2012	$	4,500,000
March 15, 2013	$	4,500,000
March 15, 2014	$	4,500,000
March 15, 2015	$	4,500,000
March 15, 2016	$	4,500,000
March 15, 2017	$	4,500,000
March 15, 2018	$	4,500,000
March 15, 2019	$	4,500,000
March 15, 2020	$	4,500,000
March 15, 2021	$	4,500,000
March 15, 2022	$	4,500,000
March 15, 2023	$	4,500,000
March 15, 2024	$	4,500,000
March 15, 2025	$	4,500,000
March 15, 2026	$	4,500,000
March 15, 2027	$	4,500,000
March 15, 2028	$	4,500,000
March 15, 2029	$	4,500,000
March 15, 2030	$	4,500,000
March 15, 2031(1)	$	4,500,000
(1) The final maturity date of 2011 Series A Bonds due 2031.

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(b)           On March 15, 2012 and on each March 15th thereafter to and including March 15, 2040, the Company will prepay a portion of the aggregate principal amount of the 2011 Series A Bonds due March 15, 2041 at par and without payment of any premium (including the Make-Whole Amount), provided that upon any partial prepayment of such 2011 Series A Bonds pursuant to Section 2.4 or partial purchase of such 2011 Series A Bonds permitted by Section 2.8, the principal amount of each required prepayment of such 2011 Series A Bonds becoming due under this Section 2.3(b) on and after the date of such prepayment or purchase shall be reduced in the same proportion as the aggregate unpaid principal amount of such 2011 Series A Bonds is reduced as a result of such prepayment or purchase.  The aggregate principal amount of the 2011 Series A Bonds due March 15, 2041 to be prepaid and the dates of such prepayments, as well as the principal amount payable on the maturity date, are set forth below:

Date	Amount
March 15, 2012	$	6,166,667
March 15, 2013	$	6,166,667
March 15, 2014	$	6,166,667
March 15, 2015	$	6,166,667
March 15, 2016	$	6,166,667
March 15, 2017	$	6,166,667
March 15, 2018	$	6,166,667
March 15, 2019	$	6,166,667
March 15, 2020	$	6,166,667
March 15, 2021	$	6,166,667
March 15, 2022	$	6,166,667
March 15, 2023	$	6,166,667
March 15, 2024	$	6,166,667
March 15, 2025	$	6,166,667
March 15, 2026	$	6,166,667
March 15, 2027	$	6,166,667
March 15, 2028	$	6,166,667
March 15, 2029	$	6,166,667
March 15, 2030	$	6,166,667
March 15, 2031	$	6,166,667
March 15, 2032	$	6,166,667
March 15, 2033	$	6,166,667
March 15, 2034	$	6,166,667
March 15, 2035	$	6,166,667
March 15, 2036	$	6,166,667
March 15, 2037	$	6,166,667
March 15, 2038	$	6,166,667
March 15, 2039	$	6,166,667

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Date	Amount
March 15, 2040	$	6,166,667
March 15, 2041(1)	$	6,166,657
(1) The final maturity date of 2011 Series A Bonds due 2041.

Section 2.4           Optional Prepayments and Make-Whole Amount. The Company may, at its option, upon notice as provided below, prepay at any time all, or from time to time any part of, the 2011 Series A Bonds, in an amount not less than 3% of the aggregate principal amount of the 2011 Series A Bonds then outstanding in the case of a partial prepayment, at 100% of the principal amount so prepaid, and the Make-Whole Amount determined for the prepayment date with respect to such principal amount.  The Company will give each 2011 Series A Holder written notice of each optional prepayment under this Section 2.4 not less than 30 days and not more than 60 days prior to the date fixed for such prepayment.  Each such notice shall specify such date (which shall be a Business Day), the aggregate principal amount of the 2011 Series A Bonds to be prepaid on such date, the principal amount of each 2011 Series A Bond held by such 2011 Series A Holder to be prepaid (determined in accordance with Section 2.5), and the interest to be paid on the prepayment date with respect to such principal amount being prepaid, and shall be accompanied by an Officer’s Certificate as to the estimated Make-Whole Amount due in connection with such prepayment (calculated as if the date of such notice were the date of the prepayment), setting forth the details of such computation.  Two Business Days prior to such prepayment, the Company shall deliver to each 2011 Series A Holder an Officer’s Certificate specifying the calculation of such Make-Whole Amount as of the specified prepayment date.  The Company shall contemporaneously deliver a copy of such notice and Officer’s Certificate to the Trustee.

Section 2.5           Allocation of Partial Prepayments. In the case of each partial prepayment of the 2011 Series A Bonds, the principal amount of the 2011 Series A Bonds to be prepaid shall be allocated among all of the 2011 Series A Bonds at the time outstanding in proportion, as nearly as practicable, to the respective unpaid principal amounts thereof not theretofore called for prepayment.

Section 2.6           Payment of Make-Whole Amount Upon Acceleration. Upon the occurrence of an Event of Default, if the outstanding principal amount of the 2011 Series A Bonds shall have been declared or otherwise become due and payable immediately pursuant to and in accordance with the Indenture then, in addition to paying each 2011 Series A Holder the entire unpaid principal amount of its 2011 Series A Bonds and all accrued and unpaid interest thereon (including, but not limited to, interest accrued thereon at the Default Rate), the Company shall calculate and pay to each 2011 Series A Holder (to the full extent permitted by applicable law) an amount equal to the Make-Whole Amount determined in respect of such principal amount.  The Company acknowledges that each 2011 Series A Holder has the right to maintain its investment in the 2011 Series A Bonds free from repayment by the Company (except as herein and in the Indenture specifically provided for) and that the provision for payment of a Make-Whole Amount by the Company in the event that the 2011 Series A Bonds are prepaid or are accelerated as a result of an Event of Default, is intended to provide compensation for the deprivation of such right under such circumstances.

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Section 2.7           Maturity; Surrender, Etc. In the case of each prepayment of 2011 Series A Bonds pursuant to this Article II, the principal amount of each 2011 Series A Bond to be prepaid shall mature and become due and payable on the date fixed for such prepayment (which shall be a Business Day), together with interest on such principal amount accrued to such date and the applicable Make-Whole Amount, if any.  From and after such date, unless the Company shall fail to pay such principal amount when so due and payable, together with the interest and Make-Whole Amount, if any, as aforesaid, interest on such principal amount shall cease to accrue.  Any 2011 Series A Bond paid or prepaid in full shall be surrendered to the Company and cancelled and shall not be reissued, and no 2011 Series A Bond shall be issued in lieu of any prepaid principal amount of any 2011 Series A Bond.

Section 2.8           Purchase of 2011 Series A Bonds.The Company will not, and will not permit any Affiliate to, purchase, redeem, prepay or otherwise acquire, directly or indirectly, any of the outstanding 2011 Series A Bonds except (a) upon the payment or prepayment of the 2011 Series A Bonds in accordance with the terms of the Original Indenture and the 2011 Series A Bonds or (b) pursuant to an offer to purchase made by the Company or an Affiliate pro rata to the Holders of all 2011 Series A Bonds at the time outstanding upon the same terms and conditions.  Any such offer shall provide each 2011 Series A Holder with sufficient information to enable it to make an informed decision with respect to such offer, and shall remain open for at least 30 Business Days.  If the Holders of more than 51% of the principal amount of the 2011 Series A Bonds then outstanding accept such offer, the Company shall promptly notify the remaining 2011 Series A Holders of such fact and the expiration date for the acceptance by 2011 Series A Holders of such offer shall be extended by the number of days necessary to give each such remaining 2011 Series A Holder at least 10 Business Days from its receipt of such notice to accept such offer.  The Company will promptly cancel all 2011 Series A Bonds acquired by it or any Affiliate pursuant to any payment, prepayment or purchase of 2011 Series A Bonds pursuant to any provision of this First Supplemental Indenture and no 2011 Series A Bonds may be issued in substitution or exchange for any such 2011 Series A Bonds.

Section 2.9           Make Whole Amount.

“Make-Whole Amount.  The term “Make-Whole Amount” means, with respect to any 2011 Series A Bond, an amount equal to the excess, if any, of the Discounted Value of the Remaining Scheduled Payments with respect to the Called Principal of such 2011 Series A Bond over the amount of such Called Principal, provided that the Make-Whole Amount may in no event be less than zero. For the purposes of determining the Make-Whole Amount with respect to any 2011 Series A Bond, the following terms have the following meanings:

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“Called Principal” means, with respect to any 2011 Series A Bond, the principal of such 2011 Series A Bond that is to be prepaid pursuant to Section 2.4 or has become or is declared to be immediately due and payable pursuant to the Indenture, as the context requires.

“Discounted Value” means, with respect to the Called Principal of any 2011 Series A Bond, the amount obtained by discounting all Remaining Scheduled Payments with respect to such Called Principal from their respective scheduled due dates to the Settlement Date with respect to such Called Principal, in accordance with accepted financial practice and at a discount factor (applied on the same periodic basis as that on which interest on the 2011 Series A Bonds is payable) equal to the Reinvestment Yield with respect to such Called Principal.

“Reinvestment Yield” means, with respect to the Called Principal of any 2011 Series A Bond, the sum of 0.50% plus the yield to maturity implied by (i) the yields reported as of 10:00 A.M. (New York City time) on the second Business Day preceding the Settlement Date with respect to such Called Principal, on the display designated as “Page PX1” (or such other display as may replace Page PX1) on Bloomberg Financial Markets for the most recently issued actively traded on the run U.S. Treasury securities having a maturity equal to the Remaining Average Life of such Called Principal as of such Settlement Date, or(ii) if such yields are not reported as of such time or the yields reported as of such time are not ascertainable (including by way of interpolation), the Treasury Constant Maturity Series Yields reported, for the latest day for which such yields have been so reported as of the second Business Day preceding the Settlement Date with respect to such Called Principal, in Federal Reserve Statistical Release H.15 (or any comparable successor publication) for actively traded U.S. Treasury securities having a constant maturity equal to the Remaining Average Life of such Called Principal as of such Settlement Date.  

In the case of each determination under clause (i) or clause (ii), as the case may be, of the preceding paragraph, such implied yield will be determined, if necessary, by (a) converting U.S. Treasury bill quotations to bond equivalent yields in accordance with accepted financial practice and (b) interpolating linearly between (1) the applicable actively traded U.S. Treasury security with the maturity closest to and greater than such Remaining Average Life and (2) the applicable actively traded U.S. Treasury security with the maturity closest to and less than such Remaining Average Life.  The Reinvestment Yield shall be rounded to the number of decimal places as appears in the interest rate of the applicable 2011 Series A Bond.

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“Remaining Average Life” means, with respect to any Called Principal, the number of years (calculated to the nearest one-twelfth year) obtained by dividing (i) such Called Principal into (ii) the sum of the products obtained by multiplying (a) the principal component of each Remaining Scheduled Payment with respect to such Called Principal by (b) the number of years (calculated to the nearest one-twelfth year) that will elapse between the Settlement Date with respect to such Called Principal and the scheduled due date of such Remaining Scheduled Payment.

“Remaining Scheduled Payments” means, with respect to the Called Principal of any 2011 Series A Bond, all payments of such Called Principal and interest thereon that would be due after the Settlement Date with respect to such Called Principal if no payment of such Called Principal were made prior to its scheduled due date; provided that if such Settlement Date is not a date on which interest payments are due to be made under the terms of the 2011 Series A Bonds, then the amount of the next succeeding scheduled interest payment will be reduced by the amount of interest accrued to such Settlement Date and required to be paid on such Settlement Date pursuant to Section 2.4 above.

“Settlement Date” means, with respect to the Called Principal of any 2011 Series A Bond, the date on which such Called Principal is to be prepaid pursuant to Section 2.4 or has become or is declared to be immediately due and payable pursuant to the Indenture, as the context requires.

Section 2.10         Use of Proceeds.  The Company shall use the proceeds of the loan evidenced by the 2011 Series A Bonds to repay indebtedness and for general corporate purposes.

ARTICLE III

OUTSTANDING SECURED OBLIGATIONS

Section 3.1           Principal Amount Presently To Be Outstanding. The Obligations Outstanding under the Indenture as of the date hereof consist of: $150,000,000 aggregate principal amount of New Bonds, 2001 Series A; $120,000,000 aggregate principal amount of New Bonds, 2002 Series A; $37,301,818.50 aggregate principal amount of the 2011 CoBank Note and $275,000,000 aggregate principal amount of First Mortgage Bonds, 2011 Series A to be issued pursuant to this First Supplemental Indenture upon compliance by the Company with the provisions of Sections 5.1 and 5.2 of the Indenture.

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ARTICLE IV

MISCELLANEOUS

Section 4.1           Supplemental Indenture.  The First Supplemental Indenture is executed and shall be construed as an indenture supplemental to the Indenture, and shall form a part thereof, and the Indenture, as hereby supplemented, modified, and amended, is hereby confirmed.  Except to the extent inconsistent with the express terms of this First Supplemental Indenture and the 2011 Series A Bonds, all of the provisions, terms, covenants and conditions of the Indenture shall be applicable to the 2011 Series A Bonds to the same extent as if specifically set forth herein.

Section 4.2           Trustee Obligations Under the Bond Purchase Agreement.  The Trustee is not a party to the Bond Purchase Agreement and all obligations of the Trustee relating to the 2011 Series A Bonds are set forth in the Indenture, including this First Supplemental Indenture.

Section 4.3           Recitals.  All Recitals in this First Supplemental Indenture are made by the Company only and not by the Trustee and are incorporated herein; and all of the provisions contained in the Original Indenture, in respect of the rights, privileges, immunities, powers and duties of the Trustee shall be applicable in respect hereof as fully and with like effect as if set forth herein in full.

Section 4.4           Successors and Assigns.  Whenever in this First Supplemental Indenture any of the parties hereto is named or referred to, this shall, subject to the provisions of Articles 10 and 12 of the Indenture, be deemed to include the successors and assigns of such party, and all the covenants and agreements contained in this First Supplemental Indenture by or on behalf of the Company, or by or on behalf of the Trustee, shall, subject as aforesaid, bind and inure to the respective benefits of the respective successors and assigns of such parties, whether so expressed or not.

Section 4.5           No Rights, Remedies, Etc.  Nothing in this First Supplemental Indenture, expressed or implied, is intended, or shall be construed, to confer upon, or to give to, any person, firm or corporation, other than the parties hereto and the Holders of the Outstanding Secured Obligations, any right, remedy or claim under or by reason of this First Supplemental Indenture or any covenant, condition, stipulation, promise or agreement hereof, and all the covenants, conditions, stipulations, promises and agreements in this First Supplemental Indenture contained by or on behalf of the Company shall be for the sole and exclusive benefit of the parties hereto, and of the Holders of Outstanding Secured Obligations.

Section 4.6           Severability.  Any provision of this First Supplemental Indenture held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions hereof; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction.

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Section 4.7           Governing Law.  This First Supplemental Indenture shall be construed in accordance with and governed by the law of the State of Alaska.

Section 4.8           Counterparts.  This First Supplemental Indenture may be executed in several counterparts, each of such counterparts shall for all purposes be deemed to be an original, and all such counterparts, or as many of them as the Company and the Trustee shall preserve undestroyed, shall together constitute but one and the same instrument.

Section 4.9           Security Agreement; Mailing Address.  To the extent permitted by applicable law, this First Supplemental Indenture shall be deemed to be a security agreement and financing statement whereby the Company grants to the Trustee a security interest in all of the Trust Estate that is personal property or fixtures under the Uniform Commercial Code.

The mailing address of the Company, as debtor, is:

Chugach Electric Association, Inc.

5601 Electron Drive

Anchorage, Alaska  99519

and the mailing address of the Trustee, as secured party, is:

U.S. Bank National Association

1420 Fifth Avenue, 7th Floor

Seattle, Washington  98101

Attn: Corporate Trust Services

Additionally, this First Supplemental Indenture shall, if appropriate, be an amendment to the financing documents previously filed in connection with the Original Indenture.  The Company is authorized to execute and file as appropriate instruments under the Uniform Commercial Code to either create a security interest or amend any security interest heretofore created.

[Remainder of page intentionally left blank; signature pages follow.]

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IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed as of the day and year first above written.

CHUGACH ELECTRIC ASSOCIATION, INC.,
an Alaska electric cooperative
By:	/s/ Michael R. Cunningham
	Name:	Michael R. Cunningham
	Title:	Sr. Vice President and
		Chief Financial Officer

STATE OF ALASKA	)
	) ss.
THIRD JUDICIAL DISTRICT	)

On this 17th day of January, 2011, before me, a Notary Public in and for the State of Alaska, personally appeared Michael R. Cunningham, to me known to be the Sr. Vice President and Chief Financial Officer of Chugach Electric Association, Inc., the electric cooperative that executed the within and foregoing instrument, and acknowledged said instrument to be the free and voluntary act and deed of said electric cooperative for the uses and purposes therein mentioned and on oath stated that s/he was authorized to execute said instrument on behalf of said electric cooperative.

IN WITNESS WHEREOF, I have hereunto set my hand and official seal the day and year first above written.

Thomas M. Schulman
Print name:	/s/ Thomas M. Schulman
Notary Public in and for the State of Alaska,
residing at Anchorage, Alaska
My commission expires:		10-10-11

First Supplemental Indenture to Second Amended and Restated Indenture of Trust

- Company Signature Page

U.S. BANK NATIONAL ASSOCIATION,
a national banking association,
as Trustee
By:	/s/ Thomas Zrust
	Name:	Thomas Zrust
	Title:	Vice President

STATE OF WASHINGTON	)
	) ss.
COUNTY OF KING	)

On this   14th day of            January           , 2011, before me, a Notary Public in and for the State of Washington, personally appeared Thomas Zrust_________________, to me known to be the             Vice President              of U.S. Bank National             .Association            , the national banking association that executed the within and foregoing instrument, and acknowledged said instrument to be the free and voluntary act and deed of said national banking association for the uses and purposes therein mentioned and on oath stated that s/he was authorized to execute said instrument on behalf of said national banking association.

IN WITNESS WHEREOF, I have hereunto set my hand and official seal the day and year first above written.

/s/ Kim J. Kropp
Print name:	Kim J. Kropp
Notary Public in and for the State of
Washington, residing at Sammamish
My commission expires:		12/19/2011

First Supplemental Indenture to Second Amended and Restated Indenture of Trust

- Trustee Signature Page

EXHIBIT A

SCHEDULE OF RECORDING INFORMATION

Document	Type of Filing	Location for Filing with Secretary of State	Amendment Filing No.	Initial Filing NO.	Document No.	Date Filed
Indenture

Exhibit A

EXHIBIT B

FORM OF 2011 SERIES A BONDS

Exhibit B

See the Form of 2011 Series A Bond (Tranche A) due March 15, 2031 filed as Exhibit 4.21 and the Form of the 2011 Series A Bond (Tranche B) due March 15, 2041 filed as Exhibit 4.22 to this 2010 Form 10-K Annual Report

B-1

EX-4.20

Exhibit 4.20

Execution Version

Chugach Electric Association, Inc.

$90,000,000 4.20% First Mortgage Bonds, 2011 Series A

Due March 15, 2031

$185,000,000 4.75% First Mortgage Bonds, 2011 Series A

Due March 15, 2041

_____________

Bond Purchase Agreement

_____________

Dated January 21, 2011

Table of Contents

Section		Heading	Page
Section 1.		Authorization of 2011 Series A Bonds	1
Section 2.		Sale and Purchase of 2011 Series A Bonds	2
Section 3.		Closing	2
Section 4.		Conditions to Closing	2
	Section 4.1.	Representations and Warranties	3
	Section 4.2.	Performance; No Default	3
	Section 4.3.	Compliance Certificates	3
	Section 4.4.	Opinions of Counsel	3
	Section 4.5.	Purchase Permitted by Applicable Law, Etc	3
	Section 4.6.	Sale of Other Bonds	4
	Section 4.7.	Payment of Special Counsel Fees	4
	Section 4.8.	Private Placement Number	4
	Section 4.9.	Changes in Corporate Structure	4
	Section 4.10.	Funding Instructions	4
	Section 4.11.	UCC Financing Statements and Indenture	4
	Section 4.12.	Proceedings and Documents	5
	Section 4.13.	Documents Required by Indenture; Basis for Authentication	5
	Section 4.14.	Regulatory Approval	5
	Section 4.15.	Consents Under Existing Debt Agreements	5
	Section 4.16.	Acceptance of Appointment to Receive Service of Process	5
Section 5.		Representations and Warranties of the Company	5
	Section 5.1.	Organization; Power and Authority	5
	Section 5.2.	Authorization, Etc	6
	Section 5.3.	Disclosure	6
	Section 5.4.	Organization and Ownership of Shares of Subsidiaries	6
	Section 5.5.	Financial Statements; Material Liabilities	6
	Section 5.6.	Compliance with Laws, Other Instruments, Etc	6
	Section 5.7.	Governmental Authorizations, Etc	7
	Section 5.8.	Litigation; Observance of Statutes and Orders	7
	Section 5.9.	Taxes	7
	Section 5.10.	Title to Property; Leases	7
	Section 5.11.	Licenses, Permits, Etc	8
	Section 5.12.	Compliance with ERISA	8
	Section 5.13.	Private Offering by the Company	9
	Section 5.14.	Use of Proceeds; Margin Regulations	9
	Section 5.15.	Existing Indebtedness	9

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	Section 5.16.	Foreign Assets Control Regulations, Etc	10
	Section 5.17.	Status under Certain Statutes	10
	Section 5.18.	Lien of Indenture	10
	Section 5.19.	Filings	11
Section 6.		Representations of the Purchasers	11
	Section 6.1.	Purchase for Investment	11
	Section 6.2.	Source of Funds	11
Section 7.		Information as to Company	13
	Section 7.1.	Financial and Business Information	13
	Section 7.2.	Officer’s Certificate	16
	Section 7.3.	Visitation	17
Section 8.		Affirmative Covenants	17
	Section 8.1.	Compliance with Law	17
	Section 8.2.	Insurance	17
	Section 8.3.	Maintenance of Properties	17
	Section 8.4.	Payment of Taxes	18
	Section 8.5.	Corporate Existence, Etc	18
	Section 8.6.	Books and Records	18
Section 9.		Negative Covenants	18
	Section 9.1.	Transactions with Affiliates	18
	Section 9.2.	Line of Business	19
	Section 9.3.	Terrorism Sanctions Regulations	19
Section 10.		Registration; Exchange; Substitution of 2011 Series A Bonds	19
Section 11.		Payments on 2011 Series A Bonds	19
Section 12.		Expenses, Etc	20
	Section 12.1.	Transaction Expenses	20
	Section 12.2.	Survival	20
Section 13.		Survival of Representations and Warranties; Entire Agreement	20
Section 14.		Amendment and Waiver	21
	Section 14.1.	Requirements	21
	Section 14.2.	Solicitation of Holders of 2011 Series A Bonds	21
	Section 14.3.	Binding Effect, Etc	21

- ii -

	Section 14.4.	2011 Series A Bonds Held by Company, Etc	22
Section 15.		Notices	22
Section 16.		Indemnification	23
Section 17.		Reproduction of Documents	23
Section 18.		Confidential Information	23
Section 19.		Substitution of Purchaser	24
Section 20.		Miscellaneous	24
	Section 20.1.	Successors and Assigns	24
	Section 20.2.	Payments Due on Non-Business Days	25
	Section 20.3.	Accounting Terms	25
	Section 20.4.	Severability	25
	Section 20.5.	Construction, Etc	25
	Section 20.6.	Counterparts	25
	Section 20.7.	Governing Law	26
	Section 20.8.	Jurisdiction and Process; Waiver of Jury Trial	26

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Schedule A	—	Information Relating to Purchasers
Schedule B	—	Defined Terms
Schedule 4.11	—	Collateral Filings
Schedule 5.3	—	Disclosure Documents
Schedule 5.5	—	Financial Statements
Schedule 5.7	—	Governmental Authorizations
Schedule 5.15	—	Existing Indebtedness
Exhibit A	—	New Indenture
Exhibit B	—	First Supplemental Indenture
Exhibit 4.4(a)(i)	—	Form of Opinion of Special Counsel to the Company
Exhibit 4.4(a)(ii)	—	Form of Opinion of General Counsel to the Company
Exhibit 4.4(b)	—	Form of Opinion of Special Counsel to the Purchasers

- iv -

Chugach Electric Association, Inc.

5601 Electron Drive

Anchorage, Alaska 99518

$90,000,000 4.20% First Mortgage Bonds, 2011 Series A

Due March 15, 2031

$185,000,000 4.75% First Mortgage Bonds, 2011 Series A

Due March 15, 2041

January 21, 2010

To Each of The Purchasers Listed in

Schedule A Hereto:

Ladies and Gentlemen:

Chugach Electric Association, Inc., an Alaska electric cooperative (the “Company”), agrees with each of the purchasers whose names appear at the end hereof (each, a “Purchaser” and, collectively, the “Purchasers”) as follows:

Section 1. Authorization of 2011 Series A Bonds.

The Company is party to an Amended and Restated Indenture of Trust between the Company and U.S. Bank National Association, as Trustee, dated April 1, 2001 (the “Original Indenture”), pursuant to which the Company has issued and sold certain bonds.  The Company intends to amend and restate the Original Indenture by entering into a Second Amended and Restated Indenture of Trust between the Company and U.S. Bank National Association, as Trustee, substantially in the form attached hereto as Exhibit A, with such changes therein, if any as shall be approved by the Purchasers and the Company (the “New Indenture”).  The Company will authorize the issue and sale of (i) $90,000,000 4.20% First Mortgage Bonds, 2011 Series A Due March 15, 2031 (the “Tranche A Bonds”) and (ii) $185,000,000 4.75% First Mortgage Bonds, 2011 Series A Due March 15, 2041 (the “Tranche B Bonds” and together with the Tranche A Bonds, the “2011 Series A Bonds,” such term to include any such bonds issued in substitution therefor pursuant to the Indenture).  The 2011 Series A Bonds will be issued under and secured by the New Indenture, as further supplemented by the First Supplemental Indenture of Trust (such First Supplemental Indenture being referred to as the “First Supplemental Indenture”).  The First Supplemental Indenture will be substantially in the form attached hereto as Exhibit B, with such changes therein, if any, as shall be approved by the Purchasers and the Company.  The New Indenture, as further amended and supplemented from time to time, including by the First Supplemental Indenture, is hereinafter referred to as the “Indenture.”

Certain capitalized and other terms used in this Agreement are defined in Schedule B; and references to a “Schedule” or an “Exhibit” are, unless otherwise specified, to a Schedule or an Exhibit attached to this Agreement.  Terms used herein but not defined herein shall have the meanings set forth in the Indenture.

Section 2. Sale and Purchase of 2011 Series A Bonds.

Subject to the terms and conditions of this Agreement, the Company will issue and sell to each Purchaser and each Purchaser will purchase from the Company, at the Closing provided for in Section 3, 2011 Series A Bonds of the tranche and in the principal amount specified opposite such Purchaser’s name in Schedule A at the purchase price of 100% of the principal amount thereof.  The Purchasers’ obligations hereunder are several and not joint obligations and no Purchaser shall have any liability to any Person for the performance or non-performance of any obligation by any other Purchaser hereunder.

Section 3. Closing.

The sale and purchase of the 2011 Series A Bonds to be purchased by each Purchaser shall occur at the offices of Chapman and Cutler LLP, 111 West Monroe, Chicago, IL, at 10:00 a.m., Chicago time, at a closing (the “Closing”) on January 21, 2011 or on such other Business Day thereafter on or prior to January 24, 2011 as may be agreed upon by the Company and the Purchasers.  At the Closing the Company will deliver to each Purchaser the 2011 Series A Bonds to be purchased by such Purchaser in the form of a single 2011 Series A Bond of each tranche of the 2011 Series A Bonds being purchased by such Purchaser (or such greater number of 2011 Series A Bonds of the appropriate maturity in denominations of at least $100,000 as such Purchaser may request) dated the date of the Closing and registered in such Purchaser’s name (or in the name of its nominee), against delivery by such Purchaser to the Company or its order of immediately available funds in the amount of the purchase price therefor by wire transfer of immediately available funds for the account of the Company to U.S. Bank National Association(ABA #091000022), U.S. Bank Corporate Trust Account No. 180121167365) (Reference: Chugach Electric 2011A, Attn: Ryan Brennan).  If at the Closing the Company shall fail to tender such 2011 Series A Bonds to any Purchaser as provided above in this Section 3, or any of the conditions specified in Section 4 shall not have been fulfilled to such Purchaser’s satisfaction, such Purchaser shall, at its election, be relieved of all further obligations under this Agreement, without thereby waiving any rights such Purchaser may have by reason of such failure or such nonfulfillment.  The Company’s obligation to issue and sell to each Purchaser the Bonds to be sold to such Purchaser is subject to fulfillment, at Closing, of the condition set forth in Section 4.6.

Section 4. Conditions to Closing.

Each Purchaser’s obligation to purchase and pay for the 2011 Series A Bonds to be sold to such Purchaser at the Closing is subject to the fulfillment to such Purchaser’s satisfaction, prior to or at the Closing, of the following conditions:

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Section 4.1.Representations and Warranties.  The representations and warranties of the Company in the Financing Agreements shall be correct when made and at the time of the Closing.

Section 4.2.Performance; No Default.  The Company shall have performed and complied with all agreements and conditions contained in the Financing Agreements required to be performed or complied with by it prior to or at the Closing and after giving effect to the issue and sale of the 2011 Series A Bonds (and the application of the proceeds thereof as contemplated by Section 5.14) no Default or Event of Default shall have occurred and be continuing.

Section 4.3.Compliance Certificates.

(a) Officer’s Certificates.  The Company shall have delivered to such Purchaser an Officer’s Certificate, dated the date of the Closing, certifying (i) that the conditions specified in Section 4 of this Agreement have been fulfilled, (ii) an attached true, complete and correct copy of the Indenture, and (iii) attached true, complete and correct copies of all certificates and opinions delivered to the Trustee under the Indenture in connection with the issuance of the 2011 Series A Bonds under the Indenture.

(b)Secretary’s Certificate.  The Company shall have delivered to such Purchaser a certificate of its Secretary, Assistant Secretary, or other officer authorized by the Company to make such certification, dated the date of Closing, certifying as to the resolutions attached thereto and other corporate proceedings relating to the authorization, execution and delivery of the Financing Agreements.

(c)Secretary’s Certificate of the Trustee. The Trustee shall have delivered to such Purchaser a certificate of a corporate trust officer, dated the date of the Closing, certifying as to the resolutions attached thereto and the authorization, execution and delivery of the Indenture and Bonds.

Section 4.4.Opinions of Counsel.  Such Purchaser shall have received opinions in form and substance satisfactory to such Purchaser, dated the date of the Closing (a) from (i) Davis Wright Tremaine LLP, counsel for the Company, and (ii) Mark K. Johnson, General Counsel to the Company, covering the matters set forth in Exhibits 4.4(a)(i) and 4.4(a)(ii), respectively, and covering such other matters incident to the transactions contemplated hereby as such Purchaser or its counsel may reasonably request (and the Company hereby authorizes its counsel to deliver such opinion to the Purchasers) and (b) from Chapman and Cutler LLP, the Purchasers’ special counsel in connection with such transactions, substantially in the form set forth in Exhibit 4.4(b) and covering such other matters incident to such transactions as such Purchaser may reasonably request.

Section 4.5.Purchase Permitted by Applicable Law, Etc.  On the date of the Closing such Purchaser’s purchase of 2011 Series A Bonds shall (a) be permitted by the laws and regulations of each jurisdiction to which such Purchaser is subject, without recourse to provisions (such as section 1405(a)(8) of the New York Insurance Law) permitting limited investments by insurance companies without restriction as to the character of the particular investment, (b) not violate any applicable law or regulation (including, without limitation, Regulation T, U or X of the Board of Governors of the Federal Reserve System) and (c) not subject such Purchaser to any tax, penalty or liability under or pursuant to any applicable law or regulation, which law or regulation was not in effect on the date hereof.  If requested by such Purchaser, such Purchaser shall have received an Officer’s Certificate certifying as to such matters of fact as such Purchaser may reasonably specify to enable such Purchaser to determine whether such purchase is so permitted.

- 3 -

Section 4.6.Sale of Other Bonds.  Contemporaneously with the Closing the Company shall sell to each other Purchaser and each other Purchaser shall purchase the 2011 Series A Bonds to be purchased by it at the Closing as specified in Schedule A.

Section 4.7.Payment of Special Counsel Fees.  Without limiting the provisions of Section 12.1, the Company shall have paid on or before the Closing the fees, charges and disbursements of the Purchasers’ special counsel referred to in Section 4.4(b) to the extent reflected in a statement of such counsel rendered to the Company at least one Business Day prior to the Closing.

Section 4.8.Private Placement Number.  A Private Placement Number issued by Standard & Poor’s CUSIP Service Bureau (in cooperation with the SVO) shall have been obtained for each tranche of the 2011 Series A Bonds.

Section 4.9.Changes in Corporate Structure.  The Company shall not have changed its jurisdiction of incorporation or organization, as applicable, or been a party to any merger or consolidation or succeeded to all or any substantial part of the liabilities of any other entity, at any time following the date of the most recent financial statements referred to in Schedule 5.5.

Section 4.10.Funding Instructions.  At least three Business Days prior to the date of the Closing, each Purchaser shall have received written instructions signed by a Responsible Officer on letterhead of the Company confirming the information specified in Section 3 including (i) the name and address of the transferee bank, (ii) such transferee bank’s ABA number and (iii) the account name and number into which the purchase price for the 2011 Series A Bonds is to be deposited.

Section 4.11.UCC Financing Statements and Indenture. The Company shall have caused (i) the New Indenture and the First Supplemental Indenture to have been recorded or filed at or prior to the Closing as a real estate mortgage in such manner and in all places in which recording is necessary to preserve and protect the lien of the Indenture upon any of the properties of the Company specifically described therein as subject to the lien of the Indenture, and which are described in Schedule 4.11, (ii) all financing statements under the UCC with respect to the personal property described in the granting clauses of the Indenture to have been filed in all places necessary to perfect and protect the security interest granted by the Indenture to the extent such security can be perfected by the filing of appropriate financing statements, and which are described in Schedule 4.11 (all such recordations and filings as provided in clauses (i) and (ii) of this Section 4.11 being referred to as the“Collateral Filings”), and (iii) all taxes, fees and other charges payable in connection with the execution, delivery and filing of the Indenture to have been paid in full.

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Section 4.12.Proceedings and Documents.  All corporate and other proceedings in connection with the transactions contemplated by this Agreement and all documents and instruments incident to such transactions shall be satisfactory to such Purchaser and its special counsel, and such Purchaser and its special counsel shall have received all such counterpart originals or certified or other copies of such documents as such Purchaser or such special counsel may reasonably request.

Section 4.13.Documents Required by Indenture; Basis for Authentication.  The Company shall have furnished to the Trustee the resolutions, certificates, instruments, opinions and cash, if any, required to be delivered prior to or upon the issuance of the Bonds pursuant to the provisions of the Indenture.  The Company shall have requested the Trustee to, and the Trustee shall have, authenticated the Bonds pursuant to Article 5 of the Indenture.  The Company shall have complied with all other conditions with respect to the issuance and authentication of the Bonds imposed by the Indenture.

Section 4.14.Regulatory Approval.  Prior to the Closing, such Purchaser and its special counsel shall have received evidence, including, without limitation, an opinion of counsel, in form and substance satisfactory to such Purchaser and its special counsel, demonstrating that all approvals and authorizations of (a) the Federal Energy Regulatory Commission under the Federal Power Act and (b) the Regulatory Commission of Alaska under the laws of the State of Alaska which are required to be obtained in connection with the issuance of the Bonds, and the execution and delivery by the Company of, and the performance by the Company of its obligations under, the Financing Agreements have been duly obtained, validly issued and are in full force and effect and final, and all periods for appeal and rehearing by third parties have expired and all conditions contained in such approvals and authorizations which are to be fulfilled on or prior to the issuance of the Bonds have been fulfilled.

Section 4.15.Consents Under Existing Debt Agreements.  The Company shall have obtained all consents required under its existing debt agreements in connection with the Company’s incurrence of the Indebtedness under the Financing Agreements.

Section 4.16.Acceptance of Appointment to Receive Service of Process.  Such Purchaser shall have received evidence of the acceptance by CT Corporation System of the appointment and designation provided for by Section 20.8(b) (and the payment of all fees in respect thereof for the period from the date of the Closing to a date not earlier than the third anniversary date of the Closing).

Section 5. Representations and Warranties of the Company.

The Company represents and warrants to each Purchaser that:

Section 5.1.Organization; Power and Authority.  The Company is an electric cooperative duly organized, validly existing and in good standing under the laws of the State of Alaska.  The Company has the corporate power and authority to own or hold under lease the properties it purports to own or hold under lease, to transact the business it transacts and proposes to transact, to execute and deliver the Financing Agreements and to perform the provisions hereof and thereof.

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Section 5.2.Authorization, Etc.  The Financing Agreements have been duly authorized by all necessary corporate action on the part of the Company, and the Financing Agreements constitute, and upon execution and delivery thereof the 2011 Series A Bonds will constitute, a legal, valid and binding obligation of the Company enforceable against the Company in accordance with their terms, except as such enforceability may be limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors’ rights generally and (ii) general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).

Section 5.3.Disclosure.  The Company, through its agent, Banc of America Securities LLC, has delivered to the Purchasers a copy of a Private Placement Memorandum, dated November 2010 (the “Memorandum”), relating to the transactions contemplated hereby.  This Agreement, the Memorandum and the documents, certificates or other writings delivered to the Purchasers by or on behalf of the Company in connection with the transactions contemplated hereby and identified in Schedule 5.3, and the financial statements listed in Schedule 5.5 (this Agreement, the Memorandum and such documents, certificates or other writings and such financial statements delivered to each Purchaser prior to November 18, 2010 being referred to, collectively, as the “Disclosure Documents”), taken as a whole, do not contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein not misleading in light of the circumstances under which they were made.  Except as disclosed in the Disclosure Documents, since December 31, 2009, there has been no change in the financial condition, operations, business, or properties of the Company except changes that individually or in the aggregate would not reasonably be expected to have a Material Adverse Effect.

Section 5.4.No Subsidiaries.  The Company has no Subsidiaries.

Section 5.5.Financial Statements; Material Liabilities.  The Company has delivered to each Purchaser copies of the financial statements of the Company listed on Schedule 5.5.  All of said financial statements (including in each case the related schedules and notes) fairly present in all material respects the financial position of the Company as of the respective dates specified in such Schedule and the results of its operations and cash flows for the respective periods so specified and have been prepared in accordance with GAAP consistently applied throughout the periods involved except as set forth in the notes thereto (subject, in the case of any interim financial statements, to normal year-end adjustments).  The Company does not have any Material liabilities that are not disclosed on such financial statements or otherwise disclosed in the Disclosure Documents.

Section 5.6.Compliance with Laws, Other Instruments, Etc.  The execution, delivery and performance by the Company of the Financing Agreements will not (i) contravene, result in any breach of, or constitute a default under, or result in the creation of any Lien, other than the Lien created under the Indenture, in respect of any property of the Company under, any indenture, mortgage, deed of trust, loan, purchase or credit agreement, lease, corporate charter or by-laws, or any other Material agreement or instrument to which the Company is bound or by which the Company or any of its properties may be bound or affected, (ii) conflict with or result in a breach of any of the terms, conditions or provisions of any order, judgment, decree, or ruling of any court, arbitrator or Governmental Authority applicable to the Company or (iii) violate any provision of any statute or other rule or regulation of any Governmental Authority applicable to the Company.

- 6 -

Section 5.7.Governmental Authorizations, Etc.  Except for the Collateral Filings contemplated by Section 4.11, no consent, approval or authorization of, or registration, filing or declaration with, any Governmental Authority is required in connection with the execution, delivery or performance by the Company of the Financing Agreements.

Section 5.8.Litigation; Observance of Statutes and Orders.  (a) There are no actions, suits, investigations or proceedings pending or, to the knowledge of the Company, threatened against or affecting the Company or any property of the Company in any court or before any arbitrator of any kind or before or by any Governmental Authority that, individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect.

(b)The Company is not in default under any order, judgment, decree or ruling of any court, arbitrator or Governmental Authority or in violation of any applicable law, ordinance, rule or regulation (including without limitation Environmental Laws or the USA Patriot Act) of any Governmental Authority, which default or violation, individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect.

Section 5.9.Taxes.  The Company has filed all income tax returns that are required to have been filed in any jurisdiction, and have paid all taxes shown to be due and payable on such returns and all other taxes and assessments payable by them, to the extent such taxes and assessments have become due and payable and before they have become delinquent, except for any taxes and assessments (i) the amount of which is not individually or in the aggregate Material or (ii) the amount, applicability or validity of which is currently being contested in good faith by appropriate proceedings and with respect to which the Company, as the case may be, has established adequate reserves in accordance with GAAP.  The Federal income tax liabilities of the Company have been finally determined (whether by reason of completed audits or the statute of limitations having run) for all fiscal years up to and including the fiscal year ended December 31, 2006.

Section 5.10.Title to Property; Leases.  The Company has good and sufficient title to its Material properties, including all such properties reflected in the most recent audited balance sheet referred to in Section 5.5 or purported to have been acquired by the Company after said date (except as sold or otherwise disposed of in the ordinary course of business), in each case free and clear of Liens (other than the Lien created by the Indenture) prohibited by this Agreement or the Indenture.  All Material leases are valid and subsisting and are in full force and effect in all material respects.

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Section 5.11.Licenses, Permits, Etc.  The Company owns or possesses all licenses, permits, franchises, authorizations, patents, copyrights, proprietary software, service marks, trademarks and trade names, or rights thereto, that are Material, without known conflict with the rights of others, except for those conflicts that, individually or in the aggregate, would not have a Material Adverse Effect.

Section 5.12.Compliance with ERISA.  (a) The Company and each ERISA Affiliate have operated and administered each Plan in compliance with all applicable laws except for such instances of noncompliance as have not resulted in and could not reasonably be expected to result in a Material Adverse Effect.  Neither the Company nor any ERISA Affiliate has incurred any liability pursuant to Title I or IV of ERISA or the penalty or excise tax provisions of the Code relating to “employee benefit plans” (as defined in section 3 of ERISA); and no event, transaction or condition has occurred or exists that would reasonably be expected to result in the incurrence of any such liability by the Company or any ERISA Affiliate, or in the imposition of any Lien on any of the rights, properties or assets of the Company or any ERISA Affiliate, in either case pursuant to Title I or IV of ERISA or to such penalty or excise tax provisions or to section 401(a)(29) or 412 of the Code or section 4068 of ERISA, other than such liabilities or Liens as would not be reasonably be expected individually or in the aggregate to have a Material Adverse Effect.

(b)    The present value of the aggregate benefit liabilities under each of the Plans (other than Multiemployer Plans) subject to Section 412 of the Code or Title IV of ERISAthat is attributable to the employees of the Company and each of its ERISA Affiliates, determined as of the end of such Plan’s most recently ended plan year on the basis of the actuarial assumptions specified for funding purposes in such Plan’s most recent actuarial valuation report, did not exceed the aggregate current value of the assets of such Plan allocable to such benefit liabilities by more than$6,128,000 in the case of any single Plan and by more than$6,128,000 in the aggregate for all Plans.  The term “benefit liabilities” has the meaning specified in section 4001 of ERISA and the terms “current value” and “present value” have the meanings specified in section 3 of ERISA.

(c)    The Company and its ERISA Affiliates have not incurred withdrawal liabilities (and are not subject to contingent withdrawal liabilities) under section 4201 or 4204 of ERISA in respect of Multiemployer Plans that individually or in the aggregate are Material.

(d)    The expected postretirement benefit obligation (determined as of the last day of the Company’s most recently ended fiscal year in accordance with Financial Accounting Standards Board Statement No. 106, without regard to liabilities attributable to continuation coverage mandated by section 4980B of the Code) of the Company is not Material.

(e)    The execution and delivery of this Agreement and the issuance and sale of the 2011 Series A Bonds hereunder will not involve any transaction that is subject to the prohibitions of section 406 of ERISA or in connection with which a tax could be imposed pursuant to section 4975(c)(1)(A)-(D) of the Code.  The representation by the Company to each Purchaser in the first sentence of this Section 5.12(e) is made in reliance upon and subject to the accuracy of such Purchaser’s representation in Section 6.2 as to the sources of the funds used to pay the purchase price of the 2011 Series A Bonds to be purchased by such Purchaser.

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Section 5.13.Private Offering by the Company.  Neither the Company nor anyone acting on its behalf has offered the 2011 Series A Bonds or any similar securities for sale to, or solicited any offer to buy any of the same from, or otherwise approached or negotiated in respect thereof with, any person other than the Purchasers and thirty-five (35) other Institutional Investors, each of which has been offered the 2011 Series A Bonds at a private sale for investment.  Neither the Company nor anyone acting on its behalf has taken, or will take, any action that would subject the issuance or sale of the 2011 Series A Bonds to the registration requirements of Section 5 of the Securities Act or to the registration requirements of any securities or blue sky laws of any applicable jurisdiction.

Section 5.14.Use of Proceeds; Margin Regulations.  The Company will apply the proceeds of the sale of the 2011 Series A Bonds to repay existing Indebtedness and for general corporate purposes of the Company.No part of the proceeds from the sale of the 2011 Series A Bonds hereunder will be used, directly or indirectly, for the purpose of buying or carrying any margin stock within the meaning of Regulation U of the Board of Governors of the Federal Reserve System (12 CFR 221), or for the purpose of buying or carrying or trading in any securities under such circumstances as to involve the Company in a violation of Regulation X of said Board (12 CFR 224) or to involve any broker or dealer in a violation of Regulation T of said Board (12 CFR 220).  Margin stock does not constitute more than 0.5% of the value of the assets of the Company and the Company does not have any present intention that margin stock will constitute more than 0.5% of the value of such assets.  As used in this Section, the terms “margin stock” and “purpose of buying or carrying” shall have the meanings assigned to them in said Regulation U.

Section 5.15.Existing Indebtedness.  (a) Except as described therein or the financial statements listed on Schedule 5.5, Schedule 5.15(a) sets forth a complete and correct list of all outstanding Indebtedness of the Company as of June 30, 2010 (including, except with respect to trade payables incurred in the ordinary course of business and not exceeding $5,000,000 in the aggregate, a description of the obligees, principal amount outstanding and collateral therefor, if any, and Guaranty thereof, if any), since which date there has been no Material change in the amounts, interest rates, sinking funds, installment payments or maturities of the Indebtedness of the Company.  The Company is not in default and no waiver of default is currently in effect in the payment of any principal or interest on any Indebtedness of the Company and no event or condition exists with respect to any Indebtedness of the Company the outstanding principal amount of which exceeds $5,000,000 that would permit (or that with notice or the lapse of time, or both, would permit) one or more Persons to cause such Indebtedness to become due and payable before its stated maturity or before its regularly scheduled dates of payment.

(b)    The Company is not a party to, or otherwise subject to any provision contained in, any instrument evidencing Indebtedness of the Company, any agreement relating thereto or any other agreement (including, but not limited to, its charter or other organizational document) which limits the amount of, or otherwise imposes restrictions on the incurring of, Indebtedness of the Company, except as specifically indicated in Schedule 5.15(b).

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Section 5.16.Foreign Assets Control Regulations, Etc.  (a) Neither the sale of the 2011 Series A Bonds by the Company hereunder nor its use of the proceeds thereof will violate the Trading with the Enemy Act, as amended, or any of the foreign assets control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling legislation or executive order relating thereto.

(b)    The Company (i) is not a Person described or designated in the Specially Designated Nationals and Blocked Persons List of the Office of Foreign Assets Control or in Section 1 of the Anti-Terrorism Order and (ii) does not engage in any dealings or transactions with any such Person in violation of applicable law.  The Company is in compliance, in all material respects, with the USA Patriot Act.

(c)    The Company shall not use any part of the proceeds from the sale of the 2011 Series A Bonds hereunder will be used, directly or indirectly, to knowingly make payments to any governmental official or employee, political party, official of a political party, candidate for political office, or anyone else acting in an official capacity, in order to obtain, retain or direct business or obtain any improper advantage, in violation of the United States Foreign Corrupt Practices Act of 1977, as amended, assuming in all cases that such Act applies to the Company.

Section 5.17.Status under Certain Statutes.  The Company is not subject to regulation (a) under the Investment Company Act of 1940, as amended, (b) under the Public Utility Holding Company Act of 2005, as amended, (c) under the ICC Termination Act of 1995, as amended, or (d) as a “public utility” under the Federal Power Act, as amended.

Section 5.18.Lien of Indenture.  (a) Upon execution, delivery and recordation of the New Indenture, the New Indenture will constitute a valid first priority Lien upon all of the properties and assets of the Company specifically or generally described or referred to in the Indenture as being subject to the Lien thereof, subject only to the exceptions referred to or permitted in the Indenture, and will create a first priority Lien upon all properties and assets acquired by the Company after the date of the New Indenture which are required to be subjected to the Lien of the Indenture, when acquired by the Company, subject only to the exceptions referred to or permitted in the Indenture and subject, further, as to real property, to the recordation of a supplement to the Indenture describing such after-acquired property (provided no intervening Liens shall have been filed or recorded against such property prior to the filing or recording of such supplement).  The descriptions of all such properties and assets contained in the granting clauses of, and exhibits to, the Indenture are correct and adequate for the purposes of the Indenture.

(b)    Contemporaneously with, or prior to, the Closing, (i) the New Indenture will be duly executed and delivered and will be duly filed or recorded as an indenture of mortgage of real estate, and any required filings with respect to personal property and fixtures subject to the Lien of the Indenture will be duly made in each place in which such recording or filing is required to protect, preserve and perfect the Lien of the Indenture, (ii) the First Supplemental Indenture will be duly executed and delivered and will be duly filed or recorded in each place in which the New Indenture has been filed or recorded and in all other places required to protect, preserve and perfect the Lien of the Indenture, and (iii) all taxes and recording and filing fees required to be paid with respect to the execution and delivery of the New Indenture and the First Supplemental Indenture, the filing of financing statements related thereto and similar documents and the issuance of the 2011 Series A Bonds thereunder will be paid by the Company.

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(c)    At all times prior to and after the recording of the First Supplemental Indenture as provided in Section 5.18(b), the 2011 Series A Bonds, when executed by the Company, authenticated and delivered by the Trustee and issued by the Company to the Purchasers will be the legal, valid and binding obligations of the Company enforceable in accordance with their terms and the terms of the Indenture and entitled to the benefits of and secured by the Lien of the Indenture equally and ratably with all other Outstanding Secured Obligations.

(d)    As of the date hereof, the Company has no “Excludable Property” as defined in the Indenture.

Section 5.19.Filings.  No action, including any filings, registration or notice, is necessary in Alaska, or any other jurisdictions to ensure the legality, validity, enforceability, priority or perfection of the Financing Agreements except for the Collateral Filings set forth in Schedule 4.11, which will be filed or recorded on or prior to the date of Closing.  No other action, including any filing, registration or notice, is necessary in Alaska, or any other jurisdiction to establish or protect for the benefit of the Trustee and the holders of 2011 Series A Bonds, the security interest and Liens purported to be created under the Indenture and the other Financing Agreements, except in each case for the Collateral Filings and the filing of continuation statements with respect to any Collateral Filing at the time and in the manner provided under applicable law.

Section 6. Representations of the Purchasers.

Section 6.1.Purchase for Investment.  Each Purchaser severally represents that it is purchasing the 2011 Series A Bonds for its own account or for one or more separate accounts maintained by such Purchaser or for the account of one or more pension or trust funds and not with a view to the distribution thereof, provided that the disposition of such Purchaser’s or their property shall at all times be within such Purchaser’s or their control.  Each Purchaser understands that the 2011 Series A Bonds have not been registered under the Securities Act and may be resold only if registered pursuant to the provisions of the Securities Act or if an exemption from registration is available, except under circumstances where neither such registration nor such an exemption is required by law, and that the Company is not required to register the 2011 Series A Bonds.

Section 6.2.Source of Funds.  Each Purchaser severally represents that at least one of the following statements is an accurate representation as to each source of funds (a “Source”) to be used by such Purchaser to pay the purchase price of the 2011 Series A Bonds to be purchased by such Purchaser hereunder:

(a)    the Source is an “insurance company general account” (as the term is defined in the United States Department of Labor’s Prohibited Transaction Exemption (“PTE”) 95-60) in respect of which the reserves and liabilities (as defined by the annual statement for life insurance companies approved by the National Association of Insurance Commissioners (the “NAIC Annual Statement”)) for the general account contract(s) held by or on behalf of any employee benefit plan together with the amount of the reserves and liabilities for the general account contract(s) held by or on behalf of any other employee benefit plans maintained by the same employer (or affiliate thereof as defined in PTE 95-60) or by the same employee organization in the general account do not exceed 10% of the total reserves and liabilities of the general account (exclusive of separate account liabilities) plus surplus as set forth in the NAIC Annual Statement filed with such Purchaser’s state of domicile; or

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(b)    the Source is a separate account that is maintained solely in connection with such Purchaser’s fixed contractual obligations under which the amounts payable, or credited, to any employee benefit plan (or its related trust) that has any interest in such separate account (or to any participant or beneficiary of such plan (including any annuitant)) are not affected in any manner by the investment performance of the separate account; or

(c)    the Source is either (i) an “insurance company pooled separate account,” (within the meaning of PTE 90-1) or (ii) a “bank collective investment fund” (within the meaning of the PTE 91-38) and, except as disclosed by such Purchaser to the Company in writing pursuant to this clause (c), no employee benefit plan or group of plans maintained by the same employer or employee organization beneficially owns more than 10% of all assets allocated to such pooled separate account or collective investment fund; or

(d)    the Source constitutes assets of an “investment fund” (within the meaning of Part VI of PTE 84-14 (the “QPAM Exemption”)) managed by a “qualified professional asset manager” or “QPAM” (within the meaning of Part VI of the QPAM Exemption); no employee benefit plan’s assets that are included in such investment fund, when combined with the assets of all other employee benefit plans established or maintained by the same employer or by an “affiliate” (within the meaning of Section VI(c)(1) of the QPAM Exemption) of such employer or by the same employee organization and managed by such QPAM, exceed 20% of the total client assets managed by such QPAM, the conditions of Part I(c) and (g) of the QPAM Exemption are satisfied, neither the QPAM nor a person controlling or controlled by the QPAM (applying the definition of “control” in Section VI(e) of the QPAM Exemption) owns a 5% or more interest in the Company  and (i) the identity of such QPAM and (ii) the names of all employee benefit plans whose assets are included in such investment fund have been disclosed to the Company in writing pursuant to this clause (d); or

(e)    the Source constitutes assets of a “plan(s)” (within the meaning of Section IV of PTE 96-23 (the “INHAM Exemption”)) managed by an “in-house asset manager” or “INHAM” (within the meaning of Part IV of the INHAM Exemption); the conditions of Part I(a), (g) and (h) of the INHAM Exemption are satisfied; neither the INHAM nor a person controlling or controlled by the INHAM (applying the definition of “control” in Section IV(d) of the INHAM Exemption) owns a 5% or more interest in the Company and (i) the identity of such INHAM and (ii) the name(s) of the employee benefit plan(s) whose assets constitute the Source have been disclosed to the Company in writing pursuant to this clause (e); or

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(f)    the Source is a governmental plan; or

(g)    the Source is one or more employee benefit plans, or a separate account or trust fund comprised of one or more employee benefit plans, each of which has been identified to the Company in writing pursuant to this clause (g); or

(h)    the Source does not include “assets” of any employee benefit plan, other than a plan exempt from the coverage of ERISA.

As used in this Section 6.2, the terms “employee benefit plan,” “governmental plan,” and “separate account” shall have the respective meanings assigned to such terms in section 3 of ERISA.

Section 7. Information as to Company.

Section 7.1.Financial and Business Information.  The Company shall deliver to each holder of 2011 Series A Bonds that is an Institutional Investor:

(a)    Quarterly Statements — within 60 days (or such shorter period as is 15 days greater than the period applicable to the filing of the Company’s Quarterly Report on Form 10-Q (the “Form 10-Q”) with the SEC regardless of whether the Company is subject to the filing requirements thereof) after the end of each quarterly fiscal period in each fiscal year of the Company (other than the last quarterly fiscal period of each such fiscal year), duplicate copies of,

(i)    a consolidated balance sheet of the Company and its Subsidiaries as at the end of such quarter, and

(ii)    consolidated statements of income and changes in cash flows of the Company and its Subsidiaries, for such quarter and (in the case of the second and third quarters) for the portion of the fiscal year ending with such quarter,

setting forth in each case in comparative form the figures for the corresponding periods in the previous fiscal year, all in reasonable detail, prepared in accordance with GAAP applicable to quarterly financial statements generally, and certified by a Senior Financial Officer as fairly presenting, in all material respects, the financial position of the companies being reported on and their results of operations and cash flows, subject to changes resulting from year-end adjustments;

(b)    Annual Statements — within 105 days (or such shorter period as is 15 days greater than the period applicable to the filing of the Company’s Annual Report on Form 10 K (the “Form 10 K”) with the SEC regardless of whether the Company is subject to the filing requirements thereof) after the end of each fiscal year of the Company, duplicate copies of,

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(i)    a consolidated balance sheet of the Company and its Subsidiaries, as at the end of such year, and

(ii)    consolidated statements of income, changes in patronage capital and membership fees and cash flows of the Company and its Subsidiaries for such year,

setting forth in each case in comparative form the figures for the previous fiscal year, all in reasonable detail, prepared in accordance with GAAP, and accompanied by an opinion thereon of independent public accountants of recognized national standing, which opinion shall state that such financial statements present fairly, in all material respects, the financial position of the companies being reported upon and their results of operations and cash flows and have been prepared in conformity with GAAP, and that the examination of such accountants in connection with such financial statements has been made in accordance with generally accepted auditing standards, and that such audit provides a reasonable basis for such opinion in the circumstances, provided that the delivery within the time period specified above of the Company’s Annual Report on Form 10-K for such fiscal year (together with the Company’s annual report to shareholders, if any, prepared pursuant to Rule 14a-3 under the Exchange Act) prepared in accordance with the requirements therefor and filed with the SEC shall be deemed to satisfy the requirements of this Section 7.1(b), and provided, further, that the Company shall be deemed to have made such delivery of such Form 10-K if it shall have timely made Electronic Delivery thereof;

(c)SEC and Other Reports — promptly upon their becoming available, one copy of (i) each financial statement, report, notice or proxy statement required to be sent by the Company or any Subsidiary to its principal lending banks as a whole (excluding information sent to such banks in the ordinary course of administration of a bank facility, such as information relating to pricing and borrowing availability) or to its public securities holders generally, and (ii) each regular or periodic report, each registration statement that shall have become effective (without exhibits except as expressly requested by such holder), and each final prospectus and all amendments thereto filed by the Company with the SEC or any Subsidiary;

(d)    Notice of Default or Event of Default — promptly, and in any event within five Business Days after a Responsible Officer becoming aware of the existence of any Default or Event of Default, a written notice specifying the nature and period of existence thereof and what action the Company is taking or proposes to take with respect thereto;

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(e)    ERISA Matters — promptly, and in any event within five Business Days after a Responsible Officer becoming aware of any of the following, a written notice setting forth the nature thereof and the action, if any, that the Company or an ERISA Affiliate proposes to take with respect thereto:

(i)    with respect to any Plan, any reportable event, as defined in section 4043(c) of ERISA and the regulations thereunder, for which notice thereof has not been waived pursuant to such regulations as in effect on the date hereof; or

(ii)    the taking by the PBGC of steps to institute, or the threatening by the PBGC of the institution of, proceedings under section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Plan, or the receipt by the Company or any ERISA Affiliate of a notice from a Multiemployer Plan that such action has been taken by the PBGC with respect to such Multiemployer Plan; or

(iii)    any event, transaction or condition that could result in the incurrence of any liability by the Company or any ERISA Affiliate pursuant to Title I or IV of ERISA or the penalty or excise tax provisions of the Code relating to employee benefit plans, or in the imposition of any Lien on any of the rights, properties or assets of the Company or any ERISA Affiliate pursuant to Title I or IV of ERISA or such penalty or excise tax provisions, if such liability or Lien, taken together with any other such liabilities or Liens then existing, would reasonably be expected to have a Material Adverse Effect;

(f)    Supplemental Indentures — promptly, and in any event within five Business Days after the execution and delivery thereof, a copy of any indenture supplemental to the Indenture that the Company from time to time may hereafter execute and deliver which amends the Indenture in any respect;

(g)    Notices from Governmental Authority — promptly, and in any event within 30 days of receipt thereof, copies of any notice to the Company or any Subsidiary from any Federal or state Governmental Authority relating to any order, ruling, statute or other law or regulation that could reasonably be expected to have a Material Adverse Effect;

 (h)    Certain Notices Under the Indenture — true, correct and complete copies of any notices required to be delivered by the Company to such holder pursuant to the terms and provisions of the Indenture; and

(i)     Requested Information — with reasonable promptness, such other data and information relating to the business, operations, affairs, financial condition, assets or properties of the Company or any of its Subsidiaries (including, but without limitation, actual copies of the Company’s Form 10-Q and Form 10-K, if any) or relating to the ability of the Company to perform its obligations under any Financing Agreement as from time to time may be reasonably requested by such holder of 2011 Series A Bonds after a Default that is continuing.

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All information required to be delivered by the Company pursuant to Section 7.1(a)-(c) shall be deemed to have been furnished if the Company shall have timely made the same available on the its website at www.chugachelectric.com and, substantially concurrently therewith (except in the case of the delivery of forms 10-K and 10-Q and any financial statements or other information contained therein, as to which no separate notification shall be necessary if such information has been posted on the Company’s website within the deadlines specified in Section 7.1(a) and Section 7.1(b)), shall have notified each holder of 2011 Series A Bonds that such information has been posted on its website and such information is fully accessible (such availability and notice thereof being referred to as “Electronic Delivery”), provided, that if any holder of 2011 Series A Bonds is unable to access the Company’s website the Company agrees to provide such holder with paper or electronic copies of such information required to be furnished pursuant to Section 7.1(a)-(c) promptly following notice (and thereafter so long as such notice remains in effect) from such holder.

Section 7.2.Officer’s Certificate. Each set of financial statements delivered to a holder of 2011 Series A Bonds pursuant to Section 7.1(a) shall be accompanied by a certificate of a Senior Financial Officer setting forth (which, in the case of Electronic Delivery of any such financial statements, shall be by separate concurrent delivery of such certificate to each holder of 2011 Series A Bonds):

(a)    Covenant Compliance — (i) the information (including detailed calculations) required in order to establish whether the Company was in compliance with the requirements of Sections 14.14 and 14.15 of the Indenture during the annual period covered by the statements then being furnished and (ii) to the extent the Company issued Additional Obligations (as defined in the Indenture) under the Indenture during the period covered by the statements being furnished, any calculations that the Company provided to the Trustee (as defined in the Indenture) to show compliance with the Indenture in connection with the issuance of the Additional Obligations (including with respect to each such Section, where applicable, the calculations of the maximum or minimum amount, ratio or percentage, as the case may be, permissible under the terms of such Sections, and the calculation of the amount, ratio or percentage then in existence); and

(b)    Event of Default — a statement that such Senior Financial Officer has reviewed the relevant terms hereof and of the Indenture and has made, or caused to be made, under his or her supervision, a review of the transactions and conditions of the Company and its Subsidiaries from the beginning of the annual period covered by the statements then being furnished to the date of the certificate and that such review shall not have disclosed the existence during such period of any condition or event that constitutes a Default or an Event of Default or, if any such condition or event existed or exists, specifying the nature and period of existence thereof and what action the Company shall have taken or proposes to take with respect thereto.

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Section 7.3.Visitation.  The Company shall permit the representatives of each holder of 2011 Series A Bonds that is an Institutional Investor:

(a)    No Default — if no Default or Event of Default then exists, at the expense of such holder and upon reasonable prior notice to the Company, to visit the principal executive office of the Company, to discuss the affairs, finances and accounts of the Company and its Subsidiaries with the Company’s officers, and, with the consent of the Company (which consent will not be unreasonably withheld) to visit the other offices and properties of the Company and each Subsidiary, all at such reasonable times and as often as may be reasonably requested in writing (but no Investor shall have the right to make such a request more frequently than once in any 12-month period); and

(b)    Default — if a Default or Event of Default then exists, at the expense of the Company to visit and inspect any of the offices or properties of the Company or any Subsidiary, to examine all their books of account and other relevant records, reports and documents, to make copies or extracts therefrom, and to discuss their respective affairs, finances and accounts with their respective officers and independent public accountants (and by this provision the Company authorizes said accountants to discuss the affairs, finances and accounts of the Company and its Subsidiaries if a Default or Event of Default then exists), all at such times and as often as may be reasonably requested in writing.

Section 8. Affirmative Covenants.

The Company covenants that so long as any of the 2011 Series A Bonds are outstanding:

Section 8.1.Compliance with Law.  Without limiting Section 9.2, the Company will and will cause each of its Subsidiaries to comply with all laws, ordinances or governmental rules or regulations to which each of them is subject, including, without limitation, ERISA, the USA Patriot Act and Environmental Laws, and will obtain and maintain in effect all licenses, certificates, permits, franchises and other governmental authorizations necessary to the ownership of their respective properties or to the conduct of their respective businesses, in each case to the extent necessary to ensure that non-compliance with such laws, ordinances or governmental rules or regulations or failures to obtain or maintain in effect such licenses, certificates, permits, franchises and other governmental authorizations would not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect.

Section 8.2.Insurance.  The Company will and will cause each of its Subsidiaries to maintain, with financially sound and reputable insurers, insurance with respect to their respective properties and businesses against such casualties and contingencies, of such types, on such terms and in such amounts (including deductibles, co-insurance and self-insurance, if adequate reserves are maintained with respect thereto) as is customary in the case of entities of established reputations engaged in the same or a similar business and similarly situated.

Section 8.3.Maintenance of Properties.  The Company will and will cause each of its Subsidiaries to maintain and keep, or cause to be maintained and kept, their respective properties in good repair, working order and condition (other than ordinary wear and tear), so that the business carried on in connection therewith may be properly conducted at all times, provided that this Section shall not prevent the Company or any Subsidiary from discontinuing the operation and the maintenance of any of its properties if such discontinuance is desirable in the conduct of its business and the Company has concluded that such discontinuance would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

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Section 8.4.Payment of Taxes.  The Company will and will cause each of its Subsidiaries to file all income tax or similar tax returns required to be filed in any jurisdiction and to pay and discharge all taxes shown to be due and payable on such returns and all other taxes, assessments, governmental charges, or levies payable by any of them, to the extent the same have become due and payable and before they have become delinquent, provided that neither the Company nor any Subsidiary need not pay any such tax, assessment, charge or levy if (i) the amount, applicability or validity thereof is contested by the Company or such Subsidiary on a timely basis in good faith and in appropriate proceedings, and the Company or a Subsidiary has established adequate reserves therefor in accordance with GAAP on the books of the Company or such Subsidiary or (ii) the nonpayment of all such taxes, assessments, charges and levies in the aggregate would not reasonably be expected to have a Material Adverse Effect.

Section 8.5.Corporate Existence, Etc.  The Company will at all times preserve and keep in full force and effect its corporate existence and the corporate existence.  The Company will at all times preserve and keep in full force and effect the corporate existence of each of its Subsidiaries (unless merged into the Company or a wholly owned Subsidiary) and all rights and franchises of the Company and its Subsidiaries unless, in the good faith judgment of the Company, the termination of or failure to preserve and keep in full force and effect such corporate existence, right or franchise would not, individually or in the aggregate, have a Material Adverse Effect.

Section 8.6.Books and Records. The Company will and will cause each of its Subsidiaries to, maintain proper books of record and account in conformity with GAAP and all applicable requirements of any Governmental Authority having legal or regulatory jurisdiction over the Company or such Subsidiary, as the case may be.

Section 9. Negative Covenants.

The Company covenants that so long as any of the 2011 Series A Bonds are outstanding:

Section 9.1.Transactions with Affiliates.  The Company will not and will not permit any Subsidiary to enter into directly or indirectly any Material transaction or Material group of related transactions (including without limitation the purchase, lease, sale or exchange of properties of any kind or the rendering of any service) with any Affiliate (other than the Company or another Subsidiary), except pursuant to the reasonable requirements of the Company’s or such Subsidiary’s business and upon fair and reasonable terms no less favorable to the Company or such Subsidiary than would be obtainable in a comparable arm’s-length transaction with a Person not an Affiliate.

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Section 9.2.Line of Business.  The Company will not and will not permit any Subsidiary to engage in any business if, as a result, the general nature of the business in which the Company and its Subsidiaries, taken as a whole, would then be engaged would be substantially changed from the general nature of the business in which the Company and its Subsidiaries, taken as a whole, are engaged on the date of this Agreement as described in the Memorandum.

Section 9.3.Terrorism Sanctions Regulations.  The Company will not and will not permit any Subsidiary to (a) become a Person described or designated in the Specially Designated Nationals and Blocked Persons List of the Office of Foreign Assets Control or in Section 1 of the Anti-Terrorism Order or (b) engage in any prohibited dealings or transactions with any Person known by any Responsible Officer to be a Person so described or designated, except pursuant to license or other lawful authority from OFAC or other competent U.S. government agency.  Each Purchaser agrees that, in making this covenant, the Company shall be entitled to assume that each Purchaser (i) is not a Person described or designated in the Specially Designated Nationals and Blocked Persons List of OFAC or in Section 1 of the Anti-Terrorism Order and (ii) does not engage in any prohibited dealings or transactions with any such Person except pursuant to license or other lawful authority from OFAC or other competent U.S. government agency, and (iii) is in compliance, in all material respects, with USA Patriot Act, to the extent applicable to such Purchaser or its Subsidiaries.

Section 10. Registration; Exchange; Substitution of 2011 Series A Bonds.

The registration, exchange, replacement and transfer of the 2011 Series A Bonds, if any, shall be subject to the terms and provisions of the Indenture.

Section 11. Payments on 2011 Series A Bonds.

So long as any Purchaser or its nominee shall be the holder of any 2011 Series A Bond, and notwithstanding anything contained in the Indenture or in such 2011 Series A Bond to the contrary, the Company will pay all sums becoming due on such 2011 Series A Bond for principal, make-whole amount or premium, if any, and interest by the method and at the address specified for such purpose below such Purchaser’s name in Schedule A, or by such other method or at such other address as such Purchaser shall have from time to time specified to the Company in writing for such purpose, without the presentation or surrender of such 2011 Series A Bond or the making of any notation thereon, except that upon written request of the Company made concurrently with or reasonably promptly after payment or prepayment in full of any 2011 Series A Bond, such Purchaser shall surrender such 2011 Series A Bond for cancellation, reasonably promptly after any such request, to the Company at its principal executive office or at the place of payment most recently designated by the Company pursuant to the Indenture.  Prior to any sale or other disposition of any 2011 Series A Bond held by a Purchaser or its nominee, such Purchaser will, at its election, either endorse thereon the amount of principal paid thereon and the last date to which interest has been paid thereon or surrender such 2011 Series A Bond to the Company in exchange for a new 2011 Series A Bond or 2011 Series A Bonds of the same maturity pursuant to Section 3.7 of the Indenture.  The Company will afford the benefits of this Section 11 to any Institutional Investor that is the direct or indirect transferee of any 2011 Series A Bond purchased by a Purchaser under this Agreement and that has made the same agreement relating to such 2011 Series A Bond as the Purchasers have made in this Section 11.

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Section 12. Expenses, Etc.

Section 12.1.Transaction Expenses.  Whether or not the transactions contemplated hereby are consummated, the Company will pay all reasonable costs and expenses (including reasonable attorneys’ fees of a special counsel and, if reasonably required by the Required Holders, local or other counsel) incurred by the Purchasers and each other holder of a 2011 Series A Bond in connection with such transactions and in connection with any amendments, waivers or consents under or in respect of any Financing Agreement (whether or not such amendment, waiver or consent becomes effective), including, without limitation:  (a) the reasonable costs and expenses incurred in enforcing or defending (or determining whether or how to enforce or defend) any rights under any Financing Agreement or in responding to any subpoena or other legal process or informal investigative demand issued in connection with any Financing Agreement, or by reason of being a holder of any 2011 Series A Bond, (b) the reasonable costs and expenses, including financial advisors’ fees, incurred in connection with the insolvency or bankruptcy of the Company or any Subsidiary or in connection with any work-out or restructuring of the transactions contemplated  by any Financing Agreement and (c) the costs and expenses incurred in connection with the initial filing of any Financing Agreement and all related documents and financial information with the SVO, provided that such costs and expenses under this clause (c) shall not exceed $3,000.  The Company will pay, and will save each Purchaser and each other holder of a 2011 Series A Bond harmless from, all claims in respect of any fees, costs or expenses if any, of brokers and finders (other than those, if any, retained by a Purchaser or other holder in connection with its purchase of the 2011 Series A Bonds).

Section 12.2.Survival.  The obligations of the Company under this Section 12 will survive the payment or transfer of any 2011 Series A Bond, the enforcement, amendment or waiver of any provision of any Financing Agreement, and the termination of any Financing Agreement.

Section 13. Survival of Representations and Warranties; Entire Agreement.

All representations and warranties contained herein shall survive the execution and delivery of the Financing Agreements, the purchase or transfer by any Purchaser of any 2011 Series A Bond or portion thereof or interest therein and the payment of any 2011 Series A Bond, and may be relied upon by any subsequent holder of a 2011 Series A Bond, regardless of any investigation made at any time by or on behalf of such Purchaser or any other holder of a 2011 Series A Bond.  All statements contained in any certificate or other instrument required to be delivered by or on behalf of the Company pursuant to this Agreement shall be deemed representations and warranties of the Company under this Agreement.  Subject to the preceding sentence, the Financing Agreements embody the entire agreement and understanding between each Purchaser and the Company and supersede all prior agreements and understandings relating to the subject matter hereof.

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Section 14. Amendment and Waiver.

Section 14.1.Requirements.  This Agreement and the Bonds may be amended, and the observance of any term hereof or of the Bonds may be waived (either retroactively or prospectively), with (and only with) the written consent of the Company and the Required Holders, except that (a) no amendment or waiver of any of the provisions of Section 1, 2, 3, 4, 5, 6 or 19 hereof or any defined term (as it is used therein), will be effective as to any Purchaser unless consented to by such Purchaser in writing, and (b) no such amendment or waiver may, without the written consent of the holder of each 2011 Series A Bond at the time outstanding affected thereby, (i) change the percentage of the principal amount of the 2011 Series A Bonds the holders of which are required to consent to any such amendment or waiver or (ii) amend any of Sections 14 or 18.

Section 14.2.Solicitation of Holders of 2011 Series A Bonds.

(a)Solicitation. The Company will provide each holder of the 2011 Series A Bonds (irrespective of the amount of 2011 Series A Bonds then owned by it) with sufficient information, sufficiently far in advance of the date a decision is required, to enable such holder to make an informed and considered decision with respect to any proposed amendment, waiver or consent in respect of any of the provisions hereof or of the 2011 Series A Bonds.  The Company will deliver executed or true and correct copies of each amendment, waiver or consent effected pursuant to the provisions of this Section 14 to each holder of outstanding 2011 Series A Bonds promptly following the date on which it is executed and delivered by, or receives the consent or approval of, the requisite holders of 2011 Series A Bonds.

(b)Payment. The Company will not directly or indirectly pay or cause to be paid any remuneration, whether by way of supplemental or additional interest, fee or otherwise, or grant any security or provide other credit support, to any holder of 2011 Series A Bonds as consideration for or as an inducement to the entering into by any holder of 2011 Series A Bonds of any waiver or amendment of any of the terms and provisions hereof unless such remuneration is concurrently paid, or security is concurrently granted or other credit support concurrently provided, on the same terms, ratably to each holder of 2011 Series A Bonds then outstanding even if such holder did not consent to such waiver or amendment.

(c)Consent in Contemplation of Transfer.  Any consent made pursuant to this Section 14.2 by the holder of any 2011 Series A Bond that has transferred or has agreed to transfer such 2011 Series A Bond to the Company, any Subsidiary or any Affiliate of the Company and has provided or has agreed to provide such written consent as a condition to such transfer shall be void and of no force or effect except solely as to such holder, and any amendments effected or waivers granted or to be effected or granted that would not have been or would not be so effected or granted but for such consent (and the consents of all other holders of 2011 Series A Bonds that were acquired under the same or similar conditions) shall be void and of no force or effect except solely as to such transferring holder.

Section 14.3.Binding Effect, Etc. Any amendment or waiver consented to as provided in this Section 14 applies equally to all holders of 2011 Series A Bonds and is binding upon them and upon each future holder of any 2011 Series A Bond and upon the Company without regard to whether such 2011 Series A Bond has been marked to indicate such amendment or waiver.  No such amendment or waiver will extend to or affect any obligation, covenant, agreement, Default or Event of Default not expressly amended or waived or impair any right consequent thereon.  No course of dealing between the Company and the holder of any 2011 Series A Bond nor any delay in exercising any rights hereunder or under any 2011 Series A Bond shall operate as a waiver of any rights of any holder of such 2011 Series A Bond.  As used herein, the term “this Agreement” and references thereto shall mean this Agreement as it may from time to time be amended or supplemented.

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Section 14.4.2011 Series A Bonds Held by Company, etc. Solely for the purpose of determining whether the holders of the requisite percentage of the aggregate principal amount of 2011 Series A Bonds then outstanding approved or consented to any amendment, waiver or consent to be given under this Agreement or the 2011 Series A Bonds, or have directed the taking of any action provided herein or in the 2011 Series A Bonds to be taken upon the direction of the holders of a specified percentage of the aggregate principal amount of 2011 Series A Bonds then outstanding, 2011 Series A Bonds directly or indirectly owned by the Company or any of its Affiliates shall be deemed not to be outstanding.

Section 15. Notices.

All notices and communications provided for hereunder shall be in writing and sent (a) by telecopy if the sender on the same day sends a confirming copy of such notice by a recognized overnight delivery service (charges prepaid), or (b) by registered or certified mail with return receipt requested (postage prepaid), or (c) by a recognized overnight delivery service (with charges prepaid).  Any such notice must be sent:

(i)if to any Purchaser or its nominee, to such Purchaser or nominee at the address specified for such communications in Schedule A, or at such other address as such Purchaser or nominee shall have specified to the Company in writing,

(ii)if to any other holder of any 2011 Series A Bond, to such holder at such address as such other holder shall have specified to the Company in writing,

(iii)if to the Company, to the Company at its address set forth at the beginning hereof to the attention of Chief Financial Officer, or at such other address as the Company shall have specified to the holder of each 2011 Series A Bond in writing, or

(iv)if to the Trustee, to the Trustee at the address specified in the Indenture or at such other address as the Trustee shall have specified to the holder of each Bond in writing.

Notices under this Section 15 will be deemed given only when actually received.

- 22 -

Section 16. Indemnification.

The Company hereby agrees to indemnify and hold the Purchasers harmless from, against and in respect of any and all loss, liability and expense (including reasonable attorneys’ fees) arising from any misrepresentation or nonfulfillment of any undertaking on the part of the Company under this Agreement.  The indemnification obligations of the Company under this Section 16 shall survive the execution and delivery of this Agreement, the delivery of the 2011 Series A Bonds to the Purchasers and the consummation of the transactions contemplated herein.

Section 17. Reproduction of Documents.

This Agreement and all documents relating thereto, including, without limitation, (a) consents, waivers and modifications that may hereafter be executed, (b) documents received by any Purchaser at the Closing (except the 2011 Series A Bonds themselves), and (c) financial statements, certificates and other information previously or hereafter furnished to any Purchaser, may be reproduced by such Purchaser by any photographic, photostatic, electronic, digital, or other similar process and such Purchaser may destroy any original document so reproduced.  The Company agrees and stipulates that, to the extent permitted by applicable law, any such reproduction shall be admissible in evidence as the original itself in any judicial or administrative proceeding (whether or not the original is in existence and whether or not such reproduction was made by such Purchaser in the regular course of business) and any enlargement, facsimile or further reproduction of such reproduction shall likewise be admissible in evidence.  This Section 17 shall not prohibit the Company or any other holder of 2011 Series A Bonds from contesting any such reproduction to the same extent that it could contest the original, or from introducing evidence to demonstrate the inaccuracy of any such reproduction.

Section 18. Confidential Information.

For the purposes of this Section 18, “Confidential Information” means information delivered to any Purchaser by or on behalf of the Company in connection with the transactions contemplated by or otherwise pursuant to this Agreement that is proprietary in nature and that was clearly marked or labeled or otherwise adequately identified when received by such Purchaser as being confidential information of the Company, provided that such term does not include information that (a) was publicly known or otherwise known to such Purchaser prior to the time of such disclosure, (b) subsequently becomes publicly known through no act or omission by such Purchaser or any person acting on such Purchaser’s behalf, (c) otherwise becomes known to such Purchaser other than through disclosure by the Company or (d) constitutes financial statements delivered to such Purchaser under Section 7.1 that are otherwise publicly available.  Each Purchaser will maintain the confidentiality of such Confidential Information in accordance with the procedures adopted by such Purchaser in good faith to protect its own confidential information and confidential information of third parties delivered to such Purchaser, provided that such Purchaser may deliver or disclose Confidential Information to (i) its directors, trustees, officers, employees, agents, attorneys and affiliates (to the extent such disclosure reasonably relates to the administration of the investment represented by its 2011 Series A Bonds), (ii) its financial advisors and other professional advisors who agree to hold confidential the Confidential Information substantially in accordance with the terms of this Section 18, (iii) any other holder of any 2011 Series A Bond, (iv) any Institutional Investor to which it sells or offers to sell such 2011 Series A Bond or any part thereof or any participation therein (if such Person has agreed in writing prior to its receipt of such Confidential Information to be bound by the provisions of this Section 18), (v) any Person from which it offers to purchase any security of the Company (if such Person has agreed in writing prior to its receipt of such Confidential Information to be bound by the provisions of this Section 18), (vi) any federal or state regulatory authority having jurisdiction over such Purchaser, (vii) the NAIC or the SVO or, in each case, any similar organization, or any nationally recognized rating agency that requires access to information about such Purchaser’s investment portfolio, or (viii) any other Person to which such delivery or disclosure may be necessary or appropriate (w) to effect compliance with any law, rule, regulation or order applicable to such Purchaser, (x) in response to any subpoena or other legal process, (y) in connection with any litigation to which such Purchaser is a party (provided that such litigation is related to such Purchaser’s investment in the Bonds) or (z) if an Event of Default has occurred and is continuing, to the extent such Purchaser may reasonably determine such delivery and disclosure to be necessary or appropriate in the enforcement or for the protection of the rights and remedies under such Purchaser’s 2011 Series A Bonds and this Agreement.  Each holder of a 2011 Series A Bond, by its acceptance of a 2011 Series A Bond, will be deemed to have agreed to be bound by and to be entitled to the benefits of this Section 14 as though it were a party to this Agreement.  On reasonable request by the Company in connection with the delivery to any holder of a 2011 Series A Bond of information required to be delivered to such holder under this Agreement or requested by such holder (other than a holder that is a party to this Agreement or its nominee), such holder will enter into an agreement with the Company embodying the provisions of this Section 18.

- 23 -

Section 19. Substitution of Purchaser.

Each Purchaser shall have the right to substitute any one of its Affiliates as the purchaser of the 2011 Series A Bonds that it has agreed to purchase hereunder, by written notice to the Company, which notice shall be signed by both such Purchaser and such Affiliate, shall contain such Affiliate’s agreement to be bound by this Agreement and shall contain a confirmation by such Affiliate of the accuracy with respect to it of the representations set forth in Section 6.  Upon receipt of such notice, any reference to such Purchaser in this Agreement (other than in this Section 19), shall be deemed to refer to such Affiliate in lieu of such original Purchaser.  In the event that such Affiliate is so substituted as a Purchaser hereunder and such Affiliate thereafter transfers to such original Purchaser all of the 2011 Series A Bonds then held by such Affiliate, upon receipt by the Company of notice of such transfer, any reference to such Affiliate as a “Purchaser”  in this Agreement (other than in this Section 19), shall no longer be deemed to refer to such Affiliate, but shall refer to such original Purchaser, and such original Purchaser shall again have all the rights of an original holder of the 2011 Series A Bonds under this Agreement.

Section 20. Miscellaneous.

Section 20.1.Successors and Assigns.  All covenants and other agreements contained in this Agreement by or on behalf of any of the parties hereto bind and inure to the benefit of their respective successors and assigns (including, without limitation, any subsequent holder of a 2011 Series A Bond) whether so expressed or not.

- 24 -

Section 20.2.Payments Due on Non-Business Days.  Anything in this Agreement or the Bonds to the contrary notwithstanding, any payment of principal of or Make-Whole Amount or interest on any Bond that is due on a date other than a Business Day shall be made on the next succeeding Business Day without including the additional days elapsed in the computation of the interest payable on such next succeeding Business Day; provided that if the maturity date of any Bond is a date other than a Business Day, the payment otherwise due on such maturity date shall be made on the next succeeding Business Day and shall include the additional days elapsed in the computation of interest payable on such next succeeding Business Day.

Section 20.3.Accounting Terms.  All accounting terms used herein which are not expressly defined in this Agreement have the meanings respectively given to them in accordance with GAAP.  Except as otherwise specifically provided herein, (i) all computations made pursuant to this Agreement shall be made using numbers prepared in accordance with GAAP, and (ii) all financial statements shall be prepared in accordance with GAAP.

For purposes of determining compliance with the financial covenants contained in the Financing Agreements, any election by the Company to measure an item of Indebtedness using fair value (as permitted by Statement of Financial Accounting Standards No. 159 or any similar accounting standard) shall be disregarded and such determination shall be made as if such election had not been made.

Section 20.4.Severability.  Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall (to the full extent permitted by law) not invalidate or render unenforceable such provision in any other jurisdiction.

Section 20.5.Construction, Etc.  Each covenant contained herein shall be construed (absent express provision to the contrary) as being independent of each other covenant contained herein, so that compliance with any one covenant shall not (absent such an express contrary provision) be deemed to excuse compliance with any other covenant.  Where any provision herein refers to action to be taken by any Person, or which such Person is prohibited from taking, such provision shall be applicable whether such action is taken directly or indirectly by such Person.

For the avoidance of doubt, all Schedules and Exhibits attached to this Agreement shall be deemed to be a part hereof.

Section 20.6.Counterparts.  This Agreement may be executed in any number of counterparts, each of which shall be an original but all of which together shall constitute one instrument.  Each counterpart may consist of a number of copies hereof, each signed by less than all, but together signed by all, of the parties hereto.

- 25 -

Section 20.7.Governing Law.  This Agreement shall be construed and enforced in accordance with, and the rights of the parties shall be governed by, the law of the State of New York excluding choice-of-law principles of the law of such State that would permit the application of the laws of a jurisdiction other than such State.

Section 20.8.Jurisdiction and Process; Waiver of Jury Trial.  (a) The Company irrevocably submits to the non-exclusive jurisdiction of any New York State or federal court sitting in the Borough of Manhattan, The City of New York, over any suit, action or proceeding arising out of or relating to this Agreement, the Financing Agreements or the 2011 Series A Bonds.  To the fullest extent permitted by applicable law, the Company irrevocably waives and agrees not to assert, by way of motion, as a defense or otherwise, any claim that it is not subject to the jurisdiction of any such court, any objection that it may now or hereafter have to the laying of the venue of any such suit, action or proceeding brought in any such court and any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum.

(b)The Company hereby irrevocably appoints CT Corporation System, with offices as of the date of this Agreement at 111 8th Avenue, 13th Floor, New York, New York 10011, as its authorized agent for service of process in relation to any action, suit or proceeding of the nature referred to in Section 20.8(a).  The Company consents to process being served by or on behalf of any holder of a 2011 Series A Bond with respect to any such any action, suit or proceeding by mailing a copy thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, return receipt requested to CT Corporation System at the address noted above.  The Company agrees that such service upon receipt (i) shall be deemed in every respect effective service of process upon it in any such suit, action or proceeding and (ii) shall, to the fullest extent permitted by applicable law, be taken and held to be valid personal service upon and personal delivery to it.  Notices hereunder shall be conclusively presumed received as evidenced by a delivery receipt furnished by the United States Postal Service or any reputable commercial delivery service.  The Company further agrees that any failure of CT Corporation System to give notice to the Company of any such service shall not impair or affect the validity of such service of any judgment rendered in any such action, suit or proceeding.  Nothing in this Agreement will affect the right of any party to this Agreement to serve process in any other manner permitted by law.

(c)Nothing in this Section 20.8 shall affect the right of any holder of a 2011 Series A Bond to serve process in any manner permitted by law, or limit any right that the holders of any of the 2011 Series A Bonds may have to bring proceedings against the Company in the courts of any appropriate jurisdiction or to enforce in any lawful manner a judgment obtained in one jurisdiction in any other jurisdiction.

(d)The Parties hereto hereby waive trial by jury in any action brought on or with respect to this Agreement, the 2011 Series A Bonds or any other document executed in connection herewith or therewith.

*    *    *    *    *

- 26 -

If you are in agreement with the foregoing, please sign the form of agreement on a counterpart of this Agreement and return it to the Company, whereupon this Agreement shall become a binding agreement between you and the Company.

Very truly yours,

Chugach Electric Association, Inc.

By /s/ Michael R. Cunningham

Name: Michael R. Cunningham

Title: Sr. Vice President and Chief Financial Officer

- 27 -

Accepted as of the date first written above.
	New York Life Insurance Company
	By	/s/ Ruthard C. Murphy, II
		Name: Ruthard C. Murphy, II
		Title:   Corporate Vice President
	New York Life Insurance and Annuity Corporation
	By	New York Life Investment Management LLC, its Investment Manager
		By /s/ Ruthard C. Murphy, II
		Name: Ruthard C. Murphy, II
		Title:   Director
	New York Life Insurance and Annuity Corporation Institutionally Owned Life Insurance Separate Account (BOLI 30C)
	By	New York Life Investment Management LLC, its Investment Manager
		By /s/ Ruthard C. Murphy, II
		Name: Ruthard C. Murphy, II
		Title:   Director

- 28 -

Accepted as of the date first written above.

New York Life Insurance and Annuity Corporation Institutionally Owned Life Insurance Separate Account (BOLI 30E)
By	New York Life Investment Management LLC, its Investment Manager
	By /s/  Ruthard C.Murphy, II
	Name: Ruthard C.Murphy, II
	Title:   Director

- 29 -

Accepted as of the date first written above.

Allstate Life Insurance Company
By	/s/ Jerry D. Zinkula
	Name: Jerry D. Zinkula
By	/s/ Steven E. Shebik
	Name: Steven E. Shebik
	Authorized Signatories

- 30 -

Accepted as of the date first written above.

Knights of Columbus
	By /s/ Ronald J. Tracz
	Name:
	Title:

- 31 -

Accepted as of the date first written above.

ING Life Insurance and Annuity Company
ING USA Annuity and Life Insurance Company
Reliastar Life Insurance Company
Reliastar Life Insurance Company of New York
By:  ING Investment Management LLC, as Agent
	By /s/ Christopher P. Lyons
	Name:  Christopher P. Lyons
	Title:    Senior Vice President

- 32 -

Accepted as of the date first written above.

Aviva Life and Annuity Company
By:	Aviva Investors North America, Inc., Its authorized attorney-in-fact
	By /s/ Roger D. Fors
	Name:  Roger D. Fors
	Title:  VP-Private Fixed Income

- 33 -

Accepted as of the date first written above.

The Lincoln National Life Insurance Company
By:	Delaware Investment Advisers, a series of Delaware Management Business Trust, Attorney in Fact
	By /s/ Bradley S. Ritter
	Name:  Bradley S. Ritter
	Title:    Senior Vice President
First Penn-Pacific Life Insurance Company
By:	Delaware Investment Advisers, a series of Delaware Management Business Trust, Attorney in Fact
	By /s/ Bradley S. Ritter
	Name:  Bradley S. Ritter
	Title:    Senior Vice President

- 34 -

Accepted as of the date first written above.

Massachusetts Mutual Life Insurance Company
By:	Babson Capital Management LLC as Investment Adviser
	By /s/ Thomas P. Shea
	Name:  Thomas P. Shea
	Title:   Managing Director
C.M. Life Insurance Company
By:	Babson Capital Management LLC as Investment Adviser
	By /s/ Thomas P. Shea
	Name:  Thomas P. Shea
	Title:   Managing Director

- 35 -

Accepted as of the date first written above.

American United Life Insurance Company
	By /s/ John Mason
	Name:  John Mason
	Title:   Vice President, Fixed Income Securities
The State Life Insurance Company
By:	American United Life Insurance Company
Its:	Agent
By	/s/ John Mason
	Name:  John Mason
	Title:  Vice President, Fixed Income Securities
Pioneer Mutual Life Insurance Company
By:	American United Life Insurance Company
Its:	Agent
By	/s/ John Mason
	Name: John Mason
	Title:  Vice President, Fixed Income Securities

- 36 -

Accepted as of the date first written above.

Equitrust Life Insurance Company
By	/s/ Herman L. Riva
	Name:  Herman L. Riva
	Title:  Vice President
Farm Bureau Life Insurance Company
By	/s/ Herman L. Riva
	Name:  Herman L. Riva
	Title:  Vice President

- 37 -

Accepted as of the date first written above.

Country Life Insurance Company
By	/s/ John Jacobs
	Name: John Jacobs
	Title: Director – Fixed Income
Cotton States Life Insurance Company
By	/s/ John Jacobs
	Name: John Jacobs
	Title:  Director – Fixed Income

- 38 -

Accepted as of the date first written above.

Phoenix Life Insurance Company
By	/s/ Christopher M. Wilkos
	Name: Christopher M. Wilkos
	Title: Executive Vice President
PHL Variable Insurance Company
By	/s/ Christopher M. Wilkos
	Name: Christopher M. Wilkos
	Title: Executive Vice President

- 39 -

Accepted as of the date first written above.

National Mutual Benefit
By:	Prime Advisors, Inc., its Attorney-in-Fact
By	/s/ Scott Sell
	Name: Scott Sell
	Title: Vice President

- 40 -

Chugach Electric Association

Information Relating to Purchasers

Name of and Address of Purchaser	Principal Amount of Tranche A Bonds to Be Purchased		Principal Amount of Tranche B Bonds to Be Purchased
New York Life Insurance Company c/o New York Life Investment Management LLC 51 Madison Avenue 2nd Floor, Room 208 New York, New York  10010 Attention:  FixedIncome Investors Group, Private Finance, 2nd Floor Fax Number:  (212) 447-4122	$	27,800,000	$	0

Payments

All payments by wire or intrabank transfer of immediately available funds to:

JPMorgan Chase Bank

New York, New York  10019

ABA #021-000-021

Credit:  New York Life Insurance Company

General Account No. 008-9-00687

With sufficient information (including issuer, PPN number, interest rate, maturity and whether payment is of principal, premium, or interest) to identify the source and application of such funds.

Notices

All notices of payments, written confirmations of such wire transfers and any audit confirmation:

Schedule A

(to Bond Purchase Agreement)

New York Life Insurance Company

c/o New York Life Investment Management LLC

51 Madison Avenue

2nd Floor, Room 208

New York, New York  10010-1603

Attention:  Securities Operations, Private Group, 2nd Floor

Fax Number:  (908) 840-3385

with a copy sent electronically to:

FIIGLibrary@nylim.com

TraditionalPVtOps@nylim.com

A-2

All other notices and communications to be addressed as first provided above, with a copy sent electronically to: FIIGLibrary@nylim.com and TraditionalPVtOps@nylim.com, and with a copy of any notices regarding defaults or Events of Default under the operative documents to:  Attention:  Office of the General Counsel, Investment Section, Room 1016, Fax Number: (212) 576-8340.

Physical Delivery

New York Life Investment Management LLC

51 Madison Avenue, Room 1016M

New York, NY  10010

Attn:  Rebecca Strutton, Vice President and Assistant General Counsel

Phone:  (212) 576-4825

Name of Nominee in which Bonds are to be issued:  None

Taxpayer I.D. Number:  13-5582869

A-3

Name of and Address of Purchaser	Principal Amount of Tranche A Bonds to Be Purchased		Principal Amount of Tranche B Bonds to Be Purchased
New York Life Insurance and Annuity Corporation c/o New York Life Investment Management LLC 51 Madison Avenue 2nd Floor, Room 208 New York, New York  10010-1603 Attention:Fixed Income Investors Group,                         Private Finance, 2nd Floor                         Fax Number:  (212) 447-4122	$	21,000,000	$	0

Payments

All payments by wire or intrabank transfer of immediately available funds to:

JPMorgan Chase Bank

New York, New York

ABA #021-000-021

Credit:  New York Life Insurance and Annuity Corporation

General Account No. 323-8-47382

With sufficient information (including issuer, PPN number, interest rate, maturity and whether payment is of principal, premium, or interest) to identify the source and application of such funds.

Notices

All notices of payments, written confirmations of such wire transfers and any audit confirmation:

New York Life Insurance and Annuity Corporation

c/o New York Life Investment Management LLC

51 Madison Avenue

2nd Floor, Room 208

New York, New York  10010-1603

Attention:  Securities Operation, Private Group, 2nd Floor

Fax Number:  (908) 840-3385

with a copy sent electronically to:

FIIGLibrary@nylim.com

TraditionalPVtOps@nylim.com

A-4

All other notices and communications to be addressed as first provided above, with a copy sent electronically to: FIIGLibrary@nylim.com and TraditionalPVtOps@nylim.com, and with a copy of any notices regarding defaults or Events of Default under the operative documents to:  Attention:  Office of the General Counsel, Investment Section, Room 1016, Fax Number: (212) 576-8340.

Physical Delivery

New York Life Investment Management LLC

51 Madison Avenue, Room 1016M

New York, NY  10010

Attn:  Rebecca Strutton, Vice President and Assistant General Counsel

Phone:  (212) 576-4825

Name of Nominee in which Bonds are to be issued:  None

Taxpayer I.D. Number:  13-3044743

A-5

Name of and Address of Purchaser	Principal Amount of Tranche A Bonds to Be Purchased		Principal Amount of Tranche B Bonds to Be Purchased
New York Life Insurance and Annuity Corporation Institutionally Owned Life Insurance Separate Account c/o New York Life Investment Management LLC 51 Madison Avenue 2nd Floor, Room 208 New York, New York  10010-1603 Attention:Fixed Income Investors Group, Private Finance, 2nd Floor Fax Number:  (212) 447-4122	$	5,600,000	$	0

Payments

All payments by wire or intrabank transfer of immediately available funds to:

JPMorgan Chase Bank

New York, New York

ABA #021-000-021

Credit: NYLIAC SEPARATE BOLI 30C

General Account Number 304-6-23970

With sufficient information (including issuer, PPN number, interest rate, maturity and whether payment is of principal, premium, or interest) to identify the source and application of such funds.

Notices

All notices of payments, written confirmations of such wire transfers and any audit confirmation:

New York Life Insurance and Annuity Corporation

Institutionally Owned Life Insurance Separate Account

c/o New York Life Investment Management LLC

51 Madison Avenue

2nd Floor, Room 208

New York, New York  10010-1603

Attention:  Securities Operation, Private Group, 2nd Floor

Fax Number:  (908) 840-3385

with a copy sent electronically to:

FIIGLibrary@nylim.com

TraditionalPVtOps@nylim.com

A-6

All other notices and communications to be addressed as first provided above, with a copy sent electronically to: (1) FIIGLibrary@nylim.com and (2) TraditionalPVtOps@nylim.com and with a copy of any notices regarding defaults or Events of Default under the operative documents to:  Attention:  Office of the General Counsel, Investment Section, Room 1016, Fax Number: (212) 576-8340.

Physical Delivery

New York Life Investment Management LLC

51 Madison Avenue, Room 1016M

New York, NY  10010

Attn:  Rebecca Strutton, Vice President and Assistant General Counsel

Phone:  (212) 576-4825

Name in which Bonds are to be issued:  New York Life Insurance and Annuity Corporation Institutionally Owned Life Insurance Separate Account (BOLI 30C)

Taxpayer I.D. Number:  13-3044743

A-7

Name of and Address of Purchaser	Principal Amount of Tranche A Bonds to Be Purchased		Principal Amount of Tranche B Bonds to Be Purchased
New York Life Insurance and Annuity Corporation Institutionally Owned Life Insurance Separate Account c/o New York Life Investment Management LLC 51 Madison Avenue 2nd Floor, Room 208 New York, New York  10010-1603 Attention:Fixed Income Investors Group, Private Finance, 2nd Floor Fax Number:  (212) 447-4122	$	600,000	$	0

Payments

All payments by wire or intrabank transfer of immediately available funds to:

JPMorgan Chase Bank

New York, New York

ABA #021-000-021

Credit: NYLIAC SEPARATE BOLI 30E

General Account Number 860318708

With sufficient information (including issuer, PPN number, interest rate, maturity and whether payment is of principal, premium, or interest) to identify the source and application of such funds.

Notices

All notices of payments, written confirmations of such wire transfers and any audit confirmation:

New York Life Insurance and Annuity Corporation

Institutionally Owned Life Insurance Separate Account

c/o New York Life Investment Management LLC

51 Madison Avenue

2nd Floor, Room 208

New York, New York  10010-1603

Attention:  Securities Operation, Private Group, 2nd Floor

Fax Number:  (908) 840-3385

with a copy sent electronically to:

FIIGLibrary@nylim.com

TraditionalPVtOps@nylim.com

A-8

All other notices and communications to be addressed as first provided above, with a copy sent electronically to: (1) FIIGLibrary@nylim.com and (2) TraditionalPVtOps@nylim.com and with a copy of any notices regarding defaults or Events of Default under the operative documents to:  Attention:  Office of the General Counsel, Investment Section, Room 1016, Fax Number: (212) 576-8340.

Physical Delivery

New York Life Investment Management LLC

51 Madison Avenue, Room 1016M

New York, NY  10010

Attn:  Rebecca Strutton, Vice President and Assistant General Counsel

Phone:  (212) 576-4825

Name in which Bonds are to be issued:  New York Life Insurance and Annuity Corporation Institutionally Owned Life Insurance Separate Account (BOLI 30E)

Taxpayer I.D. Number:  13-3044743

A-9

Name of and Address of Purchaser	Principal Amount of Tranche A Bonds to Be Purchased		Principal Amount of Tranche B Bonds to Be Purchased
Allstate Life Insurance Company c/o Allstate Investments LLC Attention:  Private Placements Department 3075 Sanders Road, STE G3A Northbrook, Illinois  60062-7127 Telephone:  (847) 402-7117 Telecopy:  (866) 226-2806	$ $ $ $	6,000,000 6,000,000 4,000,000 4,000,000	$	0

Payments

All payments by Fedwire transfer of immediately available funds or ACH Payment, identifying the name of the Issuer, the Private Placement Number and the payment as principal, interest or premium, in the format as follows:

Bank:  Citibank

ABA#:  021000089

Account name:  Allstate Life Insurance Company Collection Account – PP 

Account #:  30547007

Reference: OBI PPN 171265 A*2, Chugach Electric Association 4.20% First Mortgage Bonds,

2011 Series A, Tranche A, Due March 15, 2031 Payment Due Date: (MM/DD/YY) and the type and amount of payment being made.

For Example:

P ______ (enter “P” and the amount of principal being remitted, for example, P5000000.00) —

I ______ (enter “I” and the amount of interest being remitted, for example, I225000.00)

Notices

All notices of scheduled payments and written confirmation of such wire transfer to be sent to:

Allstate Investments LLC

Investment Operations—Private Placements

3075 Sanders Road, STE G4A

Northbrook, Illinois  60062-7127

Telephone:  (847) 402-6672 Private Placements

Telecopy:  (847) 326-7032

Email:  PrivateIOD@allstate.com

All financial reports, compliance certificates and all other written communications, including notice of prepayments to be sent by email (PrivateCompliance@allstate.com) or hard copy addressed as first provided above.

A-10

Physical Delivery

Citibank N.A.

399 Park Avenue

Level B Vault

New York, NY 10022

Attention:  Danny Reyes

For Allstate Life Insurance Company/Safekeeping Account No. 846627

Name of Nominee in which Bonds are to be issued:  None

Taxpayer I.D. Number:  36-2554642

A-11

Name of and Address of Purchaser	Principal Amount of Tranche A Bonds to Be Purchased		Principal Amount of Tranche B Bonds to Be Purchased
Knights of Columbus One Columbus Plaza New Haven, CT 06510-3326 Attn: Investment Accounting Dept., 14th Floor	$	15,000,000	$	0

Payments

All payments on account of Bonds held by such purchaser shall be made by wire transfer of immediately available funds to:

Bank of New York

ABA #021000018

CREDIT A/C:  GLA111566

ATTN:  P&I Dept

A/C Name:  Knights of Columbus Life Account

Account#:  200700

P&I Breakdown:________________

RE: PPN 171265 A*2, Chugach Electric Association 4.20% First Mortgage Bonds,

2011 Series A, Tranche A, Due March 15, 2031

Notices

All notices and communications should be emailed and mailed to:

Knights of Columbus

Life Account #200700

Attention:  Investment Department, 19th Floor

One Columbus Plaza

New Haven, CT 06510-3326

Email:  Investments@kofc.org, Sarah.capozzo@kofc.org

Phone:  (203) 752-4127

Fax:  (203) 752-4117

Physical Delivery

The Bank of New York Mellon

One Wall Street, 3rd Floor, Window “A”

New York, NY 10286

Attn: Mary Wong, Assistant Treasurer (212) 635-1003 Physical Delivery KNIGHTS OF COLUMBUS LIFE ACCOUNT #200700

Name of Nominee in which Bonds are to be issued:  None

Taxpayer I.D. Number:  06-0416470

A-12

Name of and Address of Purchaser	Principal Amount of Tranche A Bonds to Be Purchased		Principal Amount of Tranche B Bonds to Be Purchased
ING USA Annuity and Life   Insurance Company c/o ING Investment Management LLC 5780 Powers Ferry Road NW, Suite 300 Atlanta, Georgia 30327-4347 Attn:  Private Placements Fax:  (770) 690-5057	$	0	$	18,400,000

Payments

All payments on account of Notes held by such purchaser should be made by wire transfer of immediately available funds (identifying each payment as “Chugach Electric Association 4.75% First Mortgage Bonds, 2011 Series A, Tranche B, due March 15, 2041, PPN 171265 A@0, principal, premium or interest”) for credit to:

The Bank of New York Mellon

ABA #021000018

Account:  IOC 566/INST’L CUSTODY (for scheduled principal and interest payments)

Account:  IOC 565/INST’L CUSTODY (for all payments other than scheduled principal and interest)

For further credit to:  ING USA/Acct. 136373

Ref:  PPN 171265 A@0

Each such wire transfer should set forth the name of the issuer, the full title (including the coupon rate, issuance date, and final maturity date) of the Notes on account of which such payment is made, and the due date and application (as among principal, premium and interest) of the payment being made.

Notices

All notices and communications with respect to payment to be addressed:

ING Investment Management LLC

5780 Powers Ferry Road NW, Suite 300

Atlanta, Georgia 30327-4347

Attn:  Operations/Settlements

Fax:  (770) 690-4886

All other notices and communications to be addressed as first provided above.

A-13

Physical Delivery

The Bank of New York Mellon

One Wall Street

Window A - 3rd Floor

New York, NY 10286

Ref:  ING USA/Acct. 136373

With a copy of the Note transmittal to:

ING Investment Management LLC

5780 Powers Ferry Road NW, Suite 300

Atlanta, GA 30327-4347

Attn:  Patti Boss

Fax:  (770) 690-5168

Name of Nominee in which Notes are to be issued:  None

Taxpayer I.D. Number:  41-0991508

A-14

Name of and Address of Purchaser	Principal Amount of Tranche A Bonds to Be Purchased		Principal Amount of Tranche B Bonds to Be Purchased
Reliastar Life Insurance Company c/o ING Investment Management LLC 5780 Powers Ferry Road NW, Suite 300 Atlanta, Georgia 30327-4347 Attn:  Private Placements Fax:  (770) 690-5057	$	0	$	13,900,000

Payments

All payments on account of Notes held by such purchaser should be made by wire transfer of immediately available funds (identifying each payment as “Chugach Electric Association 4.75% First Mortgage Bonds, 2011 Series A, Tranche B, due March 15, 2041, PPN 171265 A@0, principal, premium or interest”) for credit to:

The Bank of New York Mellon

ABA #021000018

Account:  IOC 566/INST’L CUSTODY (for scheduled principal and interest payments)

Account:  IOC 565/INST’L CUSTODY (for all payments other than scheduled principal and interest)

For further credit to:  RLIC/Acct. 187035

Ref:  PPN 171265 A@0

Each such wire transfer should set forth the name of the issuer, the full title (including the coupon rate, issuance date, and final maturity date) of the Notes on account of which such payment is made, and the due date and application (as among principal, premium and interest) of the payment being made.

Notices

All notices and communications with respect to payment to be addressed:

ING Investment Management LLC

5780 Powers Ferry Road NW, Suite 300

Atlanta, Georgia 30327-4347

Attn:  Operations/Settlements

Fax:  (770) 690-4886

All other notices and communications to be addressed as first provided above.

A-15

Physical Delivery

The Bank of New York Mellon

One Wall Street

Window A - 3rd Floor

New York, NY 10286

Ref: RLIC/Acct. 187035

With a copy of the Note transmittal to:

ING Investment Management LLC

5780 Powers Ferry Road NW, Suite 300

Atlanta, GA 30327-4347

Attn:  Patti Boss

Fax:  (770) 690-5168

Name of Nominee in which Notes are to be issued:  None

Taxpayer I.D. Number:  41-0451140

A-16

Name of and Address of Purchaser	Principal Amount of Tranche A Bonds to Be Purchased		Principal Amount of Tranche B Bonds to Be Purchased
ING Life Insurance and Annuity Company c/o ING Investment Management LLC 5780 Powers Ferry Road NW, Suite 300 Atlanta, Georgia 30327-4347 Attn:  Private Placements Fax:  (770) 690-5057	$	0	$	9,900,000

Payments

All payments on account of Notes held by such purchaser should be made by wire transfer of immediately available funds (identifying each payment as “Chugach Electric Association 4.75% First Mortgage Bonds, 2011 Series A, Tranche B, due March 15, 2041, PPN 171265 A@0, principal, premium or interest”) for credit to:

The Bank of New York Mellon

ABA #021000018

Account:  IOC 566/INST’L CUSTODY (for scheduled principal and interest payments)

Account:  IOC 565/INST’L CUSTODY (for all payments other than scheduled principal and interest)

For further credit to:  ILIAC/Acct. 216101

Ref:  PPN 171265 A@0

Each such wire transfer should set forth the name of the issuer, the full title (including the coupon rate, issuance date, and final maturity date) of the Notes on account of which such payment is made, and the due date and application (as among principal, premium and interest) of the payment being made.

Notices

All notices and communications with respect to payment to be addressed:

ING Investment Management LLC

5780 Powers Ferry Road NW, Suite 300

Atlanta, Georgia 30327-4347

Attn:  Operations/Settlements

Fax:  (770) 690-4886

All other notices and communications to be addressed as first provided above.

A-17

Physical Delivery

The Bank of New York Mellon

One Wall Street

Window A - 3rd Floor

New York, NY 10286

Ref:  ILIAC/Acct. 216101

With a copy of the Note transmittal to:

ING Investment Management LLC

5780 Powers Ferry Road NW, Suite 300

Atlanta, GA 30327-4347

Attn:  Patti Boss

Fax:  (770) 690-5168

Name of Nominee in which Notes are to be issued:  None

Taxpayer I.D. Number:  71-0294708

A-18

Name of and Address of Purchaser	Principal Amount of Tranche A Bonds to Be Purchased		Principal Amount of Tranche B Bonds to Be Purchased
ING USA Annuity and Life Insurance Company c/o ING Investment Management LLC 5780 Powers Ferry Road NW, Suite 300 Atlanta, Georgia 30327-4347 Attn:  Private Placements Fax:  (770) 690-5057	$	0	$	7,500,000

Payments

All payments on account of Notes held by such purchaser should be made by wire transfer of immediately available funds (identifying each payment as “Chugach Electric Association 4.75% First Mortgage Bonds, 2011 Series A, Tranche B, due March 15, 2041, PPN 171265 A@0, principal, premium or interest”) for credit to:

The Bank of New York Mellon

ABA #021000018

Account:  IOC 566/INST’L CUSTODY (for scheduled principal and interest payments)

Account:  IOC 565/INST’L CUSTODY (for all payments other than scheduled principal and interest)

For further credit to:  ING USA/Acct. 179369

Ref:  PPN 171265 A@0

Each such wire transfer should set forth the name of the issuer, the full title (including the coupon rate, issuance date, and final maturity date) of the Notes on account of which such payment is made, and the due date and application (as among principal, premium and interest) of the payment being made.

Notices

All notices and communications with respect to payment to be addressed:

ING Investment Management LLC

5780 Powers Ferry Road NW, Suite 300

Atlanta, Georgia 30327-4347

Attn:  Operations/Settlements

Fax:  (770) 690-4886

All other notices and communications to be addressed as first provided above.

A-19

Physical Delivery

The Bank of New York Mellon

One Wall Street

Window A - 3rd Floor

New York, NY 10286

Ref:  ING USA/Acct. 179369

With a copy of the Note transmittal to:

ING Investment Management LLC

5780 Powers Ferry Road NW, Suite 300

Atlanta, GA 30327-4347

Attn:  Patti Boss

Fax:  (770) 690-5168

Name of Nominee in which Notes are to be issued:  None

Taxpayer I.D. Number:  41-0991508

A-20

Name of and Address of Purchaser	Principal Amount of Tranche A Bonds to Be Purchased		Principal Amount of Tranche B Bonds to Be Purchased
Reliastar Life Insurance Company of   New York c/o ING Investment Management LLC 5780 Powers Ferry Road NW, Suite 300 Atlanta, Georgia 30327-4347 Attn:  Private Placements Fax:  (770) 690-5057	$	0	$	300,000

Payments

All payments on account of Notes held by such purchaser should be made by wire transfer of immediately available funds (identifying each payment as “Chugach Electric Association 4.75% First Mortgage Bonds, 2011 Series A, Tranche B, due March 15, 2041, PPN 171265 A@0, principal, premium or interest”) for credit to:

The Bank of New York Mellon

ABA #021000018

Account:  IOC 566/INST’L CUSTODY (for scheduled principal and interest payments)

Account:  IOC 565/INST’L CUSTODY (for all payments other than scheduled principal and interest)

For further credit to:  RLNY/Acct. 187038

Ref:  PPN 171265 A@0

Each such wire transfer should set forth the name of the issuer, the full title (including the coupon rate, issuance date, and final maturity date) of the Notes on account of which such payment is made, and the due date and application (as among principal, premium and interest) of the payment being made.

Notices

All notices and communications with respect to payment to be addressed:

ING Investment Management LLC

5780 Powers Ferry Road NW, Suite 300

Atlanta, Georgia 30327-4347

Attn:  Operations/Settlements

Fax:  (770) 690-4886

All other notices and communications to be addressed as first provided above.

A-21

Physical Delivery

The Bank of New York Mellon

One Wall Street

Window A - 3rd Floor

New York, NY 10286

Ref:  RLNY/Acct. 187038

With a copy of the Note transmittal to:

ING Investment Management LLC

5780 Powers Ferry Road NW, Suite 300

Atlanta, GA 30327-4347

Attn:  Patti Boss

Fax:  (770) 690-5168

Name of Nominee in which Notes are to be issued:  None

Taxpayer I.D. Number:  53-0242530

A-22

Name of and Address of Purchaser	Principal Amount of Tranche A Bonds to Be Purchased		Principal Amount of Tranche B Bonds to Be Purchased
Aviva Life and Annuity Company c/o Aviva Investors North America, Inc. 215 10th Street, Suite 1000 Des Moines, IA 50309	$	0	$	40,000,000

Payments

All payments on or in respect of the Bonds to be by bank wire transfer of Federal or other immediately available funds to:

The Bank of New York

New York, New York

ABA #021000018

Credit A/C# GLA111566

A/C Name:  Institutional Custody Insurance Division

Custody Account Name:  Aviva Life and Annuity Co-Annuity

Custody Account Number:  010048

Reference:  Chugach Electric Association 4.75% First Mortgage Bonds, 2011 Series A, Tranche B,

Due March 15, 2041, PPN 171265 A@0, and Application (as among

principal, make-whole and interest) of the payment being made.

Notices

All notices and communications, including Financials, Compliance and Requests to be addressed:

Aviva Life and Annuity Company

c/o Aviva Investors North America, Inc.

Attention:  Private Fixed Income Dept.

215 10th Street, Suite 1000

Des Moines, IA 50309

Preferred Remittance:  privateplacements@avivainvestors.com

Physical Delivery

The Bank of New York

One Wall Street, 3rd Floor

Window A

New York, New York 10286

FAO:  Aviva Life and Annuity Co-Annuity, A/C #010048

Name of Nominee in which Bonds are to be issued:  HARE & CO.

Taxpayer I.D. Number for Aviva Life and Annuity Company: 42-0175020

Taxpayer I.D. Number for Hare & Co.: 13-6062916

A-23

Name of and Address of Purchaser	Principal Amount of Tranche A Bonds to Be Purchased		Principal Amount of Tranche B Bonds to Be Purchased
The Lincoln National Life Insurance Company c/o Delaware Investment Advisers 2005 Market Street, Mail Stop 41-104 Philadelphia, Pennsylvania  19103 Attention:  Fixed Income Private Placements Telefacsimile:  (215) 255-1654	$	0	$ $ $ $	16,000,000 9,000,000 6,000,000 4,000,000

Payments

All payments on or in respect of the Bonds to be by bank wire transfer of Federal or other immediately available funds (identifying each payment as “Chugach Electric Association 4.75% First Mortgage Bonds, 2011 Series A, Tranche B, Due March 15, 2041, PPN 171265 A@0, principal, premium or interest”) to:

The Bank of New York Mellon

One Wall Street, New York, New York 10286

ABA #021000018

BNF:  IOC566

Attention:  Private Placement P&I Dept.

Further Credit:  The Lincoln National Life Insurance Company

Ref:  PPN/CUSIP# / SECURITY DESC / PAYT REASON

FFC Account Numbers Listed Below:

Bond Amount		Lincoln Account Name	Custody Number
$	16,000,000	The Lincoln National Life Insurance Company—Seg 11		215715
$	9,000,000	The Lincoln National Life Insurance Company—Seg 10		215714
$	6,000,000	The Lincoln National Life Insurance Company—Seg 65		215732
$	4,000,000	The Lincoln National Life Insurance Company—Seg JP201		186228

Notices

All notices and communications, including notices with respect to payments and written confirmation of each such payment, to be addressed to:

A-24

Delaware Investment Advisers

2005 Market Street, Mail Stop 41-104

Philadelphia, Pennsylvania  19103

Attention:  Fixed Income Private Placements

Private Placement Fax:  (215) 255-1654

With notices of PAYMENT ONLY:

Lincoln Financial Group

1300 South Clinton Street, Mail Stop 2H-17

Fort Wayne, Indiana  46802

Attention:  K. Estep — Investment Accounting

Investment Accounting Fax:  (260) 455-2622

and

The Bank of New York Mellon

P. O. Box 19266

Newark, New Jersey  07195

Attention:  Private Placement P&I Department

Reference:  Account Name and PPN Number

Physical Delivery

The Bank of New York Mellon

Attn:  Free Receive Department

Contact Person:  Arnold Musella (Telephone: 212-635-1917)

One Wall Street, 3rd Floor

New York, NY 10286

(in cover letter reference bond amount, acct name, and bank acct #)

Please fax copy of cover letter to: Karen Costa—The Bank of New York Mellon Fax#:  (315) 414-5017

with a copy to:

Lincoln Financial Group

Attn:  Kathy Bireley

100 N. Greene Street

Greensboro, NC 27401

Name of Nominee in which Bonds are to be issued:  None

Taxpayer I.D. Number:  35-0472300

A-25

Name of and Address of Purchaser	Principal Amount of Tranche A Bonds to Be Purchased		Principal Amount of Tranche B Bonds to Be Purchased
First Penn-Pacific Life Insurance Company c/o Delaware Investment Advisers 2005 Market Street, Mail Stop 41-104 Philadelphia, Pennsylvania  19103 Attention:  Fixed Income Private Placements Telefacsimile:  (215) 255-1654	$	0	$	5,000,000

Payments

All payments on or in respect of the Bonds to be by bank wire transfer of Federal or other immediately available funds (identifying each payment as “Chugach Electric Association 4.75% First Mortgage Bonds, 2011 Series A, Tranche B, Due March 15, 2041, PPN 171265 A@0, principal, premium or interest”) to:

NORTHERN CHGO/Trust

801 South Canal St., Chicago, IL 60607

ABA #:  071000152

Credit Wire Account #:  5186041000

Attention:  Income / Dividend

For Further Credit to:  First Penn-Pacific Life Insurance Company

Further Credit Custody A/C #:  26-27448

Ref:  Name of Security, PPN Number, Rate, Maturity, P=$, I=$

Notices

All notices and communications, including notices with respect to payments and written confirmation of each such payment, to be addressed to:

A-26

Delaware Investment Advisers

2005 Market Street, Mail Stop 41-104

Philadelphia, Pennsylvania  19103

Attention:  Fixed Income Private Placements

Private Placement Fax:  (215) 255-1654

With notices of PAYMENT ONLY:

Lincoln Financial Group

1300 South Clinton Street, Mail Stop 2H-17

Fort Wayne, Indiana  46802

Attention:  K. Estep — Investment Accounting

Investment Accounting Fax:  (260) 455-2622

and

The Northern Trust Company

801 South Canal Street

Income Collections C-4S

Attention:  Viola Nash / Oscell Owens

Chicago, IL 60607

Fax:  312-630-8179

REFERENCE Account:  26-27448 for First Penn-Pacific Life Ins. Co. & PPN/CUSIP#

Physical Delivery

The Northern Trust Company of New York

Harborside Financial Center 10, Suite 1401

3 Second Street

Attention:  Jose Mero—Telephone:  201-793-2739

For Account of:  First Penn-Pacific Life Insurance Company

Account #:  26-27448

Jersey City, NJ 07311

(IN COVER LETTER REF Acct # 26-27448 for FIRST PENN-PACIFIC LIFE INS)

with a copy to:

Lincoln Financial Group

Attn:  Kathy Bireley

100 N. Greene Street

Greensboro, NC 27401

Name of Nominee in which Bonds are to be issued:  None

Taxpayer I.D. Number:  23-2044248

A-27

Name of and Address of Purchaser	Principal Amount of Tranche A Bonds to Be Purchased		Principal Amount of Tranche B Bonds to Be Purchased
Massachusetts Mutual Life Insurance Company c/o Babson Capital Management LLC 1500 Main Street, Suite 2200 P.O. Box 15189 Springfield, Massachusetts 01115-5189 Attention:  Securities Investment Division	$	0	$	28,000,000

Payments

All payments on or in respect of the Bonds to be by bank wire transfer of Federal or other immediately available funds (identifying each payment as “Chugach Electric Association 4.75% First Mortgage Bonds, 2011 Series A, Tranche B, Due March 15, 2041, PPN 171265 A@0, principal, premium or interest”) to:

MassMutual Co-Owned Account

Citibank

New York, New York  

ABA # 021000089

Account # 30510685

Re:  Description of security, cusip, principal and interest split

With telephone advice of payment to the Securities Custody and Collection Department of Babson Capital Management LLC at (413) 226-1754 or (413) 226-1803.

Notices

All notices and communications to be addressed as first provided above, except notices with respect to payments to be addressed Suite 200, Attention:  Securities Custody and Collection Department.

Physical Delivery

Steven J. Katz, Counsel

Babson Capital Management LLC

1500 Main Street, Suite 2800

Springfield, MA  01115

Phone:  413-226-1059

Fax: 413-226-2059

Email:  skatz@babsoncapital.com

Name of Nominee in which Bonds are to be issued:  None

Taxpayer I.D. Number:  04-1590850

A-28

Name of and Address of Purchaser	Principal Amount of Tranche A Bonds to Be Purchased		Principal Amount of Tranche B Bonds to Be Purchased
C.M. Life Insurance Company c/o Babson Capital Management LLC 1500 Main Street, Suite 2200 P.O. Box 15189 Springfield, Massachusetts 01115-5189 Attention:  Securities Investment Division	$	0	$	2,000,000

Payments

All payments on or in respect of the Bonds to be by bank wire transfer of Federal or other immediately available funds (identifying each payment as “Chugach Electric Association 4.75% First Mortgage Bonds, 2011 Series A, Tranche B, Due March 15, 2041, PPN 171265 A@0, principal, premium or interest”) to:

MassMutual Co-Owned Account

Citibank

New York, New York  

ABA # 021000089

Account # 30510685

Re:  Description of security, cusip, principal and interest split

With telephone advice of payment to the Securities Custody and Collection Department of Babson Capital Management LLC at (413) 226-1754 or (413) 226-1803.

Notices

All notices and communications to be addressed as first provided above, except notices with respect to payments to be addressed Suite 200, Attention:  Securities Custody and Collection Department.

Physical Delivery

Steven J. Katz, Counsel

Babson Capital Management LLC

1500 Main Street, Suite 2800

Springfield, MA  01115

Phone:  413-226-1059

Fax: 413-226-2059

Email:  skatz@babsoncapital.com

Name of Nominee in which Bonds are to be issued:  None

Taxpayer I.D. Number:  06-1041383

A-29

Name of and Address of Purchaser	Principal Amount of Tranche A Bonds to Be Purchased		Principal Amount of Tranche B Bonds to Be Purchased
American United Life Insurance Company One American Square, Suite 305W P.O. Box 368 Indianapolis, Indiana  46206 Attention:  Michael Bullock, Securities Department Overnight Mailing Address: 250 W. North Street Indianapolis, Indiana 46202 Attention:  Michael Bullock, Securities Department	$	0	$	5,000,000

Payments

All payments on or in respect of the Bonds to be by bank wire transfer of Federal or other immediately available funds (identifying each payment as “Chugach Electric Association 4.75% First Mortgage Bonds, 2011 Series A, Tranche B, Due March 15, 2041, PPN 171265 A@0, principal, premium or interest”) to the following bank account:

AMERICAN UNITED LIFE INSURANCE COMPANY

Bank of New York

ABA #021000018

CREDIT A/C # GLA111566

A/C Name: American United Life Insurance Company

Account #:  186683

P&I Breakdown:  (Insert)

Reference:  PPN 171265 A@0, (Insert credit name)

Notices

All notices and communications, including notices with respect to payments and written confirmation of each such payment, to be addressed as first provided above.

Physical Delivery

Bank of New York

One Wall Street, 3rd Floor

New York, NY 10286

Ref:   American United Life Insurance Company, Account #186683

Attn: Anthony Saviano/Window A

cc:     Michele Morris/NYC Physical Desk on all correspondence

Name of Nominee in which Bonds are to be issued:  None

Taxpayer I.D. Number:  35-0145825

A-30

Name of and Address of Purchaser	Principal Amount of Tranche A Bonds to Be Purchased		Principal Amount of Tranche B Bonds to Be Purchased
The State Life Insurance Company c/o American United Life Insurance Company One American Square, Suite 305W P.O. Box 368 Indianapolis, Indiana  46206 Attention:  Michael Bullock, Securities Department Overnight Mailing Address: 250 W. North Street Indianapolis, Indiana 46202 Attention:  Michael Bullock, Securities Department	$	0	$	2,500,000

Payments

All payments on or in respect of the Bonds to be by bank wire transfer of Federal or other immediately available funds (identifying each payment as “Chugach Electric Association 4.75% First Mortgage Bonds, 2011 Series A, Tranche B, Due March 15, 2041, PPN 171265 A@0, principal, premium or interest”) to the following bank account:

THE STATE LIFE INSURANCE COMPANY

Bank of New York

ABA #021000018

CREDIT A/C # GLA111566

A/C Name: The State Life Insurance Company

Account #:  343761

P&I Breakdown:  (Insert)

Reference:  PPN 171265 A@0, (Insert credit name)

Notices

All notices and communications, including notices with respect to payments and written confirmation of each such payment, to be addressed as first provided above.

Physical Delivery

Bank of New York

One Wall Street, 3rd Floor

New York, NY 10286

Ref:  The State Life Insurance Company, c/o American United Life Insurance Company,

Account #343761

Attn: Anthony Saviano/Window A

cc: Michele Morris/NYC Physical Desk on all correspondence

Name of Nominee in which Bonds are to be issued:  None

Taxpayer I.D. Number:  35-0684263

A-31

Name of and Address of Purchaser	Principal Amount of Tranche A Bonds to Be Purchased		Principal Amount of Tranche B Bonds to Be Purchased
Pioneer Mutual Life Insurance Company c/o American United Life Insurance Company One American Square, Suite 305W P.O. Box 368 Indianapolis, Indiana  46206 Attention:  Michael Bullock, Securities Department Overnight Mailing Address: 250 W. North Street Indianapolis, Indiana 46202 Attention:  Michael Bullock, Securities Department	$	0	$	500,000

Payments

All payments on or in respect of the Bonds to be by bank wire transfer of Federal or other immediately available funds (identifying each payment as “Chugach Electric Association 4.75% First Mortgage Bonds, 2011 Series A, Tranche B, Due March 15, 2041, PPN 171265 A@0, principal, premium or interest”) to the following bank account:

PIONEER MUTUAL LIFE INSURANCE COMPANY

Bank of New York

ABA #021000018

CREDIT A/C # GLA111566

A/C Name: Pioneer Mutual Life Insurance Company

Account #:  186709

P&I Breakdown:  (Insert)

Reference:  PPN 171265 A@0, (Insert credit name)

Notices

All notices and communications, including notices with respect to payments and written confirmation of each such payment, to be addressed as first provided above.

Physical Delivery

Bank of New York

One Wall Street, 3rd Floor

New York, NY 10286

Ref:  Pioneer Mutual Life Insurance Company, c/o American United Life Insurance

Company, Account #186709

Attn: Anthony Saviano/Window A

cc: Michele Morris/NYC Physical Desk on all correspondence

Name of Nominee in which Bonds are to be issued:  None

Taxpayer I.D. Number:  45-0220640

A-32

Name of and Address of Purchaser	Principal Amount of Tranche A Bonds to Be Purchased		Principal Amount of Tranche B Bonds to Be Purchased
Equitrust Life Insurance Company c/o FBL Financial Group, Inc. Attention:  Securities Department-Private Placements 5400 University Avenue West Des Moines, IA 50266 Email:  privateplacements@FBLFinancial.com	$	0	$	5,000,000

Payments

All payments on or in respect of the Bonds to be by bank wire transfer of Federal or other immediately available funds (identifying each payment as “Chugach Electric Association 4.75% First Mortgage Bonds, 2011 Series A, Tranche B, Due March 15, 2041, PPN 171265 A@0, principal premium or interest”) to:

JP Morgan Chase Bank

ABA No.:  021-000-021

A/C #9009002859

Account No. G10559 (Please do not put a space between G and Acct Number)

Reference:  PPN, Name of Issuer & Description; Principal and Interest Payment

Contact:  privateplacements@fblfinancial.com

Notices

All notices and communications, including notices with respect to payments and written confirmation of each such payment, to be addressed as first provided above

All other notices and communications to be addressed as first provided above.

Physical Delivery

JPMorgan Chase Bank, N.A.

4 Chase Metrotech Center, 3rd Floor

Brooklyn, New York 11245-0001

Attn:  Physical Receive Department

Reference:  G10559/Equitrust Life Insurance Co

Name of Nominee in which Bonds are to be issued:  Cudd & Co.

Taxpayer I.D. Number for CUDD & CO.:  13-6022143

Taxpayer I.D. Number for Equitrust Life Insurance Company:  42-1468417

A-33

Name of and Address of Purchaser	Principal Amount of Tranche A Bonds to Be Purchased		Principal Amount of Tranche B Bonds to Be Purchased
Farm Bureau Life Insurance Company c/o FBL Financial Group, Inc. Attention:  Securities Department-Private Placements 5400 University Avenue West Des Moines, IA 50266 Email:  privateplacements@FBLFinancial.com	$	0	$	2,000,000

Payments

All payments on or in respect of the Bonds to be by bank wire transfer of Federal or other immediately available funds (identifying each payment as “Chugach Electric Association 4.75% First Mortgage Bonds, 2011 Series A, Tranche B, Due March 15, 2041, PPN 171265 A@0, principal premium or interest”) to:

JP Morgan Chase Bank

ABA No.:  021-000-021

A/C #9009002859

Account No. G10557 (Please do not put a space between G and Acct Number)

Reference:  PPN, Name of Issuer & Description; Principal and Interest Payment

Contact:  privateplacements@fblfinancial.com

Notices

All notices and communications, including notices with respect to payments and written confirmation of each such payment, to be addressed as first provided above

All other notices and communications to be addressed as first provided above.

Physical Delivery

JPMorgan Chase Bank, N.A.

4 Chase Metrotech Center, 3rd Floor

Brooklyn, New York 11245-0001

Attn:  Physical Receive Department

Reference:  G10557/Farm Bureau Life Insurance Co

Name of Nominee in which Bonds are to be issued:  Cudd & Co.

Taxpayer I.D. Number for CUDD & CO.:  13-6022143

Taxpayer I.D. Number for Farm Bureau Life Insurance Company:  42-0623913

A-34

Name of and Address of Purchaser	Principal Amount of Tranche A Bonds to Be Purchased		Principal Amount of Tranche B Bonds to Be Purchased
Country Life Insurance Company 1705 N Towanda Avenue Bloomington, Illinois  61702 Attention:  Investments Telephone:  (309) 821-6260 Fax:  (309) 821-6301	$	0	$	3,000,000

Payments

All payments on or in respect of the Bonds to be by bank wire transfer of Federal or other immediately available funds to:

Northern Trust Chgo/Trust

ABA #071000152

Wire Account Number 5186041000

For Further Credit to: 26-02712

Account Name: Country Life Insurance Company

Representing P & I on (list security) [BANK]

Accompanying Information:  Chugach Electric Association 4.75% First Mortgage Bonds, 2011 Series A, Tranche B, Due March 15, 2041, PPN 171265 A@0, due date and application (as among principal, premium  and interest) of the payment being made.

Notices

All notices and communications to be addressed as first provided above, except notices with respect to payments and written confirmation of each such payment, to be addressed:  

Country Life Insurance Company

Attention:  Investment Accounting

1705 N Towanda Avenue

Bloomington, Illinois  61702

Telephone:  (309) 821-6348

Fax:  (309) 821-2800

A-35

Physical Delivery

The Northern Trust Company of New York

Harborside Financial Center 10, Suite 1401

3 Second Street

Attn:  26-02712/Country Life Insurance Company

Jersey City, NJ 07311

Include Acct # and Name in cover letter as well

Name of Nominee in which Bonds are to be issued:  None

Taxpayer I.D. Number:  37-0808781

A-36

Name of and Address of Purchaser	Principal Amount of Tranche A Bonds to Be Purchased		Principal Amount of Tranche B Bonds to Be Purchased
Cotton States Life Insurance Company c/o Country Life Insurance Company 1705 N Towanda Avenue Bloomington, Illinois  61702 Attention:  Investments Telephone:  (309) 821-6260 Fax:  (309) 821-6301	$	0	$	1,000,000

Payments

All payments on or in respect of the Bonds to be by bank wire transfer of Federal or other immediately available funds to:

SUNTRUST BANKS

ABA Number 061000104 SunTrust Bank

Wire Account Number 9088003142

Account Name:  Income Collections

For Further Credit to:  Cotton States 1129997

Account Name: Cotton States Life Insurance

Representing P & I on (list security) [BANK]

Accompanying Information:  Chugach Electric Association 4.75% First Mortgage Bonds, 2011 Series A, Tranche B, Due March 15, 2041, PPN 171265 A@0, due date and application (as among principal, premium  and interest) of the payment being made.

Notices

All notices and communications to be addressed as first provided above, except notices with respect to payments and written confirmation of each such payment, to be addressed:  

Cotton States Life Insurance Company

c/o Country Life Insurance Company

Attention:  Investment Accounting

1705 N Towanda Avenue

Bloomington, Illinois  61702

Telephone:  (309) 821-6348

Fax:  (309) 821-2800

A-37

Physical Delivery

SunTrust Bank

Free Securities Movement & Control

Mail Code GA-Atl-3132

303 Peachtree Street NE, Suite 1520

Atlanta, GA 30308

Reference Acct:  1129997

Name of Nominee in which Bonds are to be issued:  None

Taxpayer I.D. Number:  58-0830929

A-38

Name of and Address of Purchaser	Principal Amount of Tranche A Bonds to Be Purchased		Principal Amount of Tranche B Bonds to Be Purchased
Phoenix Life Insurance Company c/o Goodwin Capital Advisers One American Row Private Placement Department H-GW-1 Hartford, CT  06102	$	0	$	2,000,000

Payments

All payments on or in respect of the Bonds to be by bank wire transfer of Federal or other immediately available funds (identifying each payment as “Chugach Electric Association 4.75% First Mortgage Bonds, 2011 Series A, Tranche B, Due March 15, 2041, PPN 171265 A@0 principal, premium or interest”) to:

JP Morgan Chase

New York, NY

ABA 021 000 021

Account Name:  Income Processing

Account Number:  900 9000 200

Reference:  Phoenix Life Insurance, G05123, Chugach Electric Association

Notices

All notices and communications, including notices with respect to payments and written confirmation of each such payment, to be addressed as first provided above.

All legal notices should be addressed to:

Phoenix Life Insurance Company

One American Row

Hartford, CT  06102

Attention:  Brad Buck

Physical Delivery

Phoenix Life Insurance Company

One American Row

Hartford, CT  06102

Attention:  Brad Buck

Name of Nominee in which Bonds are to be issued:  None

Taxpayer I.D. Number:  06-0493340

A-39

Name of and Address of Purchaser	Principal Amount of Tranche A Bonds to Be Purchased		Principal Amount of Tranche B Bonds to Be Purchased
PHL Variable Insurance Company c/o Goodwin Capital Advisers One American Row Private Placement Department H-GW-1 Hartford, CT  06102	$	0	$	1,000,000

Payments

All payments on or in respect of the Bonds to be by bank wire transfer of Federal or other immediately available funds (identifying each payment as “Chugach Electric Association 4.75% First Mortgage Bonds, 2011 Series A, Tranche B, Due March 15, 2041, PPN 171265 A@0 principal, premium or interest”) to:

JP Morgan Chase

New York, NY

ABA 021 000 021

Account Name:  Income Processing

Account Number:  900 9000 200

Reference:  Phoenix Variable, G09389, Chugach Electric Association

Notices

All notices and communications, including notices with respect to payments and written confirmation of each such payment, to be addressed as first provided above.

All legal notices should be addressed to:

Phoenix Life Insurance Company

One American Row

Hartford, CT  06102

Attention:  Brad Buck

Physical Delivery

Phoenix Life Insurance Company

One American Row

Hartford, CT  06102

Attention:  Brad Buck

Name of Nominee in which Bonds are to be issued:  None

Taxpayer I.D. Number:  06-1045829

A-40

Name of and Address of Purchaser	Principal Amount of Tranche A Bonds to Be Purchased		Principal Amount of Tranche B Bonds to Be Purchased
PHL Variable Insurance Company c/o Goodwin Capital Advisers One American Row Private Placement Department H-GW-1 Hartford, CT  06102	$	0	$	1,000,000

Payments

All payments on or in respect of the Bonds to be by bank wire transfer of Federal or other immediately available funds (identifying each payment as “Chugach Electric Association 4.75% First Mortgage Bonds, 2011 Series A, Tranche B, Due March 15, 2041, PPN 171265 A@0, principal, premium or interest”) to:

JP Morgan Chase

New York, NY

ABA 021 000 021

Account Name:  Income Processing

Account Number:  900 9000 200

Reference:  Phoenix Variable, G11923, Chugach Electric Association

Notices

All notices and communications, including notices with respect to payments and written confirmation of each such payment, to be addressed as first provided above.

All legal notices should be addressed to:

Phoenix Life Insurance Company

One American Row

Hartford, CT  06102

Attention:  Brad Buck

Physical Delivery

Phoenix Life Insurance Company

One American Row

Hartford, CT  06102

Attention:  Brad Buck

Name of Nominee in which Bonds are to be issued:  None

Taxpayer I.D. Number:  06-1045829

A-41

Name of and Address of Purchaser	Principal Amount of Tranche A Bonds to Be Purchased		Principal Amount of Tranche B Bonds to Be Purchased
National Mutual Benefit c/o Prime Advisors, Inc. Redmond Ridge Corporate Center 22635 NE Marketplace Drive, Suite 160 Redmond, WA 98053 Attention:  Scott Sell, Vice President	$	0	$	2,000,000

Payments

All payments on or in respect of the Bonds to be by bank wire transfer of Federal or other immediately available funds (identifying each payment as “Chugach Electric Association 4.75% First Mortgage Bonds, 2011 Series A, Tranche B, Due March 15, 2041, PPN 171265 A@0, principal, premium or interest”) to:

Marshall & Ilsley Trust Company

ABA #075000051

DDA# 27006

Acct# 89-M010-01-6

ATTN:  Income Dept 8th Floor

Acct Name:  National Mutual Benefit

Notices

All notices and communications, including notices with respect to payments and written confirmation of each such payment, to be addressed to:

A-42

Marshall & Ilsley

Acct # 89-M010-01-6

Acct Name:  National Mutual Benefit

11270 West Park Place, Suite 400

Milwaukee, WI 53224

Attention:  Income Dept 8th Floor

Attention:  Bret Franz

Email:  bret.franz@micorp.com

Phone:  (414) 815-3819

With copies to:

National Mutual Benefit

6522 Grand Teton Plaza

P.O. Box 1527

Madison, WI 53701-1527

Attention:  Steven Reindl, Vice President of Operations

and

Prime Advisors, Inc.

100 Northfield Drive, 4th Floor

Windsor, CT 06095

Attention:  Lewis Leon, SVP/Investment Accounting

Physical Delivery

Marshall & Ilsley Trust Company N.A. as Trustee FBO

11270 W Park Place

Suite 400

Milwaukee, WI 53224

Attention:  Bret Franz

Name of Nominee in which Bonds are to be issued:  Marshall & Ilsley Trust Company custodian for the NATIONAL MUTUAL BENEFIT ACCOUNT FIXED INCOME

Taxpayer I.D. Number:  41-6370378

A-43

Schedule B

Defined Terms

As used herein, the following terms have the respective meanings set forth below or set forth in the Section hereof following such term:

“2011 Series A Bonds” is defined in Section 1 of this Agreement.

“Affiliate” means, at any time, and with respect to any Person, any other Person that at such time directly or indirectly through one or more intermediaries Controls, or is Controlled by, or is under common Control with, such first Person.  As used in this definition, “Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise. Unless the context otherwise clearly requires, any reference to an “Affiliate” is a reference to an Affiliate of the Company.

“Anti-Terrorism Order” means Executive Order No. 13224 of September 24, 2001, Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit or Support Terrorism, 66 U.S. Fed. Reg. 49, 079 (2001), as amended.

“Business Day” means for the purposes of any provision of this Agreement, any day other than a Saturday, a Sunday or a day on which commercial banks in New York, New York are required or authorized to be closed.

“Capital Lease” means, at any time, a lease with respect to which the lessee is required concurrently to recognize the acquisition of an asset and the incurrence of a liability in accordance with GAAP.

“Closing” is defined in Section 3.

“Code” means the Internal Revenue Code of 1986, as amended from time to time, and the rules and regulations promulgated thereunder from time to time.

“Collateral Filings” is defined in Section 4.11.

“Company” means Chugach Electric Association, Inc., an electric cooperative existing under the laws of the State of Alaska, or any successor that becomes such in the manner prescribed in Article 9 of the Indenture.

“Confidential Information”is defined in Section 18.

“Default” means an event or condition the occurrence or existence of which would, with the lapse of time or the giving of notice or both, become an Event of Default.

“Electronic Delivery” is defined in Section 7.1(a).

B-1

“Environmental Laws” means any and all Federal, state, local, and foreign statutes, laws, regulations, ordinances, rules, judgments, orders, decrees, permits, concessions, grants, franchises, licenses, agreements or governmental restrictions relating to pollution and the protection of the environment or the release of any materials into the environment, including but not limited to those related to Hazardous Materials.

“ERISA” means the Employee Retirement Income  Security Act of 1974, as amended from time to time, and the rules and regulations promulgated thereunder from time to time in effect.

“ERISA Affiliate” means any trade or business  (whether or not incorporated) that is treated as a single employer together with the Company under section 414 of the Code.

“Event of Default” is defined in the Indenture.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Financing Agreements” means this Agreement, the Indenture (including, without limitation, the First Supplemental Indenture) and the 2011 Series A Bonds.

“First Supplemental Indenture” is defined in Section 1.

“Form 10-K” is defined in Section 7.1(b).

“Form 10-Q” is defined in Section 7.1(a).

“GAAP” means generally accepted accounting principles as in effect from time to time in the United States of America.

“Governmental Authority” means

(a)the government of

(i)  the United States of America or any State or other political subdivision thereof, or

(ii)  any other jurisdiction in which the Company or any Subsidiary conducts all or any part of its business, or which asserts jurisdiction over any properties of the Company or any Subsidiary, or

(b)any entity exercising executive, legislative, judicial, regulatory or administrative functions of, or pertaining to, any such government.

“Guaranty”  means, with respect to any Person, any obligation (except the endorsement in the ordinary course of business of negotiable instruments for deposit or collection) of such Person guaranteeing or in effect guaranteeing any indebtedness, dividend or other obligation of any other Person in any manner, whether directly or indirectly, including (without limitation) obligations incurred through an agreement, contingent or otherwise, by such Person:

B-2

(a)to purchase such indebtedness or obligation or any property constituting security therefor;

(b)to advance or supply funds (i) for the purchase or payment of such indebtedness or obligation, or (ii) to maintain any working capital or other balance sheet condition or any income statement condition of any other Person or otherwise to advance or make available funds for the purchase or payment of such indebtedness or obligation;

(c)to lease properties or to purchase properties or services primarily for the purpose of assuring the owner of such indebtedness or obligation of the ability of any other Person to make payment of the indebtedness or obligation; or

(d)otherwise to assure the owner of such indebtedness or obligation against loss in respect thereof.

In any computation of the indebtedness or other liabilities of the obligor under any Guaranty, the indebtedness or other obligations that are the subject of such Guaranty shall be assumed to be direct obligations of such obligor.

“Hazardous Material” means any and all pollutants, toxic or hazardous wastes or other substances that might pose a hazard to health and safety, the removal of which may be required or the generation, manufacture, refining, production, processing, treatment, storage, handling, transportation, transfer, use, disposal, release, discharge, spillage, seepage or filtration of which is or shall be restricted, prohibited or penalized by any applicable law including, but not limited to, asbestos, urea formaldehyde foam insulation, polychlorinated biphenyls, petroleum, petroleum products, lead based paint, radon gas or similar restricted, prohibited or penalized substances.

“holder” means, with respect to any 2011 Series A Bond, the Person in whose name such 2011 Series A Bond is registered in the register maintained by the Trustee.

“Indebtedness” with respect to any Person means, at any time, without duplication,

(a)its liabilities for borrowed money and its redemption obligations in respect of mandatorily redeemable Preferred Stock;

(b)its liabilities for the deferred purchase price of property acquired by such Person (excluding accounts payable arising in the ordinary course of business but including all liabilities created or arising under any conditional sale or other title retention agreement with respect to any such property);

(c)(i) all liabilities appearing on its balance sheet in accordance with GAAP in respect of Capital Leases and (ii) all liabilities which would appear on its balance sheet in accordance with GAAP in respect of Synthetic Leases assuming such Synthetic Leases were accounted for as Capital Leases;

B-3

(d)all liabilities for borrowed money secured by any Lien with respect to any property owned by such Person (whether or not it has assumed or otherwise become liable for such liabilities);

(e)all its liabilities in respect of letters of credit or instruments serving a similar function issued or accepted for its account by banks and other financial institutions (whether or not representing obligations for borrowed money);

(f)any Guaranty of such Person with respect to liabilities of a type described in any of clauses (a) through (e) hereof.

“Indenture” is defined in Section 1.

“Institutional Investor” means (a) any Purchaser of a 2011 Series A Bond, (b) any holder of a 2011 Series A Bond holding (together with one or more of its affiliates) more than 5% of the aggregate principal amount of the 2011 Series A Bonds then outstanding, (c) any bank, trust company, savings and loan association or other financial institution, any pension plan, any investment company, any insurance company, any broker or dealer, or any other similar financial institution or entity, regardless of legal form, and (d) any Related Fund of any holder of any 2011 Series A Bond.

“Lien” means, with respect to any Person, any mortgage, lien, pledge, charge, security interest or other encumbrance, or any interest or title of any vendor, lessor, lender or other secured party to or of such Person under any conditional sale or other title retention agreement or Capital Lease, upon or with respect to any property or asset of such Person (including in the case of stock, stockholder agreements, voting trust agreements and all similar arrangements).

“Make-Whole Amount” is defined in the First Supplemental Indenture.

“Material” means material in relation to the business, operations, affairs, financial condition, assets or properties of the Company and its Subsidiaries taken as a whole.

“Material Adverse Effect” means:

(a)when used in Sections 4, 5 and 7, a material adverse effect on (i) the business, operations, affairs, financial condition, assets or properties of the Company, (ii) the ability of the Company to perform its obligations under this Agreement, the 2011 Series A Bonds or the Indenture or (iii) the validity or enforceability of this Agreement, the 2011 Series A Bonds or the Indenture; and

(b)when used in Section 8, a material adverse effect on (i) the ability of the Company to perform its obligations under this Agreement, the 2011 Series A Bonds or the Indenture or (ii) the validity or enforceability of this Agreement, the 2011 Series A Bonds or the Indenture.

B-4

“Member” means each holder of a membership or other equity interest in the Company.

“Memorandum” is defined in Section 5.3.

“Multiemployer Plan” means any Plan that is a “multiemployer plan” (as such term is defined in section 4001(a)(3) of ERISA).

“NAIC” means the National Association of Insurance Commissioners or any successor thereto.

“Officer’s Certificate” means a certificate of a Senior Financial Officer or of any other officer of the Company whose responsibilities extend to the subject matter of such certificate.

“PBGC” means the Pension Benefit Guaranty Corporation referred to and defined in ERISA or any successor thereto.

“Person” means an individual, partnership, corporation, limited liability company, association, trust, unincorporated organization, business entity or Governmental Authority.

“Plan” means an “employee benefit plan” (as defined in section 3(3) of ERISA) subject to Title I of ERISA that is or, within the preceding five years, has been established or maintained, or to which contributions are or, within the preceding five years, have been made or required to be made, by the Company or any ERISA Affiliate or with respect to which the Company or any ERISA Affiliate may have any liability.

“Preferred Stock” means any class of capital stock of a Person that is preferred over any other class of capital stock (or similar equity interests) of such Person as to the payment of dividends or the payment of any amount upon liquidation or dissolution of such Person.

“property” or “properties” means, unless otherwise specifically limited, real or personal property of any kind, tangible or intangible, choate or inchoate.

“PTE” is defined in Section 6.2(a).

“Purchaser” is defined in the first paragraph of this Agreement.

“Qualified Institutional Buyer” means any Person who is a “qualified institutional buyer” within the meaning of such term as set forth in Rule 144A(a)(1) under the Securities Act.

“Related Fund” means, with respect to any holder of any 2011 Series A Bond , any fund or entity that (i) invests in Securities or bank loans, and (ii) is advised or managed by such holder, the same investment advisor as such holder or by an affiliate of such holder or such investment advisor.

B-5

“Required Holders” means, at any time, the holders of more than 50% in principal amount of the 2011 Series A Bonds at the time outstanding (exclusive of 2011 Series A Bonds then owned by the Company or any of its Affiliates).

“Responsible Officer” means any Senior Financial Officer and any other officer of the Company with responsibility for the administration of the relevant portion of this Agreement.

“SEC” shall mean the Securities and Exchange Commission of the United States, or any successor thereto.

“Securities” or “Security” shall have the meaning specified in Section 2(1) of the Securities Act.

“Securities Act” means the Securities Act of 1933, as amended from time to time, and the rules and regulations promulgated thereunder from time to time in effect.

“Senior Financial Officer” means the chief financial officer, principal accounting officer, treasurer or comptroller of the Company.

“Subsidiary” means, as to any Person, any other Person in which such first Person or one or more of its Subsidiaries or such first Person and one or more of its Subsidiaries owns sufficient equity or voting interests to enable it or them (as a group) ordinarily, in the absence of contingencies, to elect a majority of the directors (or Persons performing similar functions) of such second Person, and any partnership or joint venture if more than a 50% interest in the profits or capital thereof is owned by such first Person or one or more of its Subsidiaries or such first Person and one or more of its Subsidiaries (unless such partnership or joint venture can and does ordinarily take major business actions without the prior approval of such Person or one or more of its Subsidiaries).  Unless the context otherwise clearly requires, any reference to a “Subsidiary” is a reference to a Subsidiary of the Company.

“SVO” means the Securities Valuation Office of the NAIC or any successor to such Office.

“Synthetic Lease” means, at any time, any lease (including leases that may be terminated by the lessee at any time) of any property (a) that is accounted for as an operating lease under GAAP and (b) in respect of which the lessee retains or obtains ownership of the property so leased for United States federal income tax purposes, other than any such lease under which such Person is the lessor.

“Trustee” means U.S. Bank National Association, as trustee under the Indenture, and its successors and assigns that becomes such in the manner prescribed in Article X of the Indenture.

“UCC” means, the Uniform Commercial Code as enacted and in effect from time to time in the state whose laws are treated as applying to the Trust Estate.

“USA Patriot Act” means United States Public Law 107-56, Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT ACT) Act of 2001, as amended from time to time, and the rules and regulations promulgated thereunder from time to time in effect.

B-6

Schedule 4.11

Collateral Filings

Recording of Second Supplemental Indenture of Trust dated January 20, 2011, between U.S. Bank National Association, as trustee (the “Trustee”), and Chugach Electric Association, Inc., in the real property records of each of the following Recording Districts of the State of Alaska:  Anchorage, Palmer and Kenai.

Recording of the First Supplemental Indenture of Trust dated as of January 20, 2011, to the Second Amended and Restated Indenture of Trust dated as of January 20, 2011, between the Trustee and Chugach Electric Association, Inc., in the real property records of each of the following Recording Districts of the State of Alaska:  Anchorage, Palmer and Kenai.

Filing of a UCC financing statement showing Chugach Electric Association, Inc., as debtor (and identifying the debtor as a transmitting utility), and the Trustee, as secured party, in UCC records of the Alaska Department of Natural Resources, Support Services Division, UCC Central.

Schedule 4.11

(to the Bond Purchase Agreement)

Schedule 5.3

Disclosure Documents

·   Annual Report on Form 10-K for the fiscal year ended December 31, 2009

·   Quarterly Report on Form 10-Q for the quarter ended June 30, 2010

·   Current Report on Form 8-K dated July 30, 2010

Schedule 5.3

(to Bond Purchase Agreement)

Schedule 5.5

Financial Statements

Financial statements accompanying Form 10-K of the Company filed with the SEC for fiscal year ending December 31, 2010.

Financial statements accompanying Form 10-Q of the Company filed with the SEC for the fiscal quarter ended June 30, 2010.

Schedule 5.5

(to Bond Purchase Agreement)

Schedule 5.7

Government Authorizations

None.

Schedule 5.7

(to Bond Purchase Agreement)

Schedule 5.15(a)

Existing Indebtedness

The following sets forth a complete and correct list of all outstanding indebtedness of Chugach Electric Association, Inc. as of June 30, 2010.

	Balance		Limit
2001 Series A Bonds	$	150,000,000	$	150,000,000
2002 Series A Bonds	$	120,000,000	$	120,000,000
CoBank Promissory Notes	$	38,322,744	$	38,322,744
Commercial Paper	$	62,000,000	$	300,000,000
National Rural Utilities Cooperative Finance Corporation	$	0	$	50,000,000
(NRUCFC) Line of Credit Agreement

Schedule 5.15(a)

(to Bond Purchase Agreement)

Schedule 5.15(b)

Restrictions on Indebtedness

1.   Second Amended and Restated Indenture of Trust dated as of January 20, 2011, by and between Chugach Electric Association, Inc. and U.S. Bank National Association, as Trustee, as amended and supplemented by First Supplemental Indenture of Trust dated January 20, 2011.

2.   Credit Agreement by and among Chugach Electric Association, Inc., National Rural Utilities Cooperative Finance Corporation, KeyBank National Association, Bank of America, N.A., JPMorgan Chase Bank, N.A., Bank of Montreal, Goldman Sachs Bank USA, Bank of Taiwan, Los Angeles Branch, CoBank, ACB, and Chang Hua Commercial Bank, Ltd., Los Angeles Branch, dated as of November 17, 2010.

3.   Amended and Restated Master Loan Agreement (MLA No. 000976A) between Chugach Electric Association, Inc. and CoBank, ACB dated as of January 19, 2011.

4.   Revolving Line of Credit Agreement between Chugach Electric Association, Inc. and National Rural Utilities Cooperative Finance Corporation dated October 17, 2007 (Loan No. AK008-R-5102), as amended by Amendment to Revolving Line of Credit Agreement between Chugach Electric Association, Inc. and the National Rural Utilities Cooperative Finance Corporation effective December 22, 2008.

Schedule 5.15(b)

(to Bond Purchase Agreement)

Exhibit A

Form of New Indenture

[See attached]

Exhibit A

(to Bond Purchase Agreement)

See the Second Amended and Restated Indenture of Trust filed as Exhibit 4.18 to this 2010 Form 10-K Annual Report.

A-1

Exhibit A

(to Bond Purchase Agreement)

Exhibit B

First Supplemental Indenture

[See attached]

Exhibit B

(to Bond Purchase Agreement)

See the First Supplemental Indenture to the Second Amended and Restated Indenture of Trust filed as Exhibit 4.19 to this 2010 Form 10-K Annual Report.

B-1

Exhibit B

(to Bond Purchase Agreement)

Purchasers of Chugach Electric Association, Inc. First Mortgage Bonds, 2011 Series A

January 21, 2011

Page 1

Form of Opinion of Special Counsel

to the Company

[See attached]

Exhibit 4.4(a)(i)

(to Bond Purchase Agreement)

January 21, 2011

Via Federal Express

Each of the Purchasers Listed in Exhibit A to the Bond Purchase Agreement

c/o Chapman & Cutler LLP

111 West Monroe

Chicago, IL  60603

Attention: James R. Nelson

Re:Bond Purchase Agreement dated January 21, 2011, among Chugach Electric Association, Inc. and the Purchasers Listed in Exhibit A Thereto (the “Purchasers”) Relating to Issuance of $90,000,000 4.20% First Mortgage Bonds, 2011 Series A, and $185,000,000 4.75% First Mortgage Bonds, 2011 Series A (“Bond Purchase Agreement”)

Ladies and Gentlemen:

We have acted as special counsel to Chugach Electric Association, an Alaskan electric cooperative (the “Company”), in connection with the transactions contemplated by the above- referenced Bond Purchase Agreement.  This opinion is provided to you at the request of the Company pursuant to Section 4.4 of the Bond Purchase Agreement.  Capitalized terms used and not otherwise defined in this opinion letter have the meanings defined in the Bond Purchase Agreement.  References in this opinion letter to the “Alaska UCC” are to the Uniform Commercial Code currently in effect in the State of Alaska.

The law covered by the opinions expressed herein is limited to: (i) the laws of the State of Alaska with respect to the opinions expressed in paragraphs C-1 through C-3, C-4 and C-5 (insofar as they relate to the Indenture), C-6, C-7, C-8 and C-12 through C-14; (ii) the laws of the State of New York with respect to the opinions expressed in paragraphs C-4 and C-5 (insofar as they relate to the Bond Purchase Agreement and the Series 2011A Bonds), C-7 and C-8; and (iii) the federal laws of the United States of America with respect to the opinions expressed in paragraphs C-9 through C-11 and C-15.

This opinion letter is to be interpreted in accordance with the Guidelines for the Preparation of Closing Opinions (including the appended Legal Opinion Principles) issued by the Committee on Legal Opinions of the American Bar Association’s Business Law Section as published in 57 Business Lawyer 875 (February 2002) and the Statement on the Role of Customary Practice in the Preparation and Understanding of Third-Party Legal Opinions as published in 63 Business Lawyer 1277 (August 2008).

Purchasers of Chugach Electric Association, Inc. First Mortgage Bonds, 2011 Series A

January 21, 2011

Page 2

A.Financing Agreements and Matters Examined

In connection with this opinion letter, we have examined originals, or copies certified or otherwise identified to our satisfaction, of such documents, records, certificates and statements of government officials, officers, and other representatives of the persons referred to therein, and such other documents as we have deemed relevant or necessary as the basis for the opinions herein expressed, including the following:

A-1Bond Purchase Agreement.

A-2 Second Amended and Restated Indenture of Trust dated as of January 20, 2011, between the Company and U.S. Bank National Association, as Trustee (the “Trustee”), as amended by First Supplemental Indenture of Trust dated as of January 20, 2011, between the Company and U.S. Bank National Association, as Trustee (as so amended, the “Indenture”), relating to real property described in Exhibit A attached thereto (the “Mortgaged Property”).

A-3Bonds in the aggregate amount of $275,000,000 consisting of an aggregate principal amount of $90,000,000 of First Mortgage Bonds, 2011 Series A, due March 15, 2031 and an aggregate principal amount of $185,000,000 of First Mortgage Bonds, 2011 Series A, due March 15, 2041, in each case signed by the Company but not yet authenticated by the Trustee (collectively, the “2011 Series A Bonds”).

A-5File-stamped copy of Uniform Commercial Code financing statement naming the Company as debtor and as a transmitting utility, and the Trustee as secured party (the “Financing Statement”), as filed in the UCC Section of the Department of Natural Resources of the State of Alaska (the “Filing Office”) on January 20, 2011;

A-6File-stamped copies of each of the Second Amended and Restated Indenture of Trust dated as of January 20, 2011, and the First Supplement to Second and Amended Restated Indenture dated as of January 20, 2011, in each case as recorded in the real property recording offices in each of the Anchorage, Palmer and Kenai Recording Districts on January 20, 2011 (or oral confirmation of such recordings, including recording numbers, from First American Title Insurance Company);

A-7Articles of incorporation and bylaws of the Company, certified to us by an officer of the Company as being complete and in full force and effect as of the date of this opinion.

A-8Resolutions of the Board of Directors of the Company certified to us by an officer of the Company as constituting all records of proceedings and actions of the Company relating to the transactions contemplated by the Financing Agreements (as defined below).

A-9A Certificate of Compliance with respect to the Company issued by the Alaska Department of Commerce and Economic Development, dated January 12, 2011.

Purchasers of Chugach Electric Association, Inc. First Mortgage Bonds, 2011 Series A

January 21, 2011

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A-10Certificate of an officer of the Company as to certain factual matters on which we have relied in giving this opinion, including that the times-interest-earned ratio most recently approved by the Regulatory Commission of Alaska for the Company is not less than 1.10.

The documents listed in A-1 through A-3 are herein collectively referred to as the “Financing Agreements.”

B.Assumptions

For purposes of this opinion letter, we have relied on customary assumptions as well as certain assumptions peculiar to Alaska or New York law, including the following assumptions:

B-1The descriptions of the collateral in the Financing Agreements and the Financing Statement (and any schedules and exhibits thereto) are accurate and sufficiently describe the property intended to be covered thereby.

B-2Value has been given to the Company under the Financing Agreements.

B-3Each of the Series 2011A Bonds has been duly authenticated by the Trustee in accordance with the terms of the Indenture.

B-4None of the transactions contemplated by the Financing Agreements is a consumer transaction and none of the collateral is a commercial tort claim, as such terms are defined in Section 9A-102 of the Alaska UCC.

Our opinion expressed in Paragraph C-1 as to the status of the Company under the laws of the State of Alaska is based solely upon the Certificate of Compliance enumerated above.  We have made no additional investigation after the date of that certificate in rendering our opinion expressed in Paragraph C-1 below.

Whenever a statement herein is qualified by the phrase “to our knowledge,” or by any other similar phrase, or where it is noted that nothing has been brought to our attention, it means that the opinion stated is based solely on the conscious awareness of information by one or more of the following persons as to the matters being opined on: (i) the attorney who signs the opinion letter and (ii) the attorneys at our firm who have been actively involved in negotiating the transaction, preparing the Financing Agreements, or preparing this opinion letter.  We have not undertaken any investigation to determine the accuracy of the matters covered by any such statement and any limited inquiry undertaken by us during the preparation of this opinion letter should not be regarded as such an investigation.  No inference as to our knowledge of any matters bearing on the accuracy of the facts underlying any such statement should be drawn from the fact of our representation of the Company.

Purchasers of Chugach Electric Association, Inc. First Mortgage Bonds, 2011 Series A

January 21, 2011

Page 4

C.Opinions

Based on the foregoing examinations and assumptions and subject to the qualifications and exclusions stated below, we are of the opinion that:

C-1The Company is an electric cooperative utility validly existing under Alaska law.

C-2The Company has corporate power and authority to enter into, and to perform its obligations under, each of the Financing Agreements, and to own its properties and to carry on its business as, to our knowledge, it is now conducted.

C-3The Company has authorized, by all necessary corporate action on the part of the Company, the execution and delivery of each of the Financing Agreements.

C-4The Company has duly executed and delivered each of the Financing Agreements.

C-5Each of the Financing Agreements constitutes the valid and binding obligation of the Company, enforceable against the Company in accordance with its terms.

C-6The execution and delivery by the Company of, and the performance by the Company of the transactions contemplated by, each of the Financing Agreements do not violate the Company’s Articles of Incorporation or Bylaws.

C-7The execution and delivery by the Company of, and the performance of the transactions contemplated by, each of the Financing Agreements (including the issue and sale of the Series 2011A Bonds) are not prohibited by, nor do they violate any applicable statutes or regulations of any governmental agency or body having jurisdiction over the Company or any of its properties, or any order of any agency or body having jurisdiction over the Company of which we have knowledge.

C-8No consent, approval, authorization, order, license, filing, registration or qualification of or with any governmental agency or body having jurisdiction over the Company or any of its properties is required for execution and delivery of the Financing Agreements and consummation by the Company of the transactions contemplated by the Bond Purchase Agreement, including the issue and sale of the Series 2011A bonds pursuant to the Indenture, except for the recordation of the Indenture and the filing of the Financing Statements and such consents, approvals, authorizations, licenses, filings, registrations or qualifications as may be required under state securities or Blue Sky laws in connection with the offering and purchase of the Series 2011A Bonds.

C-9Assuming the accuracy of the representations contained in Sections 5.13 and 6.1 of the Agreement, no registration of the Series 2011A Bonds under the Securities Act is required for the offer and sale of the Series 2011A Bonds in the manner contemplated by the Bond Purchase Agreement.

Purchasers of Chugach Electric Association, Inc. First Mortgage Bonds, 2011 Series A

January 21, 2011

Page 5

C-10The Company is not an “investment company”, or a company “controlled” by an “investment company”, under the Investment Company Act of 1940, as amended.

C-11Neither the execution, delivery and performance of the Agreement, nor the issue and sale of the Series 2011A Bonds, violates Regulations T, U or X of the Federal Reserve Board.

C-12The Indenture creates in the Trustee’s favor, as security for all obligations of the Company stated in the Indenture to be so secured, a valid lien on the Mortgaged Property, and a security interest in fixtures included therein, to the extent that the Company has rights in the Mortgaged Property.

C-13The Indenture creates in the Lender’s favor, as security for all obligations of the Company under the Financing Agreements that are stated in Security Agreement to be so secured, a security interest in the collateral described therein (except that described only by reference to “all the Company’s assets” or “all the Company’s personal property” or words of similar import) to the extent that (i) the Company has rights in or the power to transfer such collateral and (ii) creation of a security interest in such collateral is governed by Article 9 of the Alaska UCC (the “Article 9 Collateral”).

C-14The Trustee has acquired, for the benefit of the Purchasers, a perfected security interest in that portion of the Article 9 Collateral in which a security interest can be perfected by filing a financing statement under the Alaska UCC.

C-15No qualification of the Indenture under the Trust Indenture Act of 1939, as amended, is required in connection with the offer and sale of the 2011 Series A Bonds by the Company to the Purchasers in the manner contemplated by the Bond Purchase Agreement.

D. Qualifications

The opinions set forth herein are subject to customary qualifications as well as qualifications specific to Alaska or New York law, some of which are noted below:

D-1The effect of bankruptcy, insolvency, reorganization, receivership, moratorium, fraudulent transfer and other similar laws affecting the rights and remedies of creditors generally, and the effect of general principles of equity, whether applied by court of law or equity.

D-2Without limiting the other qualifications set forth in this opinion letter, certain provisions contained in the Financing Agreements may not be enforceable, but such unenforceability will not render any of the Financing Agreements invalid as a whole or preclude:

Purchasers of Chugach Electric Association, Inc. First Mortgage Bonds, 2011 Series A

January 21, 2011

Page 6

(i) Judicial enforcement of the Company’s obligation to repay the principal amount of advances made under the Financing Agreements, together with interest thereon (to extent not deemed a penalty), as provided in the Financing Agreements;

  (ii) Upon written notice to the Company, acceleration of the Company’s obligation to repay such principal, together with such interest, upon default in the payment of such principal or interest or upon a continuing material default by the Company in the performance of any other enforceable obligation under the Financing Agreements (to the extent the Financing Agreements provide for such acceleration); or

  (iii) Foreclosure in accordance with applicable laws of the State of Alaska of any lien or security interest created by the Financing Agreements, either upon maturity or upon acceleration under circumstances described in clause (ii) above.

  D-3The following Alaska statutes and court decisions may operate to limit further the enforceability of certain provisions of the Indenture and other Financing Agreements:

  (i) Alaska Statute 9.45.200, which prohibits simultaneous actions for recovery of a debt secured by a mortgage or deed of trust, and an action foreclosing on such mortgage or deed of trust, and prohibits a subsequent action for foreclosure of a lien unless judgment was given on the debt in the earlier action and execution on that judgment is returned unsatisfied in whole or in part.

  (ii)   Alaska Statute 34.20.100, which prohibits any action or proceeding for a deficiency on an obligation secured by a deed of trust after a foreclosure pursuant to Alaska Statute 34.20.070-34.20.130, Alaska’s non-judicial foreclosure statute.  This statute “limits the creditor’s rights to pursue further legal action or process against his debtor for any deficiency in the obligation following a non-judicial foreclosure of the property.  The limitation does not bar the retention of additional security specifically pledged on the obligation.”  Hull v. Alaska Federal Savings & Loan Assoc, 658 P.2d 122, 125 (Alaska 1983).

  (iii)  Alaska Statute 34.20.070, which allows cure of a default during the pendency of a non-judicial foreclosure, causing the non-judicial sale to be discontinued upon such cure, even though the obligations had been declared accelerated.  The statute, however, provides that after two such cures of the same deed of trust, the trustee may elect to refuse payment and continue the sale.

  (iii)  Alaska Statute 34.20.160, which provides that if a lender wishes to retain the option to sue on a note secured by a mortgage or deed of trust and obtain a personal judgment against the mortgage or trustor and any other party bound by the note, without first foreclosing the mortgage or deed of trust, the note must

Purchasers of Chugach Electric Association, Inc. First Mortgage Bonds, 2011 Series A

January 21, 2011

Page 7

affirmatively so advise the mortgagor or trustor and any other party bound by the note.  The statute provides that the following language in a note is sufficient:

The mortgage or trustor (borrower) is personally obligated and fully liable for the amount due under the note.  The mortgage or beneficiary (lender) has the right to sue on the note and obtain a personal judgment against the mortgagor or trustor for satisfaction of the amount due under the note either before or after a judicial foreclosure of the mortgage or deed of trust under AS 09.45.170 – 09.45.220.

  (v)  The doctrine of res judicata and the “rule prohibiting splitting a cause of action,” as adopted by the courts of the State of Alaska, including as set forth in Tolstrup v. Miller, 726 P.2d 1304, 1306-07 (Alaska 1986) which holds that a second suit is barred “when the matter therein could have been decided in the first suit,” including claims that could have been brought, but were not, and Osbourne v. Buckman, 993 P.2d 409, 412 (Alaska 1999), which holds that all claims arising out of a single transaction must be brought in a single suit, and those that are not become extinguished by the judgment in the suit in which some of the claims were brought.

      (vi) The ability of parties to a deed of trust or assignment of leases, by reciting that the assignment of rents is immediately perfected and choate, to modify the general principle of law, especially as to the rights of third parties, adopted by the Alaska Supreme Court in Bevins v. Peoples Bank and Trust Co., 671 P.2d 875, 879 (Alaska 1983) that “a rent clause in a deed of trust, which allows the beneficiary to collect rents upon default to satisfy the secured debt, does not automatically assign the rents accruing after the date of default to the beneficiary.  The beneficiary must take some action acquire possession of the property or rents before the rent clause becomes operative.”  Nevertheless, it is common for deeds of trust and assignments of leases in Alaska to recite that the assignment of rents is immediately effective, with the idea of staking out a position favorable to the beneficiary which might or might not hold up if challenged.

      (vii) The enforceability of any judgment rendered by the foreign jurisdiction pursuant to a forum selection clause directing the parties to litigate issues concerning real property located in the State of Alaska in another forum in light of the decision adopted by the Alaska Supreme Court in Abadou v. Trad, 624 P.2d 287 (Alaska 1981) where the Alaska Supreme Court had occasion to consider the effect of a forum selection clause designating Lebanon as the forum for resolution of all claims arising out of a contract respecting joint ownership of lands located in Alaska.  The Alaska Supreme Court first determined there was no statute containing “language of exclusivity” specifically prohibiting the resolution of such actions in another forum.  Id. at 290.  Therefore, absent evidence of some other factor rendering such a result inequitable (such as inequality of bargaining power), the forum selection clause prevailed over the venue statute.  Id. at 290-91.

The court also rejected the argument that the clause ousted Alaska courts of rightful jurisdiction, and found that the clause was not per se void.  Id. at 290.  The court noted, however, that the Lebanese court would not have jurisdiction to order a partition or judicial sale as requested in the plaintiff’s complaint, noting that “[t]he only state which can, by operation of law and apart from the act of the parties, transfer title in land out of one person and into another is the state where the land lies.”  Id. at 291 n.6 (quoting R. Leflar, American Conflicts of law § 173 (3d ed. 1977)).  However, the Lebanese court could, by virtue of its in personam jurisdiction over the parties, order the parties to execute deeds to the property as among themselves, or order other relief appropriate under the contract.  Id.  The court noted that the fact that the case must be brought in a Lebanese court in the first instance did not necessarily mean that the Lebanese judgment would be effective in Alaska, and that “only if [the plaintiff] cannot obtain relief in that forum should he be able to re-file his action in an Alaskan court.”  Id. at 292-93.

Purchasers of Chugach Electric Association, Inc. First Mortgage Bonds, 2011 Series A

January 21, 2011

Page 8

  D-4The courts of the States of Alaska and New York may consider extrinsic evidence surrounding the making of the Financing Agreements to ascertain the intent of the parties in using the language employed therein and may incorporate additional or supplementary terms into the Financing Agreements in order to effectuate the intent of the parties.

E.Exclusions

The opinions set forth herein are subject to customary exclusions, including the following matters as to which we express no opinion:

E-1The effect of, or compliance with, any federal or state securities laws, except to the extent specifically provided in paragraphs C-9 and C-10.

E-2The effect of, or compliance with, any land use, zoning, environmental, health and safety, building code or human disabilities laws, rules or regulations.

E-3The perfection of a security interest in as-extracted collateral, timber to be cut or collateral represented by a certificate of title.

E-4The priority of any mortgage lien or security interest.

This opinion letter is delivered as of its date and without any undertaking to advise you of any changes of law or fact that occur after the date of this opinion letter even though the changes may affect the legal analysis, a legal conclusion or information confirmed in this opinion letter.

Purchasers of Chugach Electric Association, Inc. First Mortgage Bonds, 2011 Series A

January 21, 2011

Page 9

This opinion letter is rendered only to you and is solely for your benefit and the benefit of successor holders of the 2011 Series A Bonds in connection with the transaction contemplated by the Financing Agreements.  This opinion letter may not be used or relied on for any other purpose or by any other person without our prior written consent.

Very truly yours,

Form of Opinion of General Counsel

to the Company

[See attached]

Exhibit 4.4(a)(ii)

(to Bond Purchase Agreement)

January 21, 2011

Each of the Purchasers Listed in Exhibit A to the Bond Purchase Agreement

c/o Chapman & Cutler LLP

111 West Monroe

Chicago, IL  60603

Attention: James R. Nelson

Re:Bond Purchase Agreement dated January 21, 2011, among Chugach Electric Association, Inc. and the Purchasers Listed in Exhibit A Thereto (the “Purchasers”) Relating to Issuance of $90,000,000 4.20% First Mortgage Bonds, 2011 Series A, and $185,000,000 4.75% First Mortgage Bonds, 2011 Series A (“Bond Purchase Agreement”)

Ladies and Gentlemen:

I am the General Counsel of Chugach Electric Association, Inc., an Alaskan electric cooperative (the “Company”), in connection with the transactions contemplated by the above- referenced Bond Purchase Agreement.  This opinion is provided to you at the request of the Company pursuant to Section 4.4 of the Bond Purchase Agreement.  Capitalized terms used and not otherwise defined in this opinion letter have the meanings defined in the Bond Purchase Agreement.  

The law covered by the opinions expressed herein is limited to the laws of the State of Alaska.

This opinion letter is to be interpreted in accordance with the Guidelines for the Preparation of Closing Opinions (including the appended Legal Opinion Principles) issued by the Committee on Legal Opinions of the American Bar Association’s Business Law Section as published in 57 Business Lawyer 875 (February 2002) and the Statement on the Role of Customary Practice in the Preparation and Understanding of Third-Party Legal Opinions as published in 63 Business Lawyer 1277 (August 2008).

A.Financing Agreements and Matters Examined

In connection with this opinion letter, I have examined originals, or copies certified or otherwise identified to our satisfaction, of such documents, records, certificates and statements of government officials, officers, and other representatives of the persons referred to therein, and such other documents as I have deemed relevant or necessary as the basis for the opinions herein expressed, including the following:

A-1Bond Purchase Agreement

A-2 Second Amended and Restated Indenture of Trust dated as of January 20, 2011, between the Company and U.S. Bank National Association, as Trustee (the “Trustee”), as amended by First Supplemental Indenture of Trust dated as of January 20, 2011, between the Company and U.S. Bank National Association, as Trustee (as so amended, the “Indenture”), relating to real property described in Exhibit A attached thereto (the “Mortgaged Property”).

Purchasers of Chugach Electric Association, Inc. First Mortgage Bonds, 2011 Series A

January 21, 2011

Page 4

A-3Bonds in the aggregate amount of $275,000,000 consisting of an aggregate principal amount of $90,000,000 of First Mortgage Bonds, 2011 Series A, due March 15, 2031 and an aggregate principal amount of $185,000,000 of First Mortgage Bonds, 2011 Series A, due March 15, 2041, in each case signed by the Company but not yet authenticated by the Trustee (collectively, the “2011 Series A Bonds”).

A-4File-stamped copy of Uniform Commercial Code financing statement naming the Company as debtor and as a transmitting utility, and the Trustee as secured party (the “Financing Statement”), as filed in the UCC Section of the Department of Natural Resources of the State of Alaska (the “Filing Office”) on January 20, 2011;

A-5File-stamped copies of each of the Second Amended and Restated Indenture of Trust dated as of January 20, 2011, and the First Supplement to the Second Amended and Restated Indenture dated as of January 20, 2011, in each case as recorded in the real property recording offices in each of the Anchorage, Palmer and Kenai Recording Districts on January 20, 2011 (or oral confirmation of such recordings, including recording numbers, from First American Title Insurance Company);

A-6Certificates of an officer of the Company as to certain factual matters on which I have relied in giving this opinion, including that the times-interest-earned ration most recently approved by the Regulatory Commission of Alaska for the Company is not less than 1.10.

A-7Articles of incorporation and bylaws of the Company, certified to by an officer of the Company as being complete and in full force and effect as of the date of this opinion.

A-8Resolutions of the Board of Directors of the Company certified by an officer of the Company as constituting all records of proceedings and actions of the Company relating to the transactions contemplated by the Financing Agreements (as defined below).

A-9A Certificate of Compliance with respect to the Company issued by the Alaska Department of Commerce and Economic Development, dated January 12, 2011.

A-10Each of the agreements identified in Exhibit B to the Second Amended and Restated Indenture of Trust dated as of January 20, 2011 (the “Material Agreements”).

The documents listed in A-1 through A-3 are herein collectively referred to as the “Financing Agreements.”

My opinion expressed in Paragraph B-1 as to the status of the Company under the laws of the State of Alaska is based solely upon the Certificate of Compliance enumerated above.  I have made no additional investigation after the date of that Certificate or in rendering my opinion expressed in B-1.

Purchasers of Chugach Electric Association, Inc. First Mortgage Bonds, 2011 Series A

January 21, 2011

Page 4

In connection with my opinion relating to the Material Agreement, I have not reviewed, and express no opinion on, (i) financial covenants or similar provisions requiring financial calculations or determinations to ascertain compliance, (ii) provisions relating to the occurrence of a “material adverse event” or words of similar import or (iii) parol evidence bearing on interpretation or construction.  Moreover, to the extent that any of the agreements and instruments identified in the Material Agreements are governed by the laws of any jurisdiction other than the State of Alaska, my opinion relating to those agreements and instruments is based solely upon the plain meaning of their language without regard to interpretation or construction that might be indicated by the laws governing those agreements and instruments.

Whenever a statement herein is qualified by the phrase “to my knowledge,” or by any other similar phrases, or where it is noted that nothing has been brought to my attention, it means that the opinion stated is based solely on the my conscious awareness of information.

B.Opinions

Based on the foregoing examinations and assumptions and subject to the qualifications and exclusions stated below, I am of the opinion that:

B-1The Company is an electric cooperative utility validly existing under Alaska law.

B-2The Company has corporate power and authority to enter into, and to perform its obligations under, each of the Financing Agreements, and to own its properties and to carry on its business as, to my knowledge, it is now conducted.

B-3The Company has authorized, by all necessary corporate action on the part of the Company, the execution and delivery of each of the Financing Agreements and the Financing Statement.

B-4The Company has duly executed and delivered each of the Financing Agreements.

B-5The execution and delivery by the Company of, and the performance by the Company of the transactions contemplated by, each of the Financing Agreements do not (a) violate the Company’s Articles of Incorporation or Bylaws, (b) breach, or result in a default under, any existing obligation of the Company under the Material Agreements.

B-6The execution and delivery by the Company of, and the performance of the transactions contemplated by, each of the Financing Agreements (including the issue and sale of the Series 2011A Bonds) are not prohibited by, nor do they violate any applicable statutes or regulations of any governmental agency or body having jurisdiction over the Company or any of its properties, or any order of any agency or body having jurisdiction over the Company of which I have knowledge.

Purchasers of Chugach Electric Association, Inc. First Mortgage Bonds, 2011 Series A

January 21, 2011

Page 4

B-7No consent, approval, authorization, order, license, filing, registration or qualification of or with any governmental agency or body having jurisdiction over the Company or any of its properties is required for execution and delivery of the Financing Documents and consummation by the Company of the transactions contemplated by the Bond Purchase Agreement, including the issue and sale of the Series 2011A bonds pursuant to the Indenture, except for the recordation of the Indenture and the filing of the Financing Statements and such consents, approvals, authorizations, licenses, filings, registrations or qualifications as may be required under state securities or Blue Sky laws in connection with the offering and purchase of the Series 2011A Bonds.

B-8To my knowledge, there are no actions or proceedings against the Company pending before any court, government agency or arbitrator, or overtly threatened in writing, that seek to affect the enforceability of any of the Financing Agreements or security interests or liens in any real or personal property granted in any of the Financing Agreements or that, if adversely determined against the Company, would adversely affect the ability of the Company to comply with its obligations under the Bond Purchase Agreement.

This opinion letter is delivered as of its date and without any undertaking to advise you of any changes of law or fact that occur after the date of this opinion letter even though the changes may affect the legal analysis, a legal conclusion or information confirmed in this opinion letter.

This opinion letter is rendered only to you and is solely for your benefit and the benefit of successor holders of the 2011 Series A Bonds in connection with the transaction contemplated by the Financing Agreements.  This opinion letter may not be used or relied on for any other purpose or by any other person without our prior written consent.

Very truly yours,

Form of Opinion of Special Counsel

to the Purchasers

[To be provided on a case by case basis]

Exhibit 4.4(b)

(to Bond Purchase Agreement)

EX-4.21

Exhibit 4.21

THIS 2011 SERIES A BOND HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM EXCEPT UNDER CIRCUMSTANCES WHERE NEITHER SUCH REGISTRATION NOR SUCH EXEMPTION IS REQUIRED BY LAW.

THE COMPANY (DEFINED BELOW) IS PERSONALLY OBLIGATED AND FULLY LIABLE FOR THE AMOUNT DUE UNDER THIS BOND AND, SUBJECT TO THE PROVISIONS OF THE INDENTURE (DEFINED BELOW), EACH HOLDER (AS DEFINED IN THE INDENTURE) HAS THE RIGHT TO SUE ON THIS BOND AND OBTAIN A PERSONAL JUDGMENT AGAINST THE COMPANY FOR SATISFACTION OF THE AMOUNT UNDER THIS BOND EITHER BEFORE OR AFTER A FORECLOSURE OF THE INDENTURE UNDER ALASKA STATUTES 09.45.170-09.45.220.

CHUGACH ELECTRIC ASSOCIATION, INC.

FIRST MORTGAGE BONDS, 2011 SERIES A DUE MARCH 15, 2031

NO. RA-1	ISSUANCE DATE: JANUARY 21, 2011
$27,800,000	PPN: 171265 A*2

FOR VALUE RECEIVED, the undersigned, CHUGACH ELECTRIC ASSOCIATION, INC. (herein called the “Company”), an electric cooperative organized and existing under the laws of the State of Alaska, hereby promises to pay to NEW YORK LIFE INSURANCE COMPANY, or registered assigns, the principal sum of TWENTY-SEVEN MILLION EIGHT HUNDRED THOUSAND DOLLARS (or so much thereof as shall not have been prepaid) on March 15, 2031, with interest computed on the basis of a 360-day year of twelve 30-day months (a) on the unpaid balance hereof at a rate of 4.20% per annum (plus, upon the occurrence and during the continuation of an Interest Rate Adjustment Event (as hereinafter defined), an additional 2% per annum) from the date hereof, payable semiannually on the 15th day of each March and September, commencing on September 15, 2011, until the principal hereof shall have become due and payable, and (b) to the extent permitted by law, on any overdue payment (including any overdue prepayment) of principal, any overdue payment of interest, any overdue payment of any Make-Whole Amount (as defined in the First Supplemental Indenture referred to below), payable semiannually as aforesaid (or, at the option of the registered Holder hereof, on demand), at the Default Rate (as defined in the First Supplemental Indenture referred to below).

“Interest Rate Adjustment Event” means the occurrence of any of the following:

(a)           the Company defaults in the performance of Section 7.1(a) or (b) or Section 7.2 of the 2011 Series A Bond Purchase Agreement (as defined below); or

(b)           any representation or warranty made in writing by or on behalf of the Company or by any officer of the Company in the Indenture or the 2011 Series A Bond Purchase Agreement (as defined below) or in any writing furnished in connection with the transactions contemplated by the First Supplemental Indenture (referred to below) proves to have been false or incorrect in any material respect on the date as of which made and, with respect to representations and warranties made after the date hereof, for which accurate information has not since been provided in writing to the Holder of this Bond.

Subject to Section 11 of the 2011 Series A Bond Purchase Agreement (defined below), payments of principal of, interest on, and any Make-Whole Amount with respect to this Bond are to be made in lawful money of the United States of America in accordance with the terms of the Indenture.

This Bond is one of the 2011 Series A Bonds (herein called the “Bonds”) issued pursuant to the First Supplemental Indenture, dated as of January 20, 2011 (as from time to time amended, the “First Supplemental Indenture”), between the Company and the Trustee named therein which amends and supplements the Second Amended and Restated Indenture of Trust, dated as of January 20, 2011 (as amended and supplemented from time to time, the “Indenture”) and is entitled to the benefits thereof and the 2011 Series A Bond Purchase Agreement dated January 21, 2011 between the Company and the purchasers listed in Schedule A thereto (the “2011 Series A Bond Purchase Agreement”).  Each Holder of this Bond will be deemed, by its acceptance hereof, to have (i) agreed to the confidentiality provisions set forth in Section 18 of the 2011 Series A Bond Purchase Agreement and (ii) made the representations set forth in Section 6 of the 2011 Series A Bond Purchase Agreement.  Unless otherwise indicated, capitalized terms used in this Bond shall have the respective meanings ascribed to such terms in the First Supplemental Indenture.

This Bond shall be registered in the name of the Holder hereof.  This Bond is transferable, as provided in the Indenture, only upon the registration books of the Company maintained by the Obligation Registrar, which shall be the Trustee, kept at its principal office, upon presentation at said office of this Bond with the written request of the registered owner hereof or his attorney duly authorized in writing, and a written instrument of transfer satisfactory to the Obligation Registrar duly executed by the registered owner or his duly authorized attorney.

The Bonds shall be issued as fully registered Bonds without coupons and in minimum denominations of $1.00 and any integral multiple of $1.00 in excess thereof. The Trustee may impose a charge sufficient to reimburse the Company or the Trustee for any tax, fee or other governmental charge required to be paid with respect to such exchange or any transfer of a Bond.  The cost, if any, of preparing each new Bond issued upon such exchange or transfer, and any other expenses of the Company or the Trustee incurred in connection therewith, shall be paid by in accordance with Section 3.7 of the Indenture.

The Company will make the required prepayments of principal on this Bond on the dates and in the amount specified in the First Supplemental Indenture.  This Bond is also subject to optional prepayment, in whole or from time to time in part, at the times and on the terms specified in First Supplemental Indenture, but not otherwise.

If an Event of Default under the Indenture occurs and is continuing, the principal of this Bond may be declared or otherwise become due and payable in the manner, at the price (including any applicable Make-Whole Amount) and with the effect provided in the Indenture.  In the event that the principal of this Bond shall have been declared or otherwise become due and payable as described in the preceding sentence, then, in addition to paying the Holder hereof the entire unpaid principal amount of this Bond and all accrued and unpaid interest hereon (including, but not limited to, interest accrued hereon at the Default Rate), the Company shall pay to the Holder hereof (to the full extent permitted by applicable law) an amount equal to the Make-Whole Amount determined in respect of such principal amount.

- 2 -

The Holder of this Bond shall have no right to enforce the provisions of the Indenture, or to institute action to enforce the covenants therein, or to take any action with respect to any default under the Indenture, or to institute, appear in or defend any suit or other proceeding with respect thereto, except as provided in the Indenture and the 2011 Series A Bond Purchase Agreement.

All acts and proceedings required by law and by the Articles of Incorporation and Bylaws of the Company necessary to make the 2011 Series A Bonds issued under the Indenture, when executed by the Company, authenticated and delivered by the Trustee and duly issued, the valid, binding and legal obligations of the Company, in accordance with its terms, have been done and taken.

It is the intention of the Holder to comply with the usury laws of the State of Alaska and of the United States of America.  This Bond is hereby expressly limited such that in no contingency or event whatsoever, whether by reason of acceleration, prepayment, or otherwise, shall the amount of interest contracted for, charged or received by the Holder for the use, forbearance, or detention of the principal indebtedness or interest hereof, which remains unpaid from time to time, exceed the highest maximum rate permitted by applicable law.  If fulfillment of any provisions hereof, at the time of performance of such provisions shall be due, shall involve transcending the valid limits prescribed by applicable law, then, ipso facto, the obligation to be fulfilled shall be reduced to the maximum rate allowed by applicable law.  If any Holder receives as interest an amount which will exceed the maximum rate allowed by applicable law, such amount shall be applied to the reduction of the principal amount owing hereunder or on account of any other principal indebtedness owed to Holder and not to the payment of interest, or if such excessive interest exceeds the unpaid balance of principal hereof and such other indebtedness, such excess shall be refunded.  To the extent not prohibited by applicable law, determination of the maximum rate allowed by applicable law shall at all times be made by amortizing, prorating, allocating and spreading in equal parts during the full term of this Bond, all interest at any time contracted for, charged or received from the Company in connection with this Bond, so that the actual rate of interest on account of such indebtedness is uniform throughout the term of this Bond.  The terms of this paragraph shall control and supersede any other provisions of this Bond.

This Bond shall be construed in accordance with and governed by the law of the State of Alaska.

No covenant or agreement contained in this Bond, the Indenture or the First Supplemental Indenture shall be deemed to be a covenant or agreement of any official, officer, agent or employee of the Company in his individual capacity, and no officer of the Company executing this Bond shall be liable personally on this Bond or be subject to any personal liability or accountability by reason of the issuance of this Bond.

This Bond shall not be entitled to any benefit under the Indenture or be valid until this Bond shall have been authenticated by the execution by the Trustee, or its successor as Trustee, of the Certificate of Authentication inscribed hereon.

- 3 -

IN WITNESS WHEREOF, the Company has caused this Bond to be executed by a duly authorized officer of the Company.

CHUGACH ELECTRIC ASSOCIATION, INC.
By:	/s/ Michael R. Cunningham
Name:
Title:	C.F.O.

- 4 -

This is one of the Obligations of the series designated therein referred to in the within-mentioned Indenture.

		U.S. BANK NATIONAL ASSOCIATION,
		as Trustee
		By:	/s/ Thomas Zrust
			Authorized Signatory
Date of Authentication:	January 21, 2011

- 5 -

THIS 2011 SERIES A BOND HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM EXCEPT UNDER CIRCUMSTANCES WHERE NEITHER SUCH REGISTRATION NOR SUCH EXEMPTION IS REQUIRED BY LAW.

THE COMPANY (DEFINED BELOW) IS PERSONALLY OBLIGATED AND FULLY LIABLE FOR THE AMOUNT DUE UNDER THIS BOND AND, SUBJECT TO THE PROVISIONS OF THE INDENTURE (DEFINED BELOW), EACH HOLDER (AS DEFINED IN THE INDENTURE) HAS THE RIGHT TO SUE ON THIS BOND AND OBTAIN A PERSONAL JUDGMENT AGAINST THE COMPANY FOR SATISFACTION OF THE AMOUNT UNDER THIS BOND EITHER BEFORE OR AFTER A FORECLOSURE OF THE INDENTURE UNDER ALASKA STATUTES 09.45.170-09.45.220.

CHUGACH ELECTRIC ASSOCIATION, INC.

FIRST MORTGAGE BONDS, 2011 SERIES A DUE MARCH 15, 2031

NO. RA-2	ISSUANCE DATE: JANUARY 21, 2011
$21,000,000	PPN: 171265 A*2

FOR VALUE RECEIVED, the undersigned, CHUGACH ELECTRIC ASSOCIATION, INC. (herein called the “Company”), an electric cooperative organized and existing under the laws of the State of Alaska, hereby promises to pay to NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION, or registered assigns, the principal sum of TWENTY-ONE MILLION DOLLARS (or so much thereof as shall not have been prepaid) on March 15, 2031, with interest computed on the basis of a 360-day year of twelve 30-day months (a) on the unpaid balance hereof at a rate of 4.20% per annum (plus, upon the occurrence and during the continuation of an Interest Rate Adjustment Event (as hereinafter defined), an additional 2% per annum) from the date hereof, payable semiannually on the 15th day of each March and September, commencing on September 15, 2011, until the principal hereof shall have become due and payable, and (b) to the extent permitted by law, on any overdue payment (including any overdue prepayment) of principal, any overdue payment of interest, any overdue payment of any Make-Whole Amount (as defined in the First Supplemental Indenture referred to below), payable semiannually as aforesaid (or, at the option of the registered Holder hereof, on demand), at the Default Rate (as defined in the First Supplemental Indenture referred to below).

“Interest Rate Adjustment Event” means the occurrence of any of the following:

(a)           the Company defaults in the performance of Section 7.1(a) or (b) or Section 7.2 of the 2011 Series A Bond Purchase Agreement (as defined below); or

(b)           any representation or warranty made in writing by or on behalf of the Company or by any officer of the Company in the Indenture or the 2011 Series A Bond Purchase Agreement (as defined below) or in any writing furnished in connection with the transactions contemplated by the First Supplemental Indenture (referred to below) proves to have been false or incorrect in any material respect on the date as of which made and, with respect to representations and warranties made after the date hereof, for which accurate information has not since been provided in writing to the Holder of this Bond.

Subject to Section 11 of the 2011 Series A Bond Purchase Agreement (defined below), payments of principal of, interest on, and any Make-Whole Amount with respect to this Bond are to be made in lawful money of the United States of America in accordance with the terms of the Indenture.

This Bond is one of the 2011 Series A Bonds (herein called the “Bonds”) issued pursuant to the First Supplemental Indenture, dated as of January 20, 2011 (as from time to time amended, the “First Supplemental Indenture”), between the Company and the Trustee named therein which amends and supplements the Second Amended and Restated Indenture of Trust, dated as of January 20, 2011 (as amended and supplemented from time to time, the “Indenture”) and is entitled to the benefits thereof and the 2011 Series A Bond Purchase Agreement dated January 21, 2011 between the Company and the purchasers listed in Schedule A thereto (the “2011 Series A Bond Purchase Agreement”).  Each Holder of this Bond will be deemed, by its acceptance hereof, to have (i) agreed to the confidentiality provisions set forth in Section 18 of the 2011 Series A Bond Purchase Agreement and (ii) made the representations set forth in Section 6 of the 2011 Series A Bond Purchase Agreement.  Unless otherwise indicated, capitalized terms used in this Bond shall have the respective meanings ascribed to such terms in the First Supplemental Indenture.

This Bond shall be registered in the name of the Holder hereof.  This Bond is transferable, as provided in the Indenture, only upon the registration books of the Company maintained by the Obligation Registrar, which shall be the Trustee, kept at its principal office, upon presentation at said office of this Bond with the written request of the registered owner hereof or his attorney duly authorized in writing, and a written instrument of transfer satisfactory to the Obligation Registrar duly executed by the registered owner or his duly authorized attorney.

The Bonds shall be issued as fully registered Bonds without coupons and in minimum denominations of $1.00 and any integral multiple of $1.00 in excess thereof. The Trustee may impose a charge sufficient to reimburse the Company or the Trustee for any tax, fee or other governmental charge required to be paid with respect to such exchange or any transfer of a Bond.  The cost, if any, of preparing each new Bond issued upon such exchange or transfer, and any other expenses of the Company or the Trustee incurred in connection therewith, shall be paid by in accordance with Section 3.7 of the Indenture.

The Company will make the required prepayments of principal on this Bond on the dates and in the amount specified in the First Supplemental Indenture.  This Bond is also subject to optional prepayment, in whole or from time to time in part, at the times and on the terms specified in First Supplemental Indenture, but not otherwise.

If an Event of Default under the Indenture occurs and is continuing, the principal of this Bond may be declared or otherwise become due and payable in the manner, at the price (including any applicable Make-Whole Amount) and with the effect provided in the Indenture.  In the event that the principal of this Bond shall have been declared or otherwise become due and payable as described in the preceding sentence, then, in addition to paying the Holder hereof the entire unpaid principal amount of this Bond and all accrued and unpaid interest hereon (including, but not limited to, interest accrued hereon at the Default Rate), the Company shall pay to the Holder hereof (to the full extent permitted by applicable law) an amount equal to the Make-Whole Amount determined in respect of such principal amount.

- 2 -

The Holder of this Bond shall have no right to enforce the provisions of the Indenture, or to institute action to enforce the covenants therein, or to take any action with respect to any default under the Indenture, or to institute, appear in or defend any suit or other proceeding with respect thereto, except as provided in the Indenture and the 2011 Series A Bond Purchase Agreement.

All acts and proceedings required by law and by the Articles of Incorporation and Bylaws of the Company necessary to make the 2011 Series A Bonds issued under the Indenture, when executed by the Company, authenticated and delivered by the Trustee and duly issued, the valid, binding and legal obligations of the Company, in accordance with its terms, have been done and taken.

It is the intention of the Holder to comply with the usury laws of the State of Alaska and of the United States of America.  This Bond is hereby expressly limited such that in no contingency or event whatsoever, whether by reason of acceleration, prepayment, or otherwise, shall the amount of interest contracted for, charged or received by the Holder for the use, forbearance, or detention of the principal indebtedness or interest hereof, which remains unpaid from time to time, exceed the highest maximum rate permitted by applicable law.  If fulfillment of any provisions hereof, at the time of performance of such provisions shall be due, shall involve transcending the valid limits prescribed by applicable law, then, ipso facto, the obligation to be fulfilled shall be reduced to the maximum rate allowed by applicable law.  If any Holder receives as interest an amount which will exceed the maximum rate allowed by applicable law, such amount shall be applied to the reduction of the principal amount owing hereunder or on account of any other principal indebtedness owed to Holder and not to the payment of interest, or if such excessive interest exceeds the unpaid balance of principal hereof and such other indebtedness, such excess shall be refunded.  To the extent not prohibited by applicable law, determination of the maximum rate allowed by applicable law shall at all times be made by amortizing, prorating, allocating and spreading in equal parts during the full term of this Bond, all interest at any time contracted for, charged or received from the Company in connection with this Bond, so that the actual rate of interest on account of such indebtedness is uniform throughout the term of this Bond.  The terms of this paragraph shall control and supersede any other provisions of this Bond.

This Bond shall be construed in accordance with and governed by the law of the State of Alaska.

No covenant or agreement contained in this Bond, the Indenture or the First Supplemental Indenture shall be deemed to be a covenant or agreement of any official, officer, agent or employee of the Company in his individual capacity, and no officer of the Company executing this Bond shall be liable personally on this Bond or be subject to any personal liability or accountability by reason of the issuance of this Bond.

This Bond shall not be entitled to any benefit under the Indenture or be valid until this Bond shall have been authenticated by the execution by the Trustee, or its successor as Trustee, of the Certificate of Authentication inscribed hereon.

- 3 -

IN WITNESS WHEREOF, the Company has caused this Bond to be executed by a duly authorized officer of the Company.

CHUGACH ELECTRIC ASSOCIATION, INC.
By:	/s/ Michael R. Cunningham
Name:
Title:	C.F.O.

- 4 -

This is one of the Obligations of the series designated therein referred to in the within-mentioned Indenture.

		U.S. BANK NATIONAL ASSOCIATION,
		as Trustee
		By:	/s/ Thomas Zrust
			Authorized Signatory
Date of Authentication:	January 21, 2011

- 5 -

THIS 2011 SERIES A BOND HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM EXCEPT UNDER CIRCUMSTANCES WHERE NEITHER SUCH REGISTRATION NOR SUCH EXEMPTION IS REQUIRED BY LAW.

THE COMPANY (DEFINED BELOW) IS PERSONALLY OBLIGATED AND FULLY LIABLE FOR THE AMOUNT DUE UNDER THIS BOND AND, SUBJECT TO THE PROVISIONS OF THE INDENTURE (DEFINED BELOW), EACH HOLDER (AS DEFINED IN THE INDENTURE) HAS THE RIGHT TO SUE ON THIS BOND AND OBTAIN A PERSONAL JUDGMENT AGAINST THE COMPANY FOR SATISFACTION OF THE AMOUNT UNDER THIS BOND EITHER BEFORE OR AFTER A FORECLOSURE OF THE INDENTURE UNDER ALASKA STATUTES 09.45.170-09.45.220.

CHUGACH ELECTRIC ASSOCIATION, INC.

FIRST MORTGAGE BONDS, 2011 SERIES A DUE MARCH 15, 2031

NO. RA-3	ISSUANCE DATE: JANUARY 21, 2011
$5,600,000	PPN: 171265 A*2

FOR VALUE RECEIVED, the undersigned, CHUGACH ELECTRIC ASSOCIATION, INC. (herein called the “Company”), an electric cooperative organized and existing under the laws of the State of Alaska, hereby promises to pay to NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION INSTITUTIONALLY OWNED LIFE INSURANCE SEPARATE ACCOUNT (BOLI 30C), or registered assigns, the principal sum of FIVE MILLION SIX HUNDRED THOUSAND DOLLARS (or so much thereof as shall not have been prepaid) on March 15, 2031, with interest computed on the basis of a 360-day year of twelve 30-day months (a) on the unpaid balance hereof at a rate of 4.20% per annum (plus, upon the occurrence and during the continuation of an Interest Rate Adjustment Event (as hereinafter defined), an additional 2% per annum) from the date hereof, payable semiannually on the 15th day of each March and September, commencing on September 15, 2011, until the principal hereof shall have become due and payable, and (b) to the extent permitted by law, on any overdue payment (including any overdue prepayment) of principal, any overdue payment of interest, any overdue payment of any Make-Whole Amount (as defined in the First Supplemental Indenture referred to below), payable semiannually as aforesaid (or, at the option of the registered Holder hereof, on demand), at the Default Rate (as defined in the First Supplemental Indenture referred to below).

“Interest Rate Adjustment Event” means the occurrence of any of the following:

(a)           the Company defaults in the performance of Section 7.1(a) or (b) or Section 7.2 of the 2011 Series A Bond Purchase Agreement (as defined below); or

(b)           any representation or warranty made in writing by or on behalf of the Company or by any officer of the Company in the Indenture or the 2011 Series A Bond Purchase Agreement (as defined below) or in any writing furnished in connection with the transactions contemplated by the First Supplemental Indenture (referred to below) proves to have been false or incorrect in any material respect on the date as of which made and, with respect to representations and warranties made after the date hereof, for which accurate information has not since been provided in writing to the Holder of this Bond.

Subject to Section 11 of the 2011 Series A Bond Purchase Agreement (defined below), payments of principal of, interest on, and any Make-Whole Amount with respect to this Bond are to be made in lawful money of the United States of America in accordance with the terms of the Indenture.

This Bond is one of the 2011 Series A Bonds (herein called the “Bonds”) issued pursuant to the First Supplemental Indenture, dated as of January 20, 2011 (as from time to time amended, the “First Supplemental Indenture”), between the Company and the Trustee named therein which amends and supplements the Second Amended and Restated Indenture of Trust, dated as of January 20, 2011 (as amended and supplemented from time to time, the “Indenture”) and is entitled to the benefits thereof and the 2011 Series A Bond Purchase Agreement dated January 21, 2011 between the Company and the purchasers listed in Schedule A thereto (the “2011 Series A Bond Purchase Agreement”).  Each Holder of this Bond will be deemed, by its acceptance hereof, to have (i) agreed to the confidentiality provisions set forth in Section 18 of the 2011 Series A Bond Purchase Agreement and (ii) made the representations set forth in Section 6 of the 2011 Series A Bond Purchase Agreement.  Unless otherwise indicated, capitalized terms used in this Bond shall have the respective meanings ascribed to such terms in the First Supplemental Indenture.

This Bond shall be registered in the name of the Holder hereof.  This Bond is transferable, as provided in the Indenture, only upon the registration books of the Company maintained by the Obligation Registrar, which shall be the Trustee, kept at its principal office, upon presentation at said office of this Bond with the written request of the registered owner hereof or his attorney duly authorized in writing, and a written instrument of transfer satisfactory to the Obligation Registrar duly executed by the registered owner or his duly authorized attorney.

The Bonds shall be issued as fully registered Bonds without coupons and in minimum denominations of $1.00 and any integral multiple of $1.00 in excess thereof. The Trustee may impose a charge sufficient to reimburse the Company or the Trustee for any tax, fee or other governmental charge required to be paid with respect to such exchange or any transfer of a Bond.  The cost, if any, of preparing each new Bond issued upon such exchange or transfer, and any other expenses of the Company or the Trustee incurred in connection therewith, shall be paid by in accordance with Section 3.7 of the Indenture.

The Company will make the required prepayments of principal on this Bond on the dates and in the amount specified in the First Supplemental Indenture.  This Bond is also subject to optional prepayment, in whole or from time to time in part, at the times and on the terms specified in First Supplemental Indenture, but not otherwise.

If an Event of Default under the Indenture occurs and is continuing, the principal of this Bond may be declared or otherwise become due and payable in the manner, at the price (including any applicable Make-Whole Amount) and with the effect provided in the Indenture.  In the event that the principal of this Bond shall have been declared or otherwise become due and payable as described in the preceding sentence, then, in addition to paying the Holder hereof the entire unpaid principal amount of this Bond and all accrued and unpaid interest hereon (including, but not limited to, interest accrued hereon at the Default Rate), the Company shall pay to the Holder hereof (to the full extent permitted by applicable law) an amount equal to the Make-Whole Amount determined in respect of such principal amount.

- 2 -

The Holder of this Bond shall have no right to enforce the provisions of the Indenture, or to institute action to enforce the covenants therein, or to take any action with respect to any default under the Indenture, or to institute, appear in or defend any suit or other proceeding with respect thereto, except as provided in the Indenture and the 2011 Series A Bond Purchase Agreement.

All acts and proceedings required by law and by the Articles of Incorporation and Bylaws of the Company necessary to make the 2011 Series A Bonds issued under the Indenture, when executed by the Company, authenticated and delivered by the Trustee and duly issued, the valid, binding and legal obligations of the Company, in accordance with its terms, have been done and taken.

It is the intention of the Holder to comply with the usury laws of the State of Alaska and of the United States of America.  This Bond is hereby expressly limited such that in no contingency or event whatsoever, whether by reason of acceleration, prepayment, or otherwise, shall the amount of interest contracted for, charged or received by the Holder for the use, forbearance, or detention of the principal indebtedness or interest hereof, which remains unpaid from time to time, exceed the highest maximum rate permitted by applicable law.  If fulfillment of any provisions hereof, at the time of performance of such provisions shall be due, shall involve transcending the valid limits prescribed by applicable law, then, ipso facto, the obligation to be fulfilled shall be reduced to the maximum rate allowed by applicable law.  If any Holder receives as interest an amount which will exceed the maximum rate allowed by applicable law, such amount shall be applied to the reduction of the principal amount owing hereunder or on account of any other principal indebtedness owed to Holder and not to the payment of interest, or if such excessive interest exceeds the unpaid balance of principal hereof and such other indebtedness, such excess shall be refunded.  To the extent not prohibited by applicable law, determination of the maximum rate allowed by applicable law shall at all times be made by amortizing, prorating, allocating and spreading in equal parts during the full term of this Bond, all interest at any time contracted for, charged or received from the Company in connection with this Bond, so that the actual rate of interest on account of such indebtedness is uniform throughout the term of this Bond.  The terms of this paragraph shall control and supersede any other provisions of this Bond.

This Bond shall be construed in accordance with and governed by the law of the State of Alaska.

No covenant or agreement contained in this Bond, the Indenture or the First Supplemental Indenture shall be deemed to be a covenant or agreement of any official, officer, agent or employee of the Company in his individual capacity, and no officer of the Company executing this Bond shall be liable personally on this Bond or be subject to any personal liability or accountability by reason of the issuance of this Bond.

This Bond shall not be entitled to any benefit under the Indenture or be valid until this Bond shall have been authenticated by the execution by the Trustee, or its successor as Trustee, of the Certificate of Authentication inscribed hereon.

- 3 -

IN WITNESS WHEREOF, the Company has caused this Bond to be executed by a duly authorized officer of the Company.

CHUGACH ELECTRIC ASSOCIATION, INC.
By:	/s/ Michael R. Cunningham
Name:
Title:	C.F.O.

- 4 -

This is one of the Obligations of the series designated therein referred to in the within-mentioned Indenture.

		U.S. BANK NATIONAL ASSOCIATION,
		as Trustee
		By:	/s/ Thomas Zrust
			Authorized Signatory
Date of Authentication:	January 21, 2011

- 5 -

THIS 2011 SERIES A BOND HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM EXCEPT UNDER CIRCUMSTANCES WHERE NEITHER SUCH REGISTRATION NOR SUCH EXEMPTION IS REQUIRED BY LAW.

THE COMPANY (DEFINED BELOW) IS PERSONALLY OBLIGATED AND FULLY LIABLE FOR THE AMOUNT DUE UNDER THIS BOND AND, SUBJECT TO THE PROVISIONS OF THE INDENTURE (DEFINED BELOW), EACH HOLDER (AS DEFINED IN THE INDENTURE) HAS THE RIGHT TO SUE ON THIS BOND AND OBTAIN A PERSONAL JUDGMENT AGAINST THE COMPANY FOR SATISFACTION OF THE AMOUNT UNDER THIS BOND EITHER BEFORE OR AFTER A FORECLOSURE OF THE INDENTURE UNDER ALASKA STATUTES 09.45.170-09.45.220.

CHUGACH ELECTRIC ASSOCIATION, INC.

FIRST MORTGAGE BONDS, 2011 SERIES A DUE MARCH 15, 2031

NO. RA-4	ISSUANCE DATE: JANUARY 21, 2011
$600,000	PPN: 171265 A*2

FOR VALUE RECEIVED, the undersigned, CHUGACH ELECTRIC ASSOCIATION, INC. (herein called the “Company”), an electric cooperative organized and existing under the laws of the State of Alaska, hereby promises to pay to NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION INSTITUTIONALLY OWNED LIFE INSURANCE SEPARATE ACCOUNT (BOLI 30E), or registered assigns, the principal sum of SIX HUNDRED THOUSAND DOLLARS (or so much thereof as shall not have been prepaid) on March 15, 2031, with interest computed on the basis of a 360-day year of twelve 30-day months (a) on the unpaid balance hereof at a rate of 4.20% per annum (plus, upon the occurrence and during the continuation of an Interest Rate Adjustment Event (as hereinafter defined), an additional 2% per annum) from the date hereof, payable semiannually on the 15th day of each March and September, commencing on September 15, 2011, until the principal hereof shall have become due and payable, and (b) to the extent permitted by law, on any overdue payment (including any overdue prepayment) of principal, any overdue payment of interest, any overdue payment of any Make-Whole Amount (as defined in the First Supplemental Indenture referred to below), payable semiannually as aforesaid (or, at the option of the registered Holder hereof, on demand), at the Default Rate (as defined in the First Supplemental Indenture referred to below).

“Interest Rate Adjustment Event” means the occurrence of any of the following:

(a)           the Company defaults in the performance of Section 7.1(a) or (b) or Section 7.2 of the 2011 Series A Bond Purchase Agreement (as defined below); or

(b)           any representation or warranty made in writing by or on behalf of the Company or by any officer of the Company in the Indenture or the 2011 Series A Bond Purchase Agreement (as defined below) or in any writing furnished in connection with the transactions contemplated by the First Supplemental Indenture (referred to below) proves to have been false or incorrect in any material respect on the date as of which made and, with respect to representations and warranties made after the date hereof, for which accurate information has not since been provided in writing to the Holder of this Bond.

Subject to Section 11 of the 2011 Series A Bond Purchase Agreement (defined below), payments of principal of, interest on, and any Make-Whole Amount with respect to this Bond are to be made in lawful money of the United States of America in accordance with the terms of the Indenture.

This Bond is one of the 2011 Series A Bonds (herein called the “Bonds”) issued pursuant to the First Supplemental Indenture, dated as of January 20, 2011 (as from time to time amended, the “First Supplemental Indenture”), between the Company and the Trustee named therein which amends and supplements the Second Amended and Restated Indenture of Trust, dated as of January 20, 2011 (as amended and supplemented from time to time, the “Indenture”) and is entitled to the benefits thereof and the 2011 Series A Bond Purchase Agreement dated January 21, 2011 between the Company and the purchasers listed in Schedule A thereto (the “2011 Series A Bond Purchase Agreement”).  Each Holder of this Bond will be deemed, by its acceptance hereof, to have (i) agreed to the confidentiality provisions set forth in Section 18 of the 2011 Series A Bond Purchase Agreement and (ii) made the representations set forth in Section 6 of the 2011 Series A Bond Purchase Agreement.  Unless otherwise indicated, capitalized terms used in this Bond shall have the respective meanings ascribed to such terms in the First Supplemental Indenture.

This Bond shall be registered in the name of the Holder hereof.  This Bond is transferable, as provided in the Indenture, only upon the registration books of the Company maintained by the Obligation Registrar, which shall be the Trustee, kept at its principal office, upon presentation at said office of this Bond with the written request of the registered owner hereof or his attorney duly authorized in writing, and a written instrument of transfer satisfactory to the Obligation Registrar duly executed by the registered owner or his duly authorized attorney.

The Bonds shall be issued as fully registered Bonds without coupons and in minimum denominations of $1.00 and any integral multiple of $1.00 in excess thereof. The Trustee may impose a charge sufficient to reimburse the Company or the Trustee for any tax, fee or other governmental charge required to be paid with respect to such exchange or any transfer of a Bond.  The cost, if any, of preparing each new Bond issued upon such exchange or transfer, and any other expenses of the Company or the Trustee incurred in connection therewith, shall be paid by in accordance with Section 3.7 of the Indenture.

The Company will make the required prepayments of principal on this Bond on the dates and in the amount specified in the First Supplemental Indenture.  This Bond is also subject to optional prepayment, in whole or from time to time in part, at the times and on the terms specified in First Supplemental Indenture, but not otherwise.

If an Event of Default under the Indenture occurs and is continuing, the principal of this Bond may be declared or otherwise become due and payable in the manner, at the price (including any applicable Make-Whole Amount) and with the effect provided in the Indenture.  In the event that the principal of this Bond shall have been declared or otherwise become due and payable as described in the preceding sentence, then, in addition to paying the Holder hereof the entire unpaid principal amount of this Bond and all accrued and unpaid interest hereon (including, but not limited to, interest accrued hereon at the Default Rate), the Company shall pay to the Holder hereof (to the full extent permitted by applicable law) an amount equal to the Make-Whole Amount determined in respect of such principal amount.

- 2 -

The Holder of this Bond shall have no right to enforce the provisions of the Indenture, or to institute action to enforce the covenants therein, or to take any action with respect to any default under the Indenture, or to institute, appear in or defend any suit or other proceeding with respect thereto, except as provided in the Indenture and the 2011 Series A Bond Purchase Agreement.

All acts and proceedings required by law and by the Articles of Incorporation and Bylaws of the Company necessary to make the 2011 Series A Bonds issued under the Indenture, when executed by the Company, authenticated and delivered by the Trustee and duly issued, the valid, binding and legal obligations of the Company, in accordance with its terms, have been done and taken.

It is the intention of the Holder to comply with the usury laws of the State of Alaska and of the United States of America.  This Bond is hereby expressly limited such that in no contingency or event whatsoever, whether by reason of acceleration, prepayment, or otherwise, shall the amount of interest contracted for, charged or received by the Holder for the use, forbearance, or detention of the principal indebtedness or interest hereof, which remains unpaid from time to time, exceed the highest maximum rate permitted by applicable law.  If fulfillment of any provisions hereof, at the time of performance of such provisions shall be due, shall involve transcending the valid limits prescribed by applicable law, then, ipso facto, the obligation to be fulfilled shall be reduced to the maximum rate allowed by applicable law.  If any Holder receives as interest an amount which will exceed the maximum rate allowed by applicable law, such amount shall be applied to the reduction of the principal amount owing hereunder or on account of any other principal indebtedness owed to Holder and not to the payment of interest, or if such excessive interest exceeds the unpaid balance of principal hereof and such other indebtedness, such excess shall be refunded.  To the extent not prohibited by applicable law, determination of the maximum rate allowed by applicable law shall at all times be made by amortizing, prorating, allocating and spreading in equal parts during the full term of this Bond, all interest at any time contracted for, charged or received from the Company in connection with this Bond, so that the actual rate of interest on account of such indebtedness is uniform throughout the term of this Bond.  The terms of this paragraph shall control and supersede any other provisions of this Bond.

This Bond shall be construed in accordance with and governed by the law of the State of Alaska.

No covenant or agreement contained in this Bond, the Indenture or the First Supplemental Indenture shall be deemed to be a covenant or agreement of any official, officer, agent or employee of the Company in his individual capacity, and no officer of the Company executing this Bond shall be liable personally on this Bond or be subject to any personal liability or accountability by reason of the issuance of this Bond.

This Bond shall not be entitled to any benefit under the Indenture or be valid until this Bond shall have been authenticated by the execution by the Trustee, or its successor as Trustee, of the Certificate of Authentication inscribed hereon.

- 3 -

IN WITNESS WHEREOF, the Company has caused this Bond to be executed by a duly authorized officer of the Company.

CHUGACH ELECTRIC ASSOCIATION, INC.
By:	/s/ Michael R. Cunningham
Name:
Title:	C.F.O.

- 4 -

This is one of the Obligations of the series designated therein referred to in the within-mentioned Indenture.

		U.S. BANK NATIONAL ASSOCIATION,
		as Trustee
		By:	/s/ Thomas Zrust
			Authorized Signatory
Date of Authentication:	January 21, 2011

- 5 -

THIS 2011 SERIES A BOND HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM EXCEPT UNDER CIRCUMSTANCES WHERE NEITHER SUCH REGISTRATION NOR SUCH EXEMPTION IS REQUIRED BY LAW.

THE COMPANY (DEFINED BELOW) IS PERSONALLY OBLIGATED AND FULLY LIABLE FOR THE AMOUNT DUE UNDER THIS BOND AND, SUBJECT TO THE PROVISIONS OF THE INDENTURE (DEFINED BELOW), EACH HOLDER (AS DEFINED IN THE INDENTURE) HAS THE RIGHT TO SUE ON THIS BOND AND OBTAIN A PERSONAL JUDGMENT AGAINST THE COMPANY FOR SATISFACTION OF THE AMOUNT UNDER THIS BOND EITHER BEFORE OR AFTER A FORECLOSURE OF THE INDENTURE UNDER ALASKA STATUTES 09.45.170-09.45.220.

CHUGACH ELECTRIC ASSOCIATION, INC.

FIRST MORTGAGE BONDS, 2011 SERIES A DUE MARCH 15, 2031

NO. RA-5	ISSUANCE DATE: JANUARY 21, 2011
$6,000,000	PPN: 171265 A*2

FOR VALUE RECEIVED, the undersigned, CHUGACH ELECTRIC ASSOCIATION, INC. (herein called the “Company”), an electric cooperative organized and existing under the laws of the State of Alaska, hereby promises to pay to ALLSTATE LIFE INSURANCE COMPANY, or registered assigns, the principal sum of SIX MILLION DOLLARS (or so much thereof as shall not have been prepaid) on March 15, 2031, with interest computed on the basis of a 360-day year of twelve 30-day months (a) on the unpaid balance hereof at a rate of 4.20% per annum (plus, upon the occurrence and during the continuation of an Interest Rate Adjustment Event (as hereinafter defined), an additional 2% per annum) from the date hereof, payable semiannually on the 15th day of each March and September, commencing on September 15, 2011, until the principal hereof shall have become due and payable, and (b) to the extent permitted by law, on any overdue payment (including any overdue prepayment) of principal, any overdue payment of interest, any overdue payment of any Make-Whole Amount (as defined in the First Supplemental Indenture referred to below), payable semiannually as aforesaid (or, at the option of the registered Holder hereof, on demand), at the Default Rate (as defined in the First Supplemental Indenture referred to below).

“Interest Rate Adjustment Event” means the occurrence of any of the following:

(a)           the Company defaults in the performance of Section 7.1(a) or (b) or Section 7.2 of the 2011 Series A Bond Purchase Agreement (as defined below); or

(b)           any representation or warranty made in writing by or on behalf of the Company or by any officer of the Company in the Indenture or the 2011 Series A Bond Purchase Agreement (as defined below) or in any writing furnished in connection with the transactions contemplated by the First Supplemental Indenture (referred to below) proves to have been false or incorrect in any material respect on the date as of which made and, with respect to representations and warranties made after the date hereof, for which accurate information has not since been provided in writing to the Holder of this Bond.

Subject to Section 11 of the 2011 Series A Bond Purchase Agreement (defined below), payments of principal of, interest on, and any Make-Whole Amount with respect to this Bond are to be made in lawful money of the United States of America in accordance with the terms of the Indenture.

This Bond is one of the 2011 Series A Bonds (herein called the “Bonds”) issued pursuant to the First Supplemental Indenture, dated as of January 20, 2011 (as from time to time amended, the “First Supplemental Indenture”), between the Company and the Trustee named therein which amends and supplements the Second Amended and Restated Indenture of Trust, dated as of January 20, 2011 (as amended and supplemented from time to time, the “Indenture”) and is entitled to the benefits thereof and the 2011 Series A Bond Purchase Agreement dated January 21, 2011 between the Company and the purchasers listed in Schedule A thereto (the “2011 Series A Bond Purchase Agreement”).  Each Holder of this Bond will be deemed, by its acceptance hereof, to have (i) agreed to the confidentiality provisions set forth in Section 18 of the 2011 Series A Bond Purchase Agreement and (ii) made the representations set forth in Section 6 of the 2011 Series A Bond Purchase Agreement.  Unless otherwise indicated, capitalized terms used in this Bond shall have the respective meanings ascribed to such terms in the First Supplemental Indenture.

This Bond shall be registered in the name of the Holder hereof.  This Bond is transferable, as provided in the Indenture, only upon the registration books of the Company maintained by the Obligation Registrar, which shall be the Trustee, kept at its principal office, upon presentation at said office of this Bond with the written request of the registered owner hereof or his attorney duly authorized in writing, and a written instrument of transfer satisfactory to the Obligation Registrar duly executed by the registered owner or his duly authorized attorney.

The Bonds shall be issued as fully registered Bonds without coupons and in minimum denominations of $1.00 and any integral multiple of $1.00 in excess thereof. The Trustee may impose a charge sufficient to reimburse the Company or the Trustee for any tax, fee or other governmental charge required to be paid with respect to such exchange or any transfer of a Bond.  The cost, if any, of preparing each new Bond issued upon such exchange or transfer, and any other expenses of the Company or the Trustee incurred in connection therewith, shall be paid by in accordance with Section 3.7 of the Indenture.

The Company will make the required prepayments of principal on this Bond on the dates and in the amount specified in the First Supplemental Indenture.  This Bond is also subject to optional prepayment, in whole or from time to time in part, at the times and on the terms specified in First Supplemental Indenture, but not otherwise.

If an Event of Default under the Indenture occurs and is continuing, the principal of this Bond may be declared or otherwise become due and payable in the manner, at the price (including any applicable Make-Whole Amount) and with the effect provided in the Indenture.  In the event that the principal of this Bond shall have been declared or otherwise become due and payable as described in the preceding sentence, then, in addition to paying the Holder hereof the entire unpaid principal amount of this Bond and all accrued and unpaid interest hereon (including, but not limited to, interest accrued hereon at the Default Rate), the Company shall pay to the Holder hereof (to the full extent permitted by applicable law) an amount equal to the Make-Whole Amount determined in respect of such principal amount.

- 2 -

The Holder of this Bond shall have no right to enforce the provisions of the Indenture, or to institute action to enforce the covenants therein, or to take any action with respect to any default under the Indenture, or to institute, appear in or defend any suit or other proceeding with respect thereto, except as provided in the Indenture and the 2011 Series A Bond Purchase Agreement.

All acts and proceedings required by law and by the Articles of Incorporation and Bylaws of the Company necessary to make the 2011 Series A Bonds issued under the Indenture, when executed by the Company, authenticated and delivered by the Trustee and duly issued, the valid, binding and legal obligations of the Company, in accordance with its terms, have been done and taken.

It is the intention of the Holder to comply with the usury laws of the State of Alaska and of the United States of America.  This Bond is hereby expressly limited such that in no contingency or event whatsoever, whether by reason of acceleration, prepayment, or otherwise, shall the amount of interest contracted for, charged or received by the Holder for the use, forbearance, or detention of the principal indebtedness or interest hereof, which remains unpaid from time to time, exceed the highest maximum rate permitted by applicable law.  If fulfillment of any provisions hereof, at the time of performance of such provisions shall be due, shall involve transcending the valid limits prescribed by applicable law, then, ipso facto, the obligation to be fulfilled shall be reduced to the maximum rate allowed by applicable law.  If any Holder receives as interest an amount which will exceed the maximum rate allowed by applicable law, such amount shall be applied to the reduction of the principal amount owing hereunder or on account of any other principal indebtedness owed to Holder and not to the payment of interest, or if such excessive interest exceeds the unpaid balance of principal hereof and such other indebtedness, such excess shall be refunded.  To the extent not prohibited by applicable law, determination of the maximum rate allowed by applicable law shall at all times be made by amortizing, prorating, allocating and spreading in equal parts during the full term of this Bond, all interest at any time contracted for, charged or received from the Company in connection with this Bond, so that the actual rate of interest on account of such indebtedness is uniform throughout the term of this Bond.  The terms of this paragraph shall control and supersede any other provisions of this Bond.

This Bond shall be construed in accordance with and governed by the law of the State of Alaska.

No covenant or agreement contained in this Bond, the Indenture or the First Supplemental Indenture shall be deemed to be a covenant or agreement of any official, officer, agent or employee of the Company in his individual capacity, and no officer of the Company executing this Bond shall be liable personally on this Bond or be subject to any personal liability or accountability by reason of the issuance of this Bond.

This Bond shall not be entitled to any benefit under the Indenture or be valid until this Bond shall have been authenticated by the execution by the Trustee, or its successor as Trustee, of the Certificate of Authentication inscribed hereon.

- 3 -

IN WITNESS WHEREOF, the Company has caused this Bond to be executed by a duly authorized officer of the Company.

CHUGACH ELECTRIC ASSOCIATION, INC.
By:	/s/ Michael R. Cunningham
Name:
Title:	C.F.O.

- 4 -

This is one of the Obligations of the series designated therein referred to in the within-mentioned Indenture.

		U.S. BANK NATIONAL ASSOCIATION,
		as Trustee
		By:	/s/ Thomas Zrust
			Authorized Signatory
Date of Authentication:	January 21, 2011

- 5 -

THIS 2011 SERIES A BOND HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM EXCEPT UNDER CIRCUMSTANCES WHERE NEITHER SUCH REGISTRATION NOR SUCH EXEMPTION IS REQUIRED BY LAW.

THE COMPANY (DEFINED BELOW) IS PERSONALLY OBLIGATED AND FULLY LIABLE FOR THE AMOUNT DUE UNDER THIS BOND AND, SUBJECT TO THE PROVISIONS OF THE INDENTURE (DEFINED BELOW), EACH HOLDER (AS DEFINED IN THE INDENTURE) HAS THE RIGHT TO SUE ON THIS BOND AND OBTAIN A PERSONAL JUDGMENT AGAINST THE COMPANY FOR SATISFACTION OF THE AMOUNT UNDER THIS BOND EITHER BEFORE OR AFTER A FORECLOSURE OF THE INDENTURE UNDER ALASKA STATUTES 09.45.170-09.45.220.

CHUGACH ELECTRIC ASSOCIATION, INC.

FIRST MORTGAGE BONDS, 2011 SERIES A DUE MARCH 15, 2031

NO. RA-6	ISSUANCE DATE: JANUARY 21, 2011
$6,000,000	PPN: 171265 A*2

FOR VALUE RECEIVED, the undersigned, CHUGACH ELECTRIC ASSOCIATION, INC. (herein called the “Company”), an electric cooperative organized and existing under the laws of the State of Alaska, hereby promises to pay to ALLSTATE LIFE INSURANCE COMPANY, or registered assigns, the principal sum of SIX MILLION DOLLARS (or so much thereof as shall not have been prepaid) on March 15, 2031, with interest computed on the basis of a 360-day year of twelve 30-day months (a) on the unpaid balance hereof at a rate of 4.20% per annum (plus, upon the occurrence and during the continuation of an Interest Rate Adjustment Event (as hereinafter defined), an additional 2% per annum) from the date hereof, payable semiannually on the 15th day of each March and September, commencing on September 15, 2011, until the principal hereof shall have become due and payable, and (b) to the extent permitted by law, on any overdue payment (including any overdue prepayment) of principal, any overdue payment of interest, any overdue payment of any Make-Whole Amount (as defined in the First Supplemental Indenture referred to below), payable semiannually as aforesaid (or, at the option of the registered Holder hereof, on demand), at the Default Rate (as defined in the First Supplemental Indenture referred to below).

“Interest Rate Adjustment Event” means the occurrence of any of the following:

(a)           the Company defaults in the performance of Section 7.1(a) or (b) or Section 7.2 of the 2011 Series A Bond Purchase Agreement (as defined below); or

(b)           any representation or warranty made in writing by or on behalf of the Company or by any officer of the Company in the Indenture or the 2011 Series A Bond Purchase Agreement (as defined below) or in any writing furnished in connection with the transactions contemplated by the First Supplemental Indenture (referred to below) proves to have been false or incorrect in any material respect on the date as of which made and, with respect to representations and warranties made after the date hereof, for which accurate information has not since been provided in writing to the Holder of this Bond.

Subject to Section 11 of the 2011 Series A Bond Purchase Agreement (defined below), payments of principal of, interest on, and any Make-Whole Amount with respect to this Bond are to be made in lawful money of the United States of America in accordance with the terms of the Indenture.

This Bond is one of the 2011 Series A Bonds (herein called the “Bonds”) issued pursuant to the First Supplemental Indenture, dated as of January 20, 2011 (as from time to time amended, the “First Supplemental Indenture”), between the Company and the Trustee named therein which amends and supplements the Second Amended and Restated Indenture of Trust, dated as of January 20, 2011 (as amended and supplemented from time to time, the “Indenture”) and is entitled to the benefits thereof and the 2011 Series A Bond Purchase Agreement dated January 21, 2011 between the Company and the purchasers listed in Schedule A thereto (the “2011 Series A Bond Purchase Agreement”).  Each Holder of this Bond will be deemed, by its acceptance hereof, to have (i) agreed to the confidentiality provisions set forth in Section 18 of the 2011 Series A Bond Purchase Agreement and (ii) made the representations set forth in Section 6 of the 2011 Series A Bond Purchase Agreement.  Unless otherwise indicated, capitalized terms used in this Bond shall have the respective meanings ascribed to such terms in the First Supplemental Indenture.

This Bond shall be registered in the name of the Holder hereof.  This Bond is transferable, as provided in the Indenture, only upon the registration books of the Company maintained by the Obligation Registrar, which shall be the Trustee, kept at its principal office, upon presentation at said office of this Bond with the written request of the registered owner hereof or his attorney duly authorized in writing, and a written instrument of transfer satisfactory to the Obligation Registrar duly executed by the registered owner or his duly authorized attorney.

The Bonds shall be issued as fully registered Bonds without coupons and in minimum denominations of $1.00 and any integral multiple of $1.00 in excess thereof. The Trustee may impose a charge sufficient to reimburse the Company or the Trustee for any tax, fee or other governmental charge required to be paid with respect to such exchange or any transfer of a Bond.  The cost, if any, of preparing each new Bond issued upon such exchange or transfer, and any other expenses of the Company or the Trustee incurred in connection therewith, shall be paid by in accordance with Section 3.7 of the Indenture.

The Company will make the required prepayments of principal on this Bond on the dates and in the amount specified in the First Supplemental Indenture.  This Bond is also subject to optional prepayment, in whole or from time to time in part, at the times and on the terms specified in First Supplemental Indenture, but not otherwise.

If an Event of Default under the Indenture occurs and is continuing, the principal of this Bond may be declared or otherwise become due and payable in the manner, at the price (including any applicable Make-Whole Amount) and with the effect provided in the Indenture.  In the event that the principal of this Bond shall have been declared or otherwise become due and payable as described in the preceding sentence, then, in addition to paying the Holder hereof the entire unpaid principal amount of this Bond and all accrued and unpaid interest hereon (including, but not limited to, interest accrued hereon at the Default Rate), the Company shall pay to the Holder hereof (to the full extent permitted by applicable law) an amount equal to the Make-Whole Amount determined in respect of such principal amount.

- 2 -

The Holder of this Bond shall have no right to enforce the provisions of the Indenture, or to institute action to enforce the covenants therein, or to take any action with respect to any default under the Indenture, or to institute, appear in or defend any suit or other proceeding with respect thereto, except as provided in the Indenture and the 2011 Series A Bond Purchase Agreement.

All acts and proceedings required by law and by the Articles of Incorporation and Bylaws of the Company necessary to make the 2011 Series A Bonds issued under the Indenture, when executed by the Company, authenticated and delivered by the Trustee and duly issued, the valid, binding and legal obligations of the Company, in accordance with its terms, have been done and taken.

It is the intention of the Holder to comply with the usury laws of the State of Alaska and of the United States of America.  This Bond is hereby expressly limited such that in no contingency or event whatsoever, whether by reason of acceleration, prepayment, or otherwise, shall the amount of interest contracted for, charged or received by the Holder for the use, forbearance, or detention of the principal indebtedness or interest hereof, which remains unpaid from time to time, exceed the highest maximum rate permitted by applicable law.  If fulfillment of any provisions hereof, at the time of performance of such provisions shall be due, shall involve transcending the valid limits prescribed by applicable law, then, ipso facto, the obligation to be fulfilled shall be reduced to the maximum rate allowed by applicable law.  If any Holder receives as interest an amount which will exceed the maximum rate allowed by applicable law, such amount shall be applied to the reduction of the principal amount owing hereunder or on account of any other principal indebtedness owed to Holder and not to the payment of interest, or if such excessive interest exceeds the unpaid balance of principal hereof and such other indebtedness, such excess shall be refunded.  To the extent not prohibited by applicable law, determination of the maximum rate allowed by applicable law shall at all times be made by amortizing, prorating, allocating and spreading in equal parts during the full term of this Bond, all interest at any time contracted for, charged or received from the Company in connection with this Bond, so that the actual rate of interest on account of such indebtedness is uniform throughout the term of this Bond.  The terms of this paragraph shall control and supersede any other provisions of this Bond.

This Bond shall be construed in accordance with and governed by the law of the State of Alaska.

No covenant or agreement contained in this Bond, the Indenture or the First Supplemental Indenture shall be deemed to be a covenant or agreement of any official, officer, agent or employee of the Company in his individual capacity, and no officer of the Company executing this Bond shall be liable personally on this Bond or be subject to any personal liability or accountability by reason of the issuance of this Bond.

This Bond shall not be entitled to any benefit under the Indenture or be valid until this Bond shall have been authenticated by the execution by the Trustee, or its successor as Trustee, of the Certificate of Authentication inscribed hereon.

- 3 -

IN WITNESS WHEREOF, the Company has caused this Bond to be executed by a duly authorized officer of the Company.

CHUGACH ELECTRIC ASSOCIATION, INC.
By:	/s/ Michael R. Cunningham
Name:
Title:	C.F.O.

- 4 -

This is one of the Obligations of the series designated therein referred to in the within-mentioned Indenture.

		U.S. BANK NATIONAL ASSOCIATION,
		as Trustee
		By:	/s/ Thomas Zrust
			Authorized Signatory
Date of Authentication:	January 21, 2011

- 5 -

THIS 2011 SERIES A BOND HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM EXCEPT UNDER CIRCUMSTANCES WHERE NEITHER SUCH REGISTRATION NOR SUCH EXEMPTION IS REQUIRED BY LAW.

THE COMPANY (DEFINED BELOW) IS PERSONALLY OBLIGATED AND FULLY LIABLE FOR THE AMOUNT DUE UNDER THIS BOND AND, SUBJECT TO THE PROVISIONS OF THE INDENTURE (DEFINED BELOW), EACH HOLDER (AS DEFINED IN THE INDENTURE) HAS THE RIGHT TO SUE ON THIS BOND AND OBTAIN A PERSONAL JUDGMENT AGAINST THE COMPANY FOR SATISFACTION OF THE AMOUNT UNDER THIS BOND EITHER BEFORE OR AFTER A FORECLOSURE OF THE INDENTURE UNDER ALASKA STATUTES 09.45.170-09.45.220.

CHUGACH ELECTRIC ASSOCIATION, INC.

FIRST MORTGAGE BONDS, 2011 SERIES A DUE MARCH 15, 2031

NO. RA-7	ISSUANCE DATE: JANUARY 21, 2011
$4,000,000	PPN: 171265 A*2

FOR VALUE RECEIVED, the undersigned, CHUGACH ELECTRIC ASSOCIATION, INC. (herein called the “Company”), an electric cooperative organized and existing under the laws of the State of Alaska, hereby promises to pay to ALLSTATE LIFE INSURANCE COMPANY, or registered assigns, the principal sum of FOUR MILLION DOLLARS (or so much thereof as shall not have been prepaid) on March 15, 2031, with interest computed on the basis of a 360-day year of twelve 30-day months (a) on the unpaid balance hereof at a rate of 4.20% per annum (plus, upon the occurrence and during the continuation of an Interest Rate Adjustment Event (as hereinafter defined), an additional 2% per annum) from the date hereof, payable semiannually on the 15th day of each March and September, commencing on September 15, 2011, until the principal hereof shall have become due and payable, and (b) to the extent permitted by law, on any overdue payment (including any overdue prepayment) of principal, any overdue payment of interest, any overdue payment of any Make-Whole Amount (as defined in the First Supplemental Indenture referred to below), payable semiannually as aforesaid (or, at the option of the registered Holder hereof, on demand), at the Default Rate (as defined in the First Supplemental Indenture referred to below).

“Interest Rate Adjustment Event” means the occurrence of any of the following:

(a)           the Company defaults in the performance of Section 7.1(a) or (b) or Section 7.2 of the 2011 Series A Bond Purchase Agreement (as defined below); or

(b)           any representation or warranty made in writing by or on behalf of the Company or by any officer of the Company in the Indenture or the 2011 Series A Bond Purchase Agreement (as defined below) or in any writing furnished in connection with the transactions contemplated by the First Supplemental Indenture (referred to below) proves to have been false or incorrect in any material respect on the date as of which made and, with respect to representations and warranties made after the date hereof, for which accurate information has not since been provided in writing to the Holder of this Bond.

Subject to Section 11 of the 2011 Series A Bond Purchase Agreement (defined below), payments of principal of, interest on, and any Make-Whole Amount with respect to this Bond are to be made in lawful money of the United States of America in accordance with the terms of the Indenture.

This Bond is one of the 2011 Series A Bonds (herein called the “Bonds”) issued pursuant to the First Supplemental Indenture, dated as of January 20, 2011 (as from time to time amended, the “First Supplemental Indenture”), between the Company and the Trustee named therein which amends and supplements the Second Amended and Restated Indenture of Trust, dated as of January 20, 2011 (as amended and supplemented from time to time, the “Indenture”) and is entitled to the benefits thereof and the 2011 Series A Bond Purchase Agreement dated January 21, 2011 between the Company and the purchasers listed in Schedule A thereto (the “2011 Series A Bond Purchase Agreement”).  Each Holder of this Bond will be deemed, by its acceptance hereof, to have (i) agreed to the confidentiality provisions set forth in Section 18 of the 2011 Series A Bond Purchase Agreement and (ii) made the representations set forth in Section 6 of the 2011 Series A Bond Purchase Agreement.  Unless otherwise indicated, capitalized terms used in this Bond shall have the respective meanings ascribed to such terms in the First Supplemental Indenture.

This Bond shall be registered in the name of the Holder hereof.  This Bond is transferable, as provided in the Indenture, only upon the registration books of the Company maintained by the Obligation Registrar, which shall be the Trustee, kept at its principal office, upon presentation at said office of this Bond with the written request of the registered owner hereof or his attorney duly authorized in writing, and a written instrument of transfer satisfactory to the Obligation Registrar duly executed by the registered owner or his duly authorized attorney.

The Bonds shall be issued as fully registered Bonds without coupons and in minimum denominations of $1.00 and any integral multiple of $1.00 in excess thereof. The Trustee may impose a charge sufficient to reimburse the Company or the Trustee for any tax, fee or other governmental charge required to be paid with respect to such exchange or any transfer of a Bond.  The cost, if any, of preparing each new Bond issued upon such exchange or transfer, and any other expenses of the Company or the Trustee incurred in connection therewith, shall be paid by in accordance with Section 3.7 of the Indenture.

The Company will make the required prepayments of principal on this Bond on the dates and in the amount specified in the First Supplemental Indenture.  This Bond is also subject to optional prepayment, in whole or from time to time in part, at the times and on the terms specified in First Supplemental Indenture, but not otherwise.

If an Event of Default under the Indenture occurs and is continuing, the principal of this Bond may be declared or otherwise become due and payable in the manner, at the price (including any applicable Make-Whole Amount) and with the effect provided in the Indenture.  In the event that the principal of this Bond shall have been declared or otherwise become due and payable as described in the preceding sentence, then, in addition to paying the Holder hereof the entire unpaid principal amount of this Bond and all accrued and unpaid interest hereon (including, but not limited to, interest accrued hereon at the Default Rate), the Company shall pay to the Holder hereof (to the full extent permitted by applicable law) an amount equal to the Make-Whole Amount determined in respect of such principal amount.

- 2 -

The Holder of this Bond shall have no right to enforce the provisions of the Indenture, or to institute action to enforce the covenants therein, or to take any action with respect to any default under the Indenture, or to institute, appear in or defend any suit or other proceeding with respect thereto, except as provided in the Indenture and the 2011 Series A Bond Purchase Agreement.

All acts and proceedings required by law and by the Articles of Incorporation and Bylaws of the Company necessary to make the 2011 Series A Bonds issued under the Indenture, when executed by the Company, authenticated and delivered by the Trustee and duly issued, the valid, binding and legal obligations of the Company, in accordance with its terms, have been done and taken.

It is the intention of the Holder to comply with the usury laws of the State of Alaska and of the United States of America.  This Bond is hereby expressly limited such that in no contingency or event whatsoever, whether by reason of acceleration, prepayment, or otherwise, shall the amount of interest contracted for, charged or received by the Holder for the use, forbearance, or detention of the principal indebtedness or interest hereof, which remains unpaid from time to time, exceed the highest maximum rate permitted by applicable law.  If fulfillment of any provisions hereof, at the time of performance of such provisions shall be due, shall involve transcending the valid limits prescribed by applicable law, then, ipso facto, the obligation to be fulfilled shall be reduced to the maximum rate allowed by applicable law.  If any Holder receives as interest an amount which will exceed the maximum rate allowed by applicable law, such amount shall be applied to the reduction of the principal amount owing hereunder or on account of any other principal indebtedness owed to Holder and not to the payment of interest, or if such excessive interest exceeds the unpaid balance of principal hereof and such other indebtedness, such excess shall be refunded.  To the extent not prohibited by applicable law, determination of the maximum rate allowed by applicable law shall at all times be made by amortizing, prorating, allocating and spreading in equal parts during the full term of this Bond, all interest at any time contracted for, charged or received from the Company in connection with this Bond, so that the actual rate of interest on account of such indebtedness is uniform throughout the term of this Bond.  The terms of this paragraph shall control and supersede any other provisions of this Bond.

This Bond shall be construed in accordance with and governed by the law of the State of Alaska.

No covenant or agreement contained in this Bond, the Indenture or the First Supplemental Indenture shall be deemed to be a covenant or agreement of any official, officer, agent or employee of the Company in his individual capacity, and no officer of the Company executing this Bond shall be liable personally on this Bond or be subject to any personal liability or accountability by reason of the issuance of this Bond.

This Bond shall not be entitled to any benefit under the Indenture or be valid until this Bond shall have been authenticated by the execution by the Trustee, or its successor as Trustee, of the Certificate of Authentication inscribed hereon.

- 3 -

IN WITNESS WHEREOF, the Company has caused this Bond to be executed by a duly authorized officer of the Company.

CHUGACH ELECTRIC ASSOCIATION, INC.
By:	/s/ Michael R. Cunningham
Name:
Title:	C.F.O.

- 4 -

This is one of the Obligations of the series designated therein referred to in the within-mentioned Indenture.

		U.S. BANK NATIONAL ASSOCIATION,
		as Trustee
		By:	/s/ Thomas Zrust
			Authorized Signatory
Date of Authentication:	January 21, 2011

- 5 -

THIS 2011 SERIES A BOND HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM EXCEPT UNDER CIRCUMSTANCES WHERE NEITHER SUCH REGISTRATION NOR SUCH EXEMPTION IS REQUIRED BY LAW.

THE COMPANY (DEFINED BELOW) IS PERSONALLY OBLIGATED AND FULLY LIABLE FOR THE AMOUNT DUE UNDER THIS BOND AND, SUBJECT TO THE PROVISIONS OF THE INDENTURE (DEFINED BELOW), EACH HOLDER (AS DEFINED IN THE INDENTURE) HAS THE RIGHT TO SUE ON THIS BOND AND OBTAIN A PERSONAL JUDGMENT AGAINST THE COMPANY FOR SATISFACTION OF THE AMOUNT UNDER THIS BOND EITHER BEFORE OR AFTER A FORECLOSURE OF THE INDENTURE UNDER ALASKA STATUTES 09.45.170-09.45.220.

CHUGACH ELECTRIC ASSOCIATION, INC.

FIRST MORTGAGE BONDS, 2011 SERIES A DUE MARCH 15, 2031

NO. RA-8	ISSUANCE DATE: JANUARY 21, 2011
$4,000,000	PPN: 171265 A*2

FOR VALUE RECEIVED, the undersigned, CHUGACH ELECTRIC ASSOCIATION, INC. (herein called the “Company”), an electric cooperative organized and existing under the laws of the State of Alaska, hereby promises to pay to ALLSTATE LIFE INSURANCE COMPANY, or registered assigns, the principal sum of FOUR MILLION DOLLARS (or so much thereof as shall not have been prepaid) on March 15, 2031, with interest computed on the basis of a 360-day year of twelve 30-day months (a) on the unpaid balance hereof at a rate of 4.20% per annum (plus, upon the occurrence and during the continuation of an Interest Rate Adjustment Event (as hereinafter defined), an additional 2% per annum) from the date hereof, payable semiannually on the 15th day of each March and September, commencing on September 15, 2011, until the principal hereof shall have become due and payable, and (b) to the extent permitted by law, on any overdue payment (including any overdue prepayment) of principal, any overdue payment of interest, any overdue payment of any Make-Whole Amount (as defined in the First Supplemental Indenture referred to below), payable semiannually as aforesaid (or, at the option of the registered Holder hereof, on demand), at the Default Rate (as defined in the First Supplemental Indenture referred to below).

“Interest Rate Adjustment Event” means the occurrence of any of the following:

(a)           the Company defaults in the performance of Section 7.1(a) or (b) or Section 7.2 of the 2011 Series A Bond Purchase Agreement (as defined below); or

(b)           any representation or warranty made in writing by or on behalf of the Company or by any officer of the Company in the Indenture or the 2011 Series A Bond Purchase Agreement (as defined below) or in any writing furnished in connection with the transactions contemplated by the First Supplemental Indenture (referred to below) proves to have been false or incorrect in any material respect on the date as of which made and, with respect to representations and warranties made after the date hereof, for which accurate information has not since been provided in writing to the Holder of this Bond.

Subject to Section 11 of the 2011 Series A Bond Purchase Agreement (defined below), payments of principal of, interest on, and any Make-Whole Amount with respect to this Bond are to be made in lawful money of the United States of America in accordance with the terms of the Indenture.

This Bond is one of the 2011 Series A Bonds (herein called the “Bonds”) issued pursuant to the First Supplemental Indenture, dated as of January 20, 2011 (as from time to time amended, the “First Supplemental Indenture”), between the Company and the Trustee named therein which amends and supplements the Second Amended and Restated Indenture of Trust, dated as of January 20, 2011 (as amended and supplemented from time to time, the “Indenture”) and is entitled to the benefits thereof and the 2011 Series A Bond Purchase Agreement dated January 21, 2011 between the Company and the purchasers listed in Schedule A thereto (the “2011 Series A Bond Purchase Agreement”).  Each Holder of this Bond will be deemed, by its acceptance hereof, to have (i) agreed to the confidentiality provisions set forth in Section 18 of the 2011 Series A Bond Purchase Agreement and (ii) made the representations set forth in Section 6 of the 2011 Series A Bond Purchase Agreement.  Unless otherwise indicated, capitalized terms used in this Bond shall have the respective meanings ascribed to such terms in the First Supplemental Indenture.

This Bond shall be registered in the name of the Holder hereof.  This Bond is transferable, as provided in the Indenture, only upon the registration books of the Company maintained by the Obligation Registrar, which shall be the Trustee, kept at its principal office, upon presentation at said office of this Bond with the written request of the registered owner hereof or his attorney duly authorized in writing, and a written instrument of transfer satisfactory to the Obligation Registrar duly executed by the registered owner or his duly authorized attorney.

The Bonds shall be issued as fully registered Bonds without coupons and in minimum denominations of $1.00 and any integral multiple of $1.00 in excess thereof. The Trustee may impose a charge sufficient to reimburse the Company or the Trustee for any tax, fee or other governmental charge required to be paid with respect to such exchange or any transfer of a Bond.  The cost, if any, of preparing each new Bond issued upon such exchange or transfer, and any other expenses of the Company or the Trustee incurred in connection therewith, shall be paid by in accordance with Section 3.7 of the Indenture.

The Company will make the required prepayments of principal on this Bond on the dates and in the amount specified in the First Supplemental Indenture.  This Bond is also subject to optional prepayment, in whole or from time to time in part, at the times and on the terms specified in First Supplemental Indenture, but not otherwise.

If an Event of Default under the Indenture occurs and is continuing, the principal of this Bond may be declared or otherwise become due and payable in the manner, at the price (including any applicable Make-Whole Amount) and with the effect provided in the Indenture.  In the event that the principal of this Bond shall have been declared or otherwise become due and payable as described in the preceding sentence, then, in addition to paying the Holder hereof the entire unpaid principal amount of this Bond and all accrued and unpaid interest hereon (including, but not limited to, interest accrued hereon at the Default Rate), the Company shall pay to the Holder hereof (to the full extent permitted by applicable law) an amount equal to the Make-Whole Amount determined in respect of such principal amount.

- 2 -

The Holder of this Bond shall have no right to enforce the provisions of the Indenture, or to institute action to enforce the covenants therein, or to take any action with respect to any default under the Indenture, or to institute, appear in or defend any suit or other proceeding with respect thereto, except as provided in the Indenture and the 2011 Series A Bond Purchase Agreement.

All acts and proceedings required by law and by the Articles of Incorporation and Bylaws of the Company necessary to make the 2011 Series A Bonds issued under the Indenture, when executed by the Company, authenticated and delivered by the Trustee and duly issued, the valid, binding and legal obligations of the Company, in accordance with its terms, have been done and taken.

It is the intention of the Holder to comply with the usury laws of the State of Alaska and of the United States of America.  This Bond is hereby expressly limited such that in no contingency or event whatsoever, whether by reason of acceleration, prepayment, or otherwise, shall the amount of interest contracted for, charged or received by the Holder for the use, forbearance, or detention of the principal indebtedness or interest hereof, which remains unpaid from time to time, exceed the highest maximum rate permitted by applicable law.  If fulfillment of any provisions hereof, at the time of performance of such provisions shall be due, shall involve transcending the valid limits prescribed by applicable law, then, ipso facto, the obligation to be fulfilled shall be reduced to the maximum rate allowed by applicable law.  If any Holder receives as interest an amount which will exceed the maximum rate allowed by applicable law, such amount shall be applied to the reduction of the principal amount owing hereunder or on account of any other principal indebtedness owed to Holder and not to the payment of interest, or if such excessive interest exceeds the unpaid balance of principal hereof and such other indebtedness, such excess shall be refunded.  To the extent not prohibited by applicable law, determination of the maximum rate allowed by applicable law shall at all times be made by amortizing, prorating, allocating and spreading in equal parts during the full term of this Bond, all interest at any time contracted for, charged or received from the Company in connection with this Bond, so that the actual rate of interest on account of such indebtedness is uniform throughout the term of this Bond.  The terms of this paragraph shall control and supersede any other provisions of this Bond.

This Bond shall be construed in accordance with and governed by the law of the State of Alaska.

No covenant or agreement contained in this Bond, the Indenture or the First Supplemental Indenture shall be deemed to be a covenant or agreement of any official, officer, agent or employee of the Company in his individual capacity, and no officer of the Company executing this Bond shall be liable personally on this Bond or be subject to any personal liability or accountability by reason of the issuance of this Bond.

This Bond shall not be entitled to any benefit under the Indenture or be valid until this Bond shall have been authenticated by the execution by the Trustee, or its successor as Trustee, of the Certificate of Authentication inscribed hereon.

- 3 -

IN WITNESS WHEREOF, the Company has caused this Bond to be executed by a duly authorized officer of the Company.

CHUGACH ELECTRIC ASSOCIATION, INC.
By:	/s/ Michael R. Cunningham
Name:
Title:	C.F.O.

- 4 -

This is one of the Obligations of the series designated therein referred to in the within-mentioned Indenture.

		U.S. BANK NATIONAL ASSOCIATION,
		as Trustee
		By:	/s/ Thomas Zrust
			Authorized Signatory
Date of Authentication:	January 21, 2011

- 5 -

THIS 2011 SERIES A BOND HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM EXCEPT UNDER CIRCUMSTANCES WHERE NEITHER SUCH REGISTRATION NOR SUCH EXEMPTION IS REQUIRED BY LAW.

THE COMPANY (DEFINED BELOW) IS PERSONALLY OBLIGATED AND FULLY LIABLE FOR THE AMOUNT DUE UNDER THIS BOND AND, SUBJECT TO THE PROVISIONS OF THE INDENTURE (DEFINED BELOW), EACH HOLDER (AS DEFINED IN THE INDENTURE) HAS THE RIGHT TO SUE ON THIS BOND AND OBTAIN A PERSONAL JUDGMENT AGAINST THE COMPANY FOR SATISFACTION OF THE AMOUNT UNDER THIS BOND EITHER BEFORE OR AFTER A FORECLOSURE OF THE INDENTURE UNDER ALASKA STATUTES 09.45.170-09.45.220.

CHUGACH ELECTRIC ASSOCIATION, INC.

FIRST MORTGAGE BONDS, 2011 SERIES A DUE MARCH 15, 2031

NO. RA-9	ISSUANCE DATE: JANUARY 21, 2011
$15,000,000	PPN: 171265 A*2

FOR VALUE RECEIVED, the undersigned, CHUGACH ELECTRIC ASSOCIATION, INC. (herein called the “Company”), an electric cooperative organized and existing under the laws of the State of Alaska, hereby promises to pay to KNIGHTS OF COLUMBUS, or registered assigns, the principal sum of FIFTEEN MILLION DOLLARS (or so much thereof as shall not have been prepaid) on March 15, 2031, with interest computed on the basis of a 360-day year of twelve 30-day months (a) on the unpaid balance hereof at a rate of 4.20% per annum (plus, upon the occurrence and during the continuation of an Interest Rate Adjustment Event (as hereinafter defined), an additional 2% per annum) from the date hereof, payable semiannually on the 15th day of each March and September, commencing on September 15, 2011, until the principal hereof shall have become due and payable, and (b) to the extent permitted by law, on any overdue payment (including any overdue prepayment) of principal, any overdue payment of interest, any overdue payment of any Make-Whole Amount (as defined in the First Supplemental Indenture referred to below), payable semiannually as aforesaid (or, at the option of the registered Holder hereof, on demand), at the Default Rate (as defined in the First Supplemental Indenture referred to below).

“Interest Rate Adjustment Event” means the occurrence of any of the following:

(a)           the Company defaults in the performance of Section 7.1(a) or (b) or Section 7.2 of the 2011 Series A Bond Purchase Agreement (as defined below); or

(b)           any representation or warranty made in writing by or on behalf of the Company or by any officer of the Company in the Indenture or the 2011 Series A Bond Purchase Agreement (as defined below) or in any writing furnished in connection with the transactions contemplated by the First Supplemental Indenture (referred to below) proves to have been false or incorrect in any material respect on the date as of which made and, with respect to representations and warranties made after the date hereof, for which accurate information has not since been provided in writing to the Holder of this Bond.

Subject to Section 11 of the 2011 Series A Bond Purchase Agreement (defined below), payments of principal of, interest on, and any Make-Whole Amount with respect to this Bond are to be made in lawful money of the United States of America in accordance with the terms of the Indenture.

This Bond is one of the 2011 Series A Bonds (herein called the “Bonds”) issued pursuant to the First Supplemental Indenture, dated as of January 20, 2011 (as from time to time amended, the “First Supplemental Indenture”), between the Company and the Trustee named therein which amends and supplements the Second Amended and Restated Indenture of Trust, dated as of January 20, 2011 (as amended and supplemented from time to time, the “Indenture”) and is entitled to the benefits thereof and the 2011 Series A Bond Purchase Agreement dated January 21, 2011 between the Company and the purchasers listed in Schedule A thereto (the “2011 Series A Bond Purchase Agreement”).  Each Holder of this Bond will be deemed, by its acceptance hereof, to have (i) agreed to the confidentiality provisions set forth in Section 18 of the 2011 Series A Bond Purchase Agreement and (ii) made the representations set forth in Section 6 of the 2011 Series A Bond Purchase Agreement.  Unless otherwise indicated, capitalized terms used in this Bond shall have the respective meanings ascribed to such terms in the First Supplemental Indenture.

This Bond shall be registered in the name of the Holder hereof.  This Bond is transferable, as provided in the Indenture, only upon the registration books of the Company maintained by the Obligation Registrar, which shall be the Trustee, kept at its principal office, upon presentation at said office of this Bond with the written request of the registered owner hereof or his attorney duly authorized in writing, and a written instrument of transfer satisfactory to the Obligation Registrar duly executed by the registered owner or his duly authorized attorney.

The Bonds shall be issued as fully registered Bonds without coupons and in minimum denominations of $1.00 and any integral multiple of $1.00 in excess thereof. The Trustee may impose a charge sufficient to reimburse the Company or the Trustee for any tax, fee or other governmental charge required to be paid with respect to such exchange or any transfer of a Bond.  The cost, if any, of preparing each new Bond issued upon such exchange or transfer, and any other expenses of the Company or the Trustee incurred in connection therewith, shall be paid by in accordance with Section 3.7 of the Indenture.

The Company will make the required prepayments of principal on this Bond on the dates and in the amount specified in the First Supplemental Indenture.  This Bond is also subject to optional prepayment, in whole or from time to time in part, at the times and on the terms specified in First Supplemental Indenture, but not otherwise.

If an Event of Default under the Indenture occurs and is continuing, the principal of this Bond may be declared or otherwise become due and payable in the manner, at the price (including any applicable Make-Whole Amount) and with the effect provided in the Indenture.  In the event that the principal of this Bond shall have been declared or otherwise become due and payable as described in the preceding sentence, then, in addition to paying the Holder hereof the entire unpaid principal amount of this Bond and all accrued and unpaid interest hereon (including, but not limited to, interest accrued hereon at the Default Rate), the Company shall pay to the Holder hereof (to the full extent permitted by applicable law) an amount equal to the Make-Whole Amount determined in respect of such principal amount.

- 2 -

The Holder of this Bond shall have no right to enforce the provisions of the Indenture, or to institute action to enforce the covenants therein, or to take any action with respect to any default under the Indenture, or to institute, appear in or defend any suit or other proceeding with respect thereto, except as provided in the Indenture and the 2011 Series A Bond Purchase Agreement.

All acts and proceedings required by law and by the Articles of Incorporation and Bylaws of the Company necessary to make the 2011 Series A Bonds issued under the Indenture, when executed by the Company, authenticated and delivered by the Trustee and duly issued, the valid, binding and legal obligations of the Company, in accordance with its terms, have been done and taken.

It is the intention of the Holder to comply with the usury laws of the State of Alaska and of the United States of America.  This Bond is hereby expressly limited such that in no contingency or event whatsoever, whether by reason of acceleration, prepayment, or otherwise, shall the amount of interest contracted for, charged or received by the Holder for the use, forbearance, or detention of the principal indebtedness or interest hereof, which remains unpaid from time to time, exceed the highest maximum rate permitted by applicable law.  If fulfillment of any provisions hereof, at the time of performance of such provisions shall be due, shall involve transcending the valid limits prescribed by applicable law, then, ipso facto, the obligation to be fulfilled shall be reduced to the maximum rate allowed by applicable law.  If any Holder receives as interest an amount which will exceed the maximum rate allowed by applicable law, such amount shall be applied to the reduction of the principal amount owing hereunder or on account of any other principal indebtedness owed to Holder and not to the payment of interest, or if such excessive interest exceeds the unpaid balance of principal hereof and such other indebtedness, such excess shall be refunded.  To the extent not prohibited by applicable law, determination of the maximum rate allowed by applicable law shall at all times be made by amortizing, prorating, allocating and spreading in equal parts during the full term of this Bond, all interest at any time contracted for, charged or received from the Company in connection with this Bond, so that the actual rate of interest on account of such indebtedness is uniform throughout the term of this Bond.  The terms of this paragraph shall control and supersede any other provisions of this Bond.

This Bond shall be construed in accordance with and governed by the law of the State of Alaska.

No covenant or agreement contained in this Bond, the Indenture or the First Supplemental Indenture shall be deemed to be a covenant or agreement of any official, officer, agent or employee of the Company in his individual capacity, and no officer of the Company executing this Bond shall be liable personally on this Bond or be subject to any personal liability or accountability by reason of the issuance of this Bond.

This Bond shall not be entitled to any benefit under the Indenture or be valid until this Bond shall have been authenticated by the execution by the Trustee, or its successor as Trustee, of the Certificate of Authentication inscribed hereon.

- 3 -

IN WITNESS WHEREOF, the Company has caused this Bond to be executed by a duly authorized officer of the Company.

CHUGACH ELECTRIC ASSOCIATION, INC.
By:	/s/ Michael R. Cunningham
Name:
Title:	C.F.O.

- 4 -

This is one of the Obligations of the series designated therein referred to in the within-mentioned Indenture.

		U.S. BANK NATIONAL ASSOCIATION,
		as Trustee
		By:	/s/ Thomas Zrust
			Authorized Signatory
Date of Authentication:	January 21, 2011

- 5 -

EX-4.22

Exhibit 4.22

THIS 2011 SERIES A BOND HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM EXCEPT UNDER CIRCUMSTANCES WHERE NEITHER SUCH REGISTRATION NOR SUCH EXEMPTION IS REQUIRED BY LAW.

THE COMPANY (DEFINED BELOW) IS PERSONALLY OBLIGATED AND FULLY LIABLE FOR THE AMOUNT DUE UNDER THIS BOND AND, SUBJECT TO THE PROVISIONS OF THE INDENTURE (DEFINED BELOW), EACH HOLDER (AS DEFINED IN THE INDENTURE) HAS THE RIGHT TO SUE ON THIS BOND AND OBTAIN A PERSONAL JUDGMENT AGAINST THE COMPANY FOR SATISFACTION OF THE AMOUNT UNDER THIS BOND EITHER BEFORE OR AFTER A FORECLOSURE OF THE INDENTURE UNDER ALASKA STATUTES 09.45.170-09.45.220.

CHUGACH ELECTRIC ASSOCIATION, INC.

FIRST MORTGAGE BONDS, 2011 SERIES A DUE MARCH 15, 2041

NO. RB-1	ISSUANCE DATE: JANUARY 21, 2011
$18,400,000	PPN: 171265 A@0

FOR VALUE RECEIVED, the undersigned, CHUGACH ELECTRIC ASSOCIATION, INC. (herein called the “Company”), an electric cooperative organized and existing under the laws of the State of Alaska, hereby promises to pay to ING USA ANNUITY AND LIFE INSURANCE COMPANY, or registered assigns, the principal sum of EIGHTEEN MILLION FOUR HUNDRED THOUSAND DOLLARS (or so much thereof as shall not have been prepaid) on March 15, 2041, with interest computed on the basis of a 360-day year of twelve 30-day months (a) on the unpaid balance hereof at a rate of 4.75% per annum (plus, upon the occurrence and during the continuation of an Interest Rate Adjustment Event (as hereinafter defined), an additional 2% per annum) from the date hereof, payable semiannually on the 15th day of each March and September, commencing on September 15, 2011, until the principal hereof shall have become due and payable, and (b) to the extent permitted by law, on any overdue payment (including any overdue prepayment) of principal, any overdue payment of interest, any overdue payment of any Make-Whole Amount (as defined in the First Supplemental Indenture referred to below), payable semiannually as aforesaid (or, at the option of the registered Holder hereof, on demand), at the Default Rate (as defined in the First Supplemental Indenture referred to below).

“Interest Rate Adjustment Event” means the occurrence of any of the following:

(a)            the Company defaults in the performance of Section 7.1(a) or (b) or Section 7.2 of the 2011 Series A Bond Purchase Agreement (as defined below); or

(b)            any representation or warranty made in writing by or on behalf of the Company or by any officer of the Company in the Indenture or the 2011 Series A Bond Purchase Agreement (as defined below) or in any writing furnished in connection with the transactions contemplated by the First Supplemental Indenture (referred to below) proves to have been false or incorrect in any material respect on the date as of which made and, with respect to representations and warranties made after the date hereof, for which accurate information has not since been provided in writing to the Holder of this Bond.

Subject to Section 11 of the 2011 Series A Bond Purchase Agreement (defined below), payments of principal of, interest on, and any Make-Whole Amount with respect to this Bond are to be made in lawful money of the United States of America in accordance with the terms of the Indenture.

This Bond is one of the 2011 Series A Bonds (herein called the “Bonds”) issued pursuant to the First Supplemental Indenture, dated as of January 20, 2011 (as from time to time amended, the “First Supplemental Indenture”), between the Company and the Trustee named therein which amends and supplements the Second Amended and Restated Indenture of Trust, dated as of January 20, 2011 (as amended and supplemented from time to time, the “Indenture”) and is entitled to the benefits thereof and the 2011 Series A Bond Purchase Agreement dated January 21, 2011 between the Company and the purchasers listed in Schedule A thereto (the “2011 Series A Bond Purchase Agreement”). Each Holder of this Bond will be deemed, by its acceptance hereof, to have (i) agreed to the confidentiality provisions set forth in Section 18 of the 2011 Series A Bond Purchase Agreement and (ii) made the representations set forth in Section 6 of the 2011 Series A Bond Purchase Agreement. Unless otherwise indicated, capitalized terms used in this Bond shall have the respective meanings ascribed to such terms in the First Supplemental Indenture.

This Bond shall be registered in the name of the Holder hereof. This Bond is transferable, as provided in the Indenture, only upon the registration books of the Company maintained by the Obligation Registrar, which shall be the Trustee, kept at its principal office, upon presentation at said office of this Bond with the written request of the registered owner hereof or his attorney duly authorized in writing, and a written instrument of transfer satisfactory to the Obligation Registrar duly executed by the registered owner or his duly authorized attorney.

The Bonds shall be issued as fully registered Bonds without coupons and in minimum denominations of $1.00 and any integral multiple of $1.00 in excess thereof. The Trustee may impose a charge sufficient to reimburse the Company or the Trustee for any tax, fee or other governmental charge required to be paid with respect to such exchange or any transfer of a Bond. The cost, if any, of preparing each new Bond issued upon such exchange or transfer, and any other expenses of the Company or the Trustee incurred in connection therewith, shall be paid by in accordance with Section 3.7 of the Indenture.

The Company will make the required prepayments of principal on this Bond on the dates and in the amount specified in the First Supplemental Indenture. This Bond is also subject to optional prepayment, in whole or from time to time in part, at the times and on the terms specified in First Supplemental Indenture, but not otherwise.

If an Event of Default under the Indenture occurs and is continuing, the principal of this Bond may be declared or otherwise become due and payable in the manner, at the price (including any applicable Make-Whole Amount) and with the effect provided in the Indenture. In the event that the principal of this Bond shall have been declared or otherwise become due and payable as described in the preceding sentence, then, in addition to paying the Holder hereof the entire unpaid principal amount of this Bond and all accrued and unpaid interest hereon (including, but not limited to, interest accrued hereon at the Default Rate), the Company shall pay to the Holder hereof (to the full extent permitted by applicable law) an amount equal to the Make-Whole Amount determined in respect of such principal amount.

- 2 -

The Holder of this Bond shall have no right to enforce the provisions of the Indenture, or to institute action to enforce the covenants therein, or to take any action with respect to any default under the Indenture, or to institute, appear in or defend any suit or other proceeding with respect thereto, except as provided in the Indenture and the 2011 Series A Bond Purchase Agreement.

All acts and proceedings required by law and by the Articles of Incorporation and Bylaws of the Company necessary to make the 2011 Series A Bonds issued under the Indenture, when executed by the Company, authenticated and delivered by the Trustee and duly issued, the valid, binding and legal obligations of the Company, in accordance with its terms, have been done and taken.

It is the intention of the Holder to comply with the usury laws of the State of Alaska and of the United States of America. This Bond is hereby expressly limited such that in no contingency or event whatsoever, whether by reason of acceleration, prepayment, or otherwise, shall the amount of interest contracted for, charged or received by the Holder for the use, forbearance, or detention of the principal indebtedness or interest hereof, which remains unpaid from time to time, exceed the highest maximum rate permitted by applicable law. If fulfillment of any provisions hereof, at the time of performance of such provisions shall be due, shall involve transcending the valid limits prescribed by applicable law, then, ipso facto, the obligation to be fulfilled shall be reduced to the maximum rate allowed by applicable law. If any Holder receives as interest an amount which will exceed the maximum rate allowed by applicable law, such amount shall be applied to the reduction of the principal amount owing hereunder or on account of any other principal indebtedness owed to Holder and not to the payment of interest, or if such excessive interest exceeds the unpaid balance of principal hereof and such other indebtedness, such excess shall be refunded. To the extent not prohibited by applicable law, determination of the maximum rate allowed by applicable law shall at all times be made by amortizing, prorating, allocating and spreading in equal parts during the full term of this Bond, all interest at any time contracted for, charged or received from the Company in connection with this Bond, so that the actual rate of interest on account of such indebtedness is uniform throughout the term of this Bond. The terms of this paragraph shall control and supersede any other provisions of this Bond.

This Bond shall be construed in accordance with and governed by the law of the State of Alaska.

No covenant or agreement contained in this Bond, the Indenture or the First Supplemental Indenture shall be deemed to be a covenant or agreement of any official, officer, agent or employee of the Company in his individual capacity, and no officer of the Company executing this Bond shall be liable personally on this Bond or be subject to any personal liability or accountability by reason of the issuance of this Bond.

This Bond shall not be entitled to any benefit under the Indenture or be valid until this Bond shall have been authenticated by the execution by the Trustee, or its successor as Trustee, of the Certificate of Authentication inscribed hereon.

- 3 -

IN WITNESS WHEREOF, the Company has caused this Bond to be executed by a duly authorized officer of the Company.

CHUGACH ELECTRIC ASSOCIATION, INC.
By:	/s/ Michael R. Cunningham
Name:
Title:	C.F.O.

- 4 -

This is one of the Obligations of the series designated therein referred to in the within-mentioned Indenture.

U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By:	/s/ Thomas Zrust
	Authorized Signatory

Date of Authentication: January 21, 2011

- 5 -

THIS 2011 SERIES A BOND HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM EXCEPT UNDER CIRCUMSTANCES WHERE NEITHER SUCH REGISTRATION NOR SUCH EXEMPTION IS REQUIRED BY LAW.

THE COMPANY (DEFINED BELOW) IS PERSONALLY OBLIGATED AND FULLY LIABLE FOR THE AMOUNT DUE UNDER THIS BOND AND, SUBJECT TO THE PROVISIONS OF THE INDENTURE (DEFINED BELOW), EACH HOLDER (AS DEFINED IN THE INDENTURE) HAS THE RIGHT TO SUE ON THIS BOND AND OBTAIN A PERSONAL JUDGMENT AGAINST THE COMPANY FOR SATISFACTION OF THE AMOUNT UNDER THIS BOND EITHER BEFORE OR AFTER A FORECLOSURE OF THE INDENTURE UNDER ALASKA STATUTES 09.45.170-09.45.220.

CHUGACH ELECTRIC ASSOCIATION, INC.

FIRST MORTGAGE BONDS, 2011 SERIES A DUE MARCH 15, 2041

NO. RB-2	ISSUANCE DATE: JANUARY 21, 2011
$13,900,000	PPN: 171265 A@0

FOR VALUE RECEIVED, the undersigned, CHUGACH ELECTRIC ASSOCIATION, INC. (herein called the “Company”), an electric cooperative organized and existing under the laws of the State of Alaska, hereby promises to pay to RELIASTAR LIFE INSURANCE COMPANY, or registered assigns, the principal sum of THIRTEEN MILLION NINE HUNDRED THOUSAND DOLLARS (or so much thereof as shall not have been prepaid) on March 15, 2041, with interest computed on the basis of a 360-day year of twelve 30-day months (a) on the unpaid balance hereof at a rate of 4.75% per annum (plus, upon the occurrence and during the continuation of an Interest Rate Adjustment Event (as hereinafter defined), an additional 2% per annum) from the date hereof, payable semiannually on the 15th day of each March and September, commencing on September 15, 2011, until the principal hereof shall have become due and payable, and (b) to the extent permitted by law, on any overdue payment (including any overdue prepayment) of principal, any overdue payment of interest, any overdue payment of any Make-Whole Amount (as defined in the First Supplemental Indenture referred to below), payable semiannually as aforesaid (or, at the option of the registered Holder hereof, on demand), at the Default Rate (as defined in the First Supplemental Indenture referred to below).

“Interest Rate Adjustment Event” means the occurrence of any of the following:

(a)            the Company defaults in the performance of Section 7.1(a) or (b) or Section 7.2 of the 2011 Series A Bond Purchase Agreement (as defined below); or

(b)            any representation or warranty made in writing by or on behalf of the Company or by any officer of the Company in the Indenture or the 2011 Series A Bond Purchase Agreement (as defined below) or in any writing furnished in connection with the transactions contemplated by the First Supplemental Indenture (referred to below) proves to have been false or incorrect in any material respect on the date as of which made and, with respect to representations and warranties made after the date hereof, for which accurate information has not since been provided in writing to the Holder of this Bond.

Subject to Section 11 of the 2011 Series A Bond Purchase Agreement (defined below), payments of principal of, interest on, and any Make-Whole Amount with respect to this Bond are to be made in lawful money of the United States of America in accordance with the terms of the Indenture.

This Bond is one of the 2011 Series A Bonds (herein called the “Bonds”) issued pursuant to the First Supplemental Indenture, dated as of January 20, 2011 (as from time to time amended, the “First Supplemental Indenture”), between the Company and the Trustee named therein which amends and supplements the Second Amended and Restated Indenture of Trust, dated as of January 20, 2011 (as amended and supplemented from time to time, the “Indenture”) and is entitled to the benefits thereof and the 2011 Series A Bond Purchase Agreement dated January 21, 2011 between the Company and the purchasers listed in Schedule A thereto (the “2011 Series A Bond Purchase Agreement”). Each Holder of this Bond will be deemed, by its acceptance hereof, to have (i) agreed to the confidentiality provisions set forth in Section 18 of the 2011 Series A Bond Purchase Agreement and (ii) made the representations set forth in Section 6 of the 2011 Series A Bond Purchase Agreement. Unless otherwise indicated, capitalized terms used in this Bond shall have the respective meanings ascribed to such terms in the First Supplemental Indenture.

This Bond shall be registered in the name of the Holder hereof. This Bond is transferable, as provided in the Indenture, only upon the registration books of the Company maintained by the Obligation Registrar, which shall be the Trustee, kept at its principal office, upon presentation at said office of this Bond with the written request of the registered owner hereof or his attorney duly authorized in writing, and a written instrument of transfer satisfactory to the Obligation Registrar duly executed by the registered owner or his duly authorized attorney.

The Bonds shall be issued as fully registered Bonds without coupons and in minimum denominations of $1.00 and any integral multiple of $1.00 in excess thereof. The Trustee may impose a charge sufficient to reimburse the Company or the Trustee for any tax, fee or other governmental charge required to be paid with respect to such exchange or any transfer of a Bond. The cost, if any, of preparing each new Bond issued upon such exchange or transfer, and any other expenses of the Company or the Trustee incurred in connection therewith, shall be paid by in accordance with Section 3.7 of the Indenture.

The Company will make the required prepayments of principal on this Bond on the dates and in the amount specified in the First Supplemental Indenture. This Bond is also subject to optional prepayment, in whole or from time to time in part, at the times and on the terms specified in First Supplemental Indenture, but not otherwise.

If an Event of Default under the Indenture occurs and is continuing, the principal of this Bond may be declared or otherwise become due and payable in the manner, at the price (including any applicable Make-Whole Amount) and with the effect provided in the Indenture. In the event that the principal of this Bond shall have been declared or otherwise become due and payable as described in the preceding sentence, then, in addition to paying the Holder hereof the entire unpaid principal amount of this Bond and all accrued and unpaid interest hereon (including, but not limited to, interest accrued hereon at the Default Rate), the Company shall pay to the Holder hereof (to the full extent permitted by applicable law) an amount equal to the Make-Whole Amount determined in respect of such principal amount.

- 2 -

The Holder of this Bond shall have no right to enforce the provisions of the Indenture, or to institute action to enforce the covenants therein, or to take any action with respect to any default under the Indenture, or to institute, appear in or defend any suit or other proceeding with respect thereto, except as provided in the Indenture and the 2011 Series A Bond Purchase Agreement.

All acts and proceedings required by law and by the Articles of Incorporation and Bylaws of the Company necessary to make the 2011 Series A Bonds issued under the Indenture, when executed by the Company, authenticated and delivered by the Trustee and duly issued, the valid, binding and legal obligations of the Company, in accordance with its terms, have been done and taken.

It is the intention of the Holder to comply with the usury laws of the State of Alaska and of the United States of America. This Bond is hereby expressly limited such that in no contingency or event whatsoever, whether by reason of acceleration, prepayment, or otherwise, shall the amount of interest contracted for, charged or received by the Holder for the use, forbearance, or detention of the principal indebtedness or interest hereof, which remains unpaid from time to time, exceed the highest maximum rate permitted by applicable law. If fulfillment of any provisions hereof, at the time of performance of such provisions shall be due, shall involve transcending the valid limits prescribed by applicable law, then, ipso facto, the obligation to be fulfilled shall be reduced to the maximum rate allowed by applicable law. If any Holder receives as interest an amount which will exceed the maximum rate allowed by applicable law, such amount shall be applied to the reduction of the principal amount owing hereunder or on account of any other principal indebtedness owed to Holder and not to the payment of interest, or if such excessive interest exceeds the unpaid balance of principal hereof and such other indebtedness, such excess shall be refunded. To the extent not prohibited by applicable law, determination of the maximum rate allowed by applicable law shall at all times be made by amortizing, prorating, allocating and spreading in equal parts during the full term of this Bond, all interest at any time contracted for, charged or received from the Company in connection with this Bond, so that the actual rate of interest on account of such indebtedness is uniform throughout the term of this Bond. The terms of this paragraph shall control and supersede any other provisions of this Bond.

This Bond shall be construed in accordance with and governed by the law of the State of Alaska.

No covenant or agreement contained in this Bond, the Indenture or the First Supplemental Indenture shall be deemed to be a covenant or agreement of any official, officer, agent or employee of the Company in his individual capacity, and no officer of the Company executing this Bond shall be liable personally on this Bond or be subject to any personal liability or accountability by reason of the issuance of this Bond.

This Bond shall not be entitled to any benefit under the Indenture or be valid until this Bond shall have been authenticated by the execution by the Trustee, or its successor as Trustee, of the Certificate of Authentication inscribed hereon.

- 3 -

IN WITNESS WHEREOF, the Company has caused this Bond to be executed by a duly authorized officer of the Company.

CHUGACH ELECTRIC ASSOCIATION, INC.
By:	/s/ Michael R. Cunningham
Name:
Title:	C.F.O.

- 4 -

This is one of the Obligations of the series designated therein referred to in the within-mentioned Indenture.

U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By:	/s/ Thomas Zrust
	Authorized Signatory

Date of Authentication: January 21, 2011

- 5 -

THIS 2011 SERIES A BOND HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM EXCEPT UNDER CIRCUMSTANCES WHERE NEITHER SUCH REGISTRATION NOR SUCH EXEMPTION IS REQUIRED BY LAW.

THE COMPANY (DEFINED BELOW) IS PERSONALLY OBLIGATED AND FULLY LIABLE FOR THE AMOUNT DUE UNDER THIS BOND AND, SUBJECT TO THE PROVISIONS OF THE INDENTURE (DEFINED BELOW), EACH HOLDER (AS DEFINED IN THE INDENTURE) HAS THE RIGHT TO SUE ON THIS BOND AND OBTAIN A PERSONAL JUDGMENT AGAINST THE COMPANY FOR SATISFACTION OF THE AMOUNT UNDER THIS BOND EITHER BEFORE OR AFTER A FORECLOSURE OF THE INDENTURE UNDER ALASKA STATUTES 09.45.170-09.45.220.

CHUGACH ELECTRIC ASSOCIATION, INC.

FIRST MORTGAGE BONDS, 2011 SERIES A DUE MARCH 15, 2041

NO. RB-3	ISSUANCE DATE: JANUARY 21, 2011
$9,900,000	PPN: 171265 A@0

FOR VALUE RECEIVED, the undersigned, CHUGACH ELECTRIC ASSOCIATION, INC. (herein called the “Company”), an electric cooperative organized and existing under the laws of the State of Alaska, hereby promises to pay to ING LIFE INSURANCE AND ANNUITY COMPANY, or registered assigns, the principal sum of NINE MILLION NINE HUNDRED THOUSAND DOLLARS (or so much thereof as shall not have been prepaid) on March 15, 2041, with interest computed on the basis of a 360-day year of twelve 30-day months (a) on the unpaid balance hereof at a rate of 4.75% per annum (plus, upon the occurrence and during the continuation of an Interest Rate Adjustment Event (as hereinafter defined), an additional 2% per annum) from the date hereof, payable semiannually on the 15th day of each March and September, commencing on September 15, 2011, until the principal hereof shall have become due and payable, and (b) to the extent permitted by law, on any overdue payment (including any overdue prepayment) of principal, any overdue payment of interest, any overdue payment of any Make-Whole Amount (as defined in the First Supplemental Indenture referred to below), payable semiannually as aforesaid (or, at the option of the registered Holder hereof, on demand), at the Default Rate (as defined in the First Supplemental Indenture referred to below).

“Interest Rate Adjustment Event” means the occurrence of any of the following:

(a)            the Company defaults in the performance of Section 7.1(a) or (b) or Section 7.2 of the 2011 Series A Bond Purchase Agreement (as defined below); or

(b)            any representation or warranty made in writing by or on behalf of the Company or by any officer of the Company in the Indenture or the 2011 Series A Bond Purchase Agreement (as defined below) or in any writing furnished in connection with the transactions contemplated by the First Supplemental Indenture (referred to below) proves to have been false or incorrect in any material respect on the date as of which made and, with respect to representations and warranties made after the date hereof, for which accurate information has not since been provided in writing to the Holder of this Bond.

Subject to Section 11 of the 2011 Series A Bond Purchase Agreement (defined below), payments of principal of, interest on, and any Make-Whole Amount with respect to this Bond are to be made in lawful money of the United States of America in accordance with the terms of the Indenture.

This Bond is one of the 2011 Series A Bonds (herein called the “Bonds”) issued pursuant to the First Supplemental Indenture, dated as of January 20, 2011 (as from time to time amended, the “First Supplemental Indenture”), between the Company and the Trustee named therein which amends and supplements the Second Amended and Restated Indenture of Trust, dated as of January 20, 2011 (as amended and supplemented from time to time, the “Indenture”) and is entitled to the benefits thereof and the 2011 Series A Bond Purchase Agreement dated January 21, 2011 between the Company and the purchasers listed in Schedule A thereto (the “2011 Series A Bond Purchase Agreement”). Each Holder of this Bond will be deemed, by its acceptance hereof, to have (i) agreed to the confidentiality provisions set forth in Section 18 of the 2011 Series A Bond Purchase Agreement and (ii) made the representations set forth in Section 6 of the 2011 Series A Bond Purchase Agreement. Unless otherwise indicated, capitalized terms used in this Bond shall have the respective meanings ascribed to such terms in the First Supplemental Indenture.

This Bond shall be registered in the name of the Holder hereof. This Bond is transferable, as provided in the Indenture, only upon the registration books of the Company maintained by the Obligation Registrar, which shall be the Trustee, kept at its principal office, upon presentation at said office of this Bond with the written request of the registered owner hereof or his attorney duly authorized in writing, and a written instrument of transfer satisfactory to the Obligation Registrar duly executed by the registered owner or his duly authorized attorney.

The Bonds shall be issued as fully registered Bonds without coupons and in minimum denominations of $1.00 and any integral multiple of $1.00 in excess thereof. The Trustee may impose a charge sufficient to reimburse the Company or the Trustee for any tax, fee or other governmental charge required to be paid with respect to such exchange or any transfer of a Bond. The cost, if any, of preparing each new Bond issued upon such exchange or transfer, and any other expenses of the Company or the Trustee incurred in connection therewith, shall be paid by in accordance with Section 3.7 of the Indenture.

The Company will make the required prepayments of principal on this Bond on the dates and in the amount specified in the First Supplemental Indenture. This Bond is also subject to optional prepayment, in whole or from time to time in part, at the times and on the terms specified in First Supplemental Indenture, but not otherwise.

If an Event of Default under the Indenture occurs and is continuing, the principal of this Bond may be declared or otherwise become due and payable in the manner, at the price (including any applicable Make-Whole Amount) and with the effect provided in the Indenture. In the event that the principal of this Bond shall have been declared or otherwise become due and payable as described in the preceding sentence, then, in addition to paying the Holder hereof the entire unpaid principal amount of this Bond and all accrued and unpaid interest hereon (including, but not limited to, interest accrued hereon at the Default Rate), the Company shall pay to the Holder hereof (to the full extent permitted by applicable law) an amount equal to the Make-Whole Amount determined in respect of such principal amount.

- 2 -

The Holder of this Bond shall have no right to enforce the provisions of the Indenture, or to institute action to enforce the covenants therein, or to take any action with respect to any default under the Indenture, or to institute, appear in or defend any suit or other proceeding with respect thereto, except as provided in the Indenture and the 2011 Series A Bond Purchase Agreement.

All acts and proceedings required by law and by the Articles of Incorporation and Bylaws of the Company necessary to make the 2011 Series A Bonds issued under the Indenture, when executed by the Company, authenticated and delivered by the Trustee and duly issued, the valid, binding and legal obligations of the Company, in accordance with its terms, have been done and taken.

It is the intention of the Holder to comply with the usury laws of the State of Alaska and of the United States of America. This Bond is hereby expressly limited such that in no contingency or event whatsoever, whether by reason of acceleration, prepayment, or otherwise, shall the amount of interest contracted for, charged or received by the Holder for the use, forbearance, or detention of the principal indebtedness or interest hereof, which remains unpaid from time to time, exceed the highest maximum rate permitted by applicable law. If fulfillment of any provisions hereof, at the time of performance of such provisions shall be due, shall involve transcending the valid limits prescribed by applicable law, then, ipso facto, the obligation to be fulfilled shall be reduced to the maximum rate allowed by applicable law. If any Holder receives as interest an amount which will exceed the maximum rate allowed by applicable law, such amount shall be applied to the reduction of the principal amount owing hereunder or on account of any other principal indebtedness owed to Holder and not to the payment of interest, or if such excessive interest exceeds the unpaid balance of principal hereof and such other indebtedness, such excess shall be refunded. To the extent not prohibited by applicable law, determination of the maximum rate allowed by applicable law shall at all times be made by amortizing, prorating, allocating and spreading in equal parts during the full term of this Bond, all interest at any time contracted for, charged or received from the Company in connection with this Bond, so that the actual rate of interest on account of such indebtedness is uniform throughout the term of this Bond. The terms of this paragraph shall control and supersede any other provisions of this Bond.

This Bond shall be construed in accordance with and governed by the law of the State of Alaska.

No covenant or agreement contained in this Bond, the Indenture or the First Supplemental Indenture shall be deemed to be a covenant or agreement of any official, officer, agent or employee of the Company in his individual capacity, and no officer of the Company executing this Bond shall be liable personally on this Bond or be subject to any personal liability or accountability by reason of the issuance of this Bond.

This Bond shall not be entitled to any benefit under the Indenture or be valid until this Bond shall have been authenticated by the execution by the Trustee, or its successor as Trustee, of the Certificate of Authentication inscribed hereon.

- 3 -

IN WITNESS WHEREOF, the Company has caused this Bond to be executed by a duly authorized officer of the Company.

CHUGACH ELECTRIC ASSOCIATION, INC.
By:	/s/ Michael R. Cunningham
Name:
Title:	C.F.O.

- 4 -

This is one of the Obligations of the series designated therein referred to in the within-mentioned Indenture.

U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By:	/s/ Thomas Zrust
	Authorized Signatory

Date of Authentication: January 21, 2011

- 5 -

THIS 2011 SERIES A BOND HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM EXCEPT UNDER CIRCUMSTANCES WHERE NEITHER SUCH REGISTRATION NOR SUCH EXEMPTION IS REQUIRED BY LAW.

THE COMPANY (DEFINED BELOW) IS PERSONALLY OBLIGATED AND FULLY LIABLE FOR THE AMOUNT DUE UNDER THIS BOND AND, SUBJECT TO THE PROVISIONS OF THE INDENTURE (DEFINED BELOW), EACH HOLDER (AS DEFINED IN THE INDENTURE) HAS THE RIGHT TO SUE ON THIS BOND AND OBTAIN A PERSONAL JUDGMENT AGAINST THE COMPANY FOR SATISFACTION OF THE AMOUNT UNDER THIS BOND EITHER BEFORE OR AFTER A FORECLOSURE OF THE INDENTURE UNDER ALASKA STATUTES 09.45.170-09.45.220.

CHUGACH ELECTRIC ASSOCIATION, INC.

FIRST MORTGAGE BONDS, 2011 SERIES A DUE MARCH 15, 2041

NO. RB-4	ISSUANCE DATE: JANUARY 21, 2011
$7,500,000	PPN: 171265 A@0

FOR VALUE RECEIVED, the undersigned, CHUGACH ELECTRIC ASSOCIATION, INC. (herein called the “Company”), an electric cooperative organized and existing under the laws of the State of Alaska, hereby promises to pay to ING USA ANNUITY AND LIFE INSURANCE COMPANY, or registered assigns, the principal sum of SEVEN MILLION FIVE HUNDRED THOUSAND DOLLARS (or so much thereof as shall not have been prepaid) on March 15, 2041, with interest computed on the basis of a 360-day year of twelve 30-day months (a) on the unpaid balance hereof at a rate of 4.75% per annum (plus, upon the occurrence and during the continuation of an Interest Rate Adjustment Event (as hereinafter defined), an additional 2% per annum) from the date hereof, payable semiannually on the 15th day of each March and September, commencing on September 15, 2011, until the principal hereof shall have become due and payable, and (b) to the extent permitted by law, on any overdue payment (including any overdue prepayment) of principal, any overdue payment of interest, any overdue payment of any Make-Whole Amount (as defined in the First Supplemental Indenture referred to below), payable semiannually as aforesaid (or, at the option of the registered Holder hereof, on demand), at the Default Rate (as defined in the First Supplemental Indenture referred to below).

“Interest Rate Adjustment Event” means the occurrence of any of the following:

(a)            the Company defaults in the performance of Section 7.1(a) or (b) or Section 7.2 of the 2011 Series A Bond Purchase Agreement (as defined below); or

(b)            any representation or warranty made in writing by or on behalf of the Company or by any officer of the Company in the Indenture or the 2011 Series A Bond Purchase Agreement (as defined below) or in any writing furnished in connection with the transactions contemplated by the First Supplemental Indenture (referred to below) proves to have been false or incorrect in any material respect on the date as of which made and, with respect to representations and warranties made after the date hereof, for which accurate information has not since been provided in writing to the Holder of this Bond.

Subject to Section 11 of the 2011 Series A Bond Purchase Agreement (defined below), payments of principal of, interest on, and any Make-Whole Amount with respect to this Bond are to be made in lawful money of the United States of America in accordance with the terms of the Indenture.

This Bond is one of the 2011 Series A Bonds (herein called the “Bonds”) issued pursuant to the First Supplemental Indenture, dated as of January 20, 2011 (as from time to time amended, the “First Supplemental Indenture”), between the Company and the Trustee named therein which amends and supplements the Second Amended and Restated Indenture of Trust, dated as of January 20, 2011 (as amended and supplemented from time to time, the “Indenture”) and is entitled to the benefits thereof and the 2011 Series A Bond Purchase Agreement dated January 21, 2011 between the Company and the purchasers listed in Schedule A thereto (the “2011 Series A Bond Purchase Agreement”). Each Holder of this Bond will be deemed, by its acceptance hereof, to have (i) agreed to the confidentiality provisions set forth in Section 18 of the 2011 Series A Bond Purchase Agreement and (ii) made the representations set forth in Section 6 of the 2011 Series A Bond Purchase Agreement. Unless otherwise indicated, capitalized terms used in this Bond shall have the respective meanings ascribed to such terms in the First Supplemental Indenture.

This Bond shall be registered in the name of the Holder hereof. This Bond is transferable, as provided in the Indenture, only upon the registration books of the Company maintained by the Obligation Registrar, which shall be the Trustee, kept at its principal office, upon presentation at said office of this Bond with the written request of the registered owner hereof or his attorney duly authorized in writing, and a written instrument of transfer satisfactory to the Obligation Registrar duly executed by the registered owner or his duly authorized attorney.

The Bonds shall be issued as fully registered Bonds without coupons and in minimum denominations of $1.00 and any integral multiple of $1.00 in excess thereof. The Trustee may impose a charge sufficient to reimburse the Company or the Trustee for any tax, fee or other governmental charge required to be paid with respect to such exchange or any transfer of a Bond. The cost, if any, of preparing each new Bond issued upon such exchange or transfer, and any other expenses of the Company or the Trustee incurred in connection therewith, shall be paid by in accordance with Section 3.7 of the Indenture.

The Company will make the required prepayments of principal on this Bond on the dates and in the amount specified in the First Supplemental Indenture. This Bond is also subject to optional prepayment, in whole or from time to time in part, at the times and on the terms specified in First Supplemental Indenture, but not otherwise.

If an Event of Default under the Indenture occurs and is continuing, the principal of this Bond may be declared or otherwise become due and payable in the manner, at the price (including any applicable Make-Whole Amount) and with the effect provided in the Indenture. In the event that the principal of this Bond shall have been declared or otherwise become due and payable as described in the preceding sentence, then, in addition to paying the Holder hereof the entire unpaid principal amount of this Bond and all accrued and unpaid interest hereon (including, but not limited to, interest accrued hereon at the Default Rate), the Company shall pay to the Holder hereof (to the full extent permitted by applicable law) an amount equal to the Make-Whole Amount determined in respect of such principal amount.

- 2 -

The Holder of this Bond shall have no right to enforce the provisions of the Indenture, or to institute action to enforce the covenants therein, or to take any action with respect to any default under the Indenture, or to institute, appear in or defend any suit or other proceeding with respect thereto, except as provided in the Indenture and the 2011 Series A Bond Purchase Agreement.

All acts and proceedings required by law and by the Articles of Incorporation and Bylaws of the Company necessary to make the 2011 Series A Bonds issued under the Indenture, when executed by the Company, authenticated and delivered by the Trustee and duly issued, the valid, binding and legal obligations of the Company, in accordance with its terms, have been done and taken.

It is the intention of the Holder to comply with the usury laws of the State of Alaska and of the United States of America. This Bond is hereby expressly limited such that in no contingency or event whatsoever, whether by reason of acceleration, prepayment, or otherwise, shall the amount of interest contracted for, charged or received by the Holder for the use, forbearance, or detention of the principal indebtedness or interest hereof, which remains unpaid from time to time, exceed the highest maximum rate permitted by applicable law. If fulfillment of any provisions hereof, at the time of performance of such provisions shall be due, shall involve transcending the valid limits prescribed by applicable law, then, ipso facto, the obligation to be fulfilled shall be reduced to the maximum rate allowed by applicable law. If any Holder receives as interest an amount which will exceed the maximum rate allowed by applicable law, such amount shall be applied to the reduction of the principal amount owing hereunder or on account of any other principal indebtedness owed to Holder and not to the payment of interest, or if such excessive interest exceeds the unpaid balance of principal hereof and such other indebtedness, such excess shall be refunded. To the extent not prohibited by applicable law, determination of the maximum rate allowed by applicable law shall at all times be made by amortizing, prorating, allocating and spreading in equal parts during the full term of this Bond, all interest at any time contracted for, charged or received from the Company in connection with this Bond, so that the actual rate of interest on account of such indebtedness is uniform throughout the term of this Bond. The terms of this paragraph shall control and supersede any other provisions of this Bond.

This Bond shall be construed in accordance with and governed by the law of the State of Alaska.

No covenant or agreement contained in this Bond, the Indenture or the First Supplemental Indenture shall be deemed to be a covenant or agreement of any official, officer, agent or employee of the Company in his individual capacity, and no officer of the Company executing this Bond shall be liable personally on this Bond or be subject to any personal liability or accountability by reason of the issuance of this Bond.

This Bond shall not be entitled to any benefit under the Indenture or be valid until this Bond shall have been authenticated by the execution by the Trustee, or its successor as Trustee, of the Certificate of Authentication inscribed hereon.

- 3 -

IN WITNESS WHEREOF, the Company has caused this Bond to be executed by a duly authorized officer of the Company.

CHUGACH ELECTRIC ASSOCIATION, INC.
By:	/s/ Michael R. Cunningham
Name:
Title:	C.F.O.

- 4 -

This is one of the Obligations of the series designated therein referred to in the within-mentioned Indenture.

U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By:	/s/ Thomas Zrust
	Authorized Signatory

Date of Authentication: January 21, 2011

- 5 -

THIS 2011 SERIES A BOND HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM EXCEPT UNDER CIRCUMSTANCES WHERE NEITHER SUCH REGISTRATION NOR SUCH EXEMPTION IS REQUIRED BY LAW.

THE COMPANY (DEFINED BELOW) IS PERSONALLY OBLIGATED AND FULLY LIABLE FOR THE AMOUNT DUE UNDER THIS BOND AND, SUBJECT TO THE PROVISIONS OF THE INDENTURE (DEFINED BELOW), EACH HOLDER (AS DEFINED IN THE INDENTURE) HAS THE RIGHT TO SUE ON THIS BOND AND OBTAIN A PERSONAL JUDGMENT AGAINST THE COMPANY FOR SATISFACTION OF THE AMOUNT UNDER THIS BOND EITHER BEFORE OR AFTER A FORECLOSURE OF THE INDENTURE UNDER ALASKA STATUTES 09.45.170-09.45.220.

CHUGACH ELECTRIC ASSOCIATION, INC.

FIRST MORTGAGE BONDS, 2011 SERIES A DUE MARCH 15, 2041

NO. RB-5	ISSUANCE DATE: JANUARY 21, 2011
$300,000	PPN: 171265 A@0

FOR VALUE RECEIVED, the undersigned, CHUGACH ELECTRIC ASSOCIATION, INC. (herein called the “Company”), an electric cooperative organized and existing under the laws of the State of Alaska, hereby promises to pay to RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK, or registered assigns, the principal sum of THREE HUNDRED THOUSAND DOLLARS (or so much thereof as shall not have been prepaid) on March 15, 2041, with interest computed on the basis of a 360-day year of twelve 30-day months (a) on the unpaid balance hereof at a rate of 4.75% per annum (plus, upon the occurrence and during the continuation of an Interest Rate Adjustment Event (as hereinafter defined), an additional 2% per annum) from the date hereof, payable semiannually on the 15th day of each March and September, commencing on September 15, 2011, until the principal hereof shall have become due and payable, and (b) to the extent permitted by law, on any overdue payment (including any overdue prepayment) of principal, any overdue payment of interest, any overdue payment of any Make-Whole Amount (as defined in the First Supplemental Indenture referred to below), payable semiannually as aforesaid (or, at the option of the registered Holder hereof, on demand), at the Default Rate (as defined in the First Supplemental Indenture referred to below).

“Interest Rate Adjustment Event” means the occurrence of any of the following:

(a)            the Company defaults in the performance of Section 7.1(a) or (b) or Section 7.2 of the 2011 Series A Bond Purchase Agreement (as defined below); or

(b)            any representation or warranty made in writing by or on behalf of the Company or by any officer of the Company in the Indenture or the 2011 Series A Bond Purchase Agreement (as defined below) or in any writing furnished in connection with the transactions contemplated by the First Supplemental Indenture (referred to below) proves to have been false or incorrect in any material respect on the date as of which made and, with respect to representations and warranties made after the date hereof, for which accurate information has not since been provided in writing to the Holder of this Bond.

Subject to Section 11 of the 2011 Series A Bond Purchase Agreement (defined below), payments of principal of, interest on, and any Make-Whole Amount with respect to this Bond are to be made in lawful money of the United States of America in accordance with the terms of the Indenture.

This Bond is one of the 2011 Series A Bonds (herein called the “Bonds”) issued pursuant to the First Supplemental Indenture, dated as of January 20, 2011 (as from time to time amended, the “First Supplemental Indenture”), between the Company and the Trustee named therein which amends and supplements the Second Amended and Restated Indenture of Trust, dated as of January 20, 2011 (as amended and supplemented from time to time, the “Indenture”) and is entitled to the benefits thereof and the 2011 Series A Bond Purchase Agreement dated January 21, 2011 between the Company and the purchasers listed in Schedule A thereto (the “2011 Series A Bond Purchase Agreement”). Each Holder of this Bond will be deemed, by its acceptance hereof, to have (i) agreed to the confidentiality provisions set forth in Section 18 of the 2011 Series A Bond Purchase Agreement and (ii) made the representations set forth in Section 6 of the 2011 Series A Bond Purchase Agreement. Unless otherwise indicated, capitalized terms used in this Bond shall have the respective meanings ascribed to such terms in the First Supplemental Indenture.

This Bond shall be registered in the name of the Holder hereof. This Bond is transferable, as provided in the Indenture, only upon the registration books of the Company maintained by the Obligation Registrar, which shall be the Trustee, kept at its principal office, upon presentation at said office of this Bond with the written request of the registered owner hereof or his attorney duly authorized in writing, and a written instrument of transfer satisfactory to the Obligation Registrar duly executed by the registered owner or his duly authorized attorney.

The Bonds shall be issued as fully registered Bonds without coupons and in minimum denominations of $1.00 and any integral multiple of $1.00 in excess thereof. The Trustee may impose a charge sufficient to reimburse the Company or the Trustee for any tax, fee or other governmental charge required to be paid with respect to such exchange or any transfer of a Bond. The cost, if any, of preparing each new Bond issued upon such exchange or transfer, and any other expenses of the Company or the Trustee incurred in connection therewith, shall be paid by in accordance with Section 3.7 of the Indenture.

The Company will make the required prepayments of principal on this Bond on the dates and in the amount specified in the First Supplemental Indenture. This Bond is also subject to optional prepayment, in whole or from time to time in part, at the times and on the terms specified in First Supplemental Indenture, but not otherwise.

If an Event of Default under the Indenture occurs and is continuing, the principal of this Bond may be declared or otherwise become due and payable in the manner, at the price (including any applicable Make-Whole Amount) and with the effect provided in the Indenture. In the event that the principal of this Bond shall have been declared or otherwise become due and payable as described in the preceding sentence, then, in addition to paying the Holder hereof the entire unpaid principal amount of this Bond and all accrued and unpaid interest hereon (including, but not limited to, interest accrued hereon at the Default Rate), the Company shall pay to the Holder hereof (to the full extent permitted by applicable law) an amount equal to the Make-Whole Amount determined in respect of such principal amount.

- 2 -

The Holder of this Bond shall have no right to enforce the provisions of the Indenture, or to institute action to enforce the covenants therein, or to take any action with respect to any default under the Indenture, or to institute, appear in or defend any suit or other proceeding with respect thereto, except as provided in the Indenture and the 2011 Series A Bond Purchase Agreement.

All acts and proceedings required by law and by the Articles of Incorporation and Bylaws of the Company necessary to make the 2011 Series A Bonds issued under the Indenture, when executed by the Company, authenticated and delivered by the Trustee and duly issued, the valid, binding and legal obligations of the Company, in accordance with its terms, have been done and taken.

It is the intention of the Holder to comply with the usury laws of the State of Alaska and of the United States of America. This Bond is hereby expressly limited such that in no contingency or event whatsoever, whether by reason of acceleration, prepayment, or otherwise, shall the amount of interest contracted for, charged or received by the Holder for the use, forbearance, or detention of the principal indebtedness or interest hereof, which remains unpaid from time to time, exceed the highest maximum rate permitted by applicable law. If fulfillment of any provisions hereof, at the time of performance of such provisions shall be due, shall involve transcending the valid limits prescribed by applicable law, then, ipso facto, the obligation to be fulfilled shall be reduced to the maximum rate allowed by applicable law. If any Holder receives as interest an amount which will exceed the maximum rate allowed by applicable law, such amount shall be applied to the reduction of the principal amount owing hereunder or on account of any other principal indebtedness owed to Holder and not to the payment of interest, or if such excessive interest exceeds the unpaid balance of principal hereof and such other indebtedness, such excess shall be refunded. To the extent not prohibited by applicable law, determination of the maximum rate allowed by applicable law shall at all times be made by amortizing, prorating, allocating and spreading in equal parts during the full term of this Bond, all interest at any time contracted for, charged or received from the Company in connection with this Bond, so that the actual rate of interest on account of such indebtedness is uniform throughout the term of this Bond. The terms of this paragraph shall control and supersede any other provisions of this Bond.

This Bond shall be construed in accordance with and governed by the law of the State of Alaska.

No covenant or agreement contained in this Bond, the Indenture or the First Supplemental Indenture shall be deemed to be a covenant or agreement of any official, officer, agent or employee of the Company in his individual capacity, and no officer of the Company executing this Bond shall be liable personally on this Bond or be subject to any personal liability or accountability by reason of the issuance of this Bond.

This Bond shall not be entitled to any benefit under the Indenture or be valid until this Bond shall have been authenticated by the execution by the Trustee, or its successor as Trustee, of the Certificate of Authentication inscribed hereon.

- 3 -

IN WITNESS WHEREOF, the Company has caused this Bond to be executed by a duly authorized officer of the Company.

CHUGACH ELECTRIC ASSOCIATION, INC.
By:	/s/ Michael R. Cunningham
Name:
Title:	C.F.O.

- 4 -

This is one of the Obligations of the series designated therein referred to in the within-mentioned Indenture.

U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By:	/s/ Thomas Zrust
	Authorized Signatory

Date of Authentication: January 21, 2011

- 5 -

THIS 2011 SERIES A BOND HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM EXCEPT UNDER CIRCUMSTANCES WHERE NEITHER SUCH REGISTRATION NOR SUCH EXEMPTION IS REQUIRED BY LAW.

THE COMPANY (DEFINED BELOW) IS PERSONALLY OBLIGATED AND FULLY LIABLE FOR THE AMOUNT DUE UNDER THIS BOND AND, SUBJECT TO THE PROVISIONS OF THE INDENTURE (DEFINED BELOW), EACH HOLDER (AS DEFINED IN THE INDENTURE) HAS THE RIGHT TO SUE ON THIS BOND AND OBTAIN A PERSONAL JUDGMENT AGAINST THE COMPANY FOR SATISFACTION OF THE AMOUNT UNDER THIS BOND EITHER BEFORE OR AFTER A FORECLOSURE OF THE INDENTURE UNDER ALASKA STATUTES 09.45.170-09.45.220.

CHUGACH ELECTRIC ASSOCIATION, INC.

FIRST MORTGAGE BONDS, 2011 SERIES A DUE MARCH 15, 2041

NO. RB-6	ISSUANCE DATE: JANUARY 21, 2011
$40,000,000	PPN: 171265 A@0

FOR VALUE RECEIVED, the undersigned, CHUGACH ELECTRIC ASSOCIATION, INC. (herein called the “Company”), an electric cooperative organized and existing under the laws of the State of Alaska, hereby promises to pay to HARE & CO., or registered assigns, the principal sum of FORTY MILLION DOLLARS (or so much thereof as shall not have been prepaid) on March 15, 2041, with interest computed on the basis of a 360-day year of twelve 30-day months (a) on the unpaid balance hereof at a rate of 4.75% per annum (plus, upon the occurrence and during the continuation of an Interest Rate Adjustment Event (as hereinafter defined), an additional 2% per annum) from the date hereof, payable semiannually on the 15th day of each March and September, commencing on September 15, 2011, until the principal hereof shall have become due and payable, and (b) to the extent permitted by law, on any overdue payment (including any overdue prepayment) of principal, any overdue payment of interest, any overdue payment of any Make-Whole Amount (as defined in the First Supplemental Indenture referred to below), payable semiannually as aforesaid (or, at the option of the registered Holder hereof, on demand), at the Default Rate (as defined in the First Supplemental Indenture referred to below).

“Interest Rate Adjustment Event” means the occurrence of any of the following:

(a)            the Company defaults in the performance of Section 7.1(a) or (b) or Section 7.2 of the 2011 Series A Bond Purchase Agreement (as defined below); or

(b)            any representation or warranty made in writing by or on behalf of the Company or by any officer of the Company in the Indenture or the 2011 Series A Bond Purchase Agreement (as defined below) or in any writing furnished in connection with the transactions contemplated by the First Supplemental Indenture (referred to below) proves to have been false or incorrect in any material respect on the date as of which made and, with respect to representations and warranties made after the date hereof, for which accurate information has not since been provided in writing to the Holder of this Bond.

Subject to Section 11 of the 2011 Series A Bond Purchase Agreement (defined below), payments of principal of, interest on, and any Make-Whole Amount with respect to this Bond are to be made in lawful money of the United States of America in accordance with the terms of the Indenture.

This Bond is one of the 2011 Series A Bonds (herein called the “Bonds”) issued pursuant to the First Supplemental Indenture, dated as of January 20, 2011 (as from time to time amended, the “First Supplemental Indenture”), between the Company and the Trustee named therein which amends and supplements the Second Amended and Restated Indenture of Trust, dated as of January 20, 2011 (as amended and supplemented from time to time, the “Indenture”) and is entitled to the benefits thereof and the 2011 Series A Bond Purchase Agreement dated January 21, 2011 between the Company and the purchasers listed in Schedule A thereto (the “2011 Series A Bond Purchase Agreement”). Each Holder of this Bond will be deemed, by its acceptance hereof, to have (i) agreed to the confidentiality provisions set forth in Section 18 of the 2011 Series A Bond Purchase Agreement and (ii) made the representations set forth in Section 6 of the 2011 Series A Bond Purchase Agreement. Unless otherwise indicated, capitalized terms used in this Bond shall have the respective meanings ascribed to such terms in the First Supplemental Indenture.

This Bond shall be registered in the name of the Holder hereof. This Bond is transferable, as provided in the Indenture, only upon the registration books of the Company maintained by the Obligation Registrar, which shall be the Trustee, kept at its principal office, upon presentation at said office of this Bond with the written request of the registered owner hereof or his attorney duly authorized in writing, and a written instrument of transfer satisfactory to the Obligation Registrar duly executed by the registered owner or his duly authorized attorney.

The Bonds shall be issued as fully registered Bonds without coupons and in minimum denominations of $1.00 and any integral multiple of $1.00 in excess thereof. The Trustee may impose a charge sufficient to reimburse the Company or the Trustee for any tax, fee or other governmental charge required to be paid with respect to such exchange or any transfer of a Bond. The cost, if any, of preparing each new Bond issued upon such exchange or transfer, and any other expenses of the Company or the Trustee incurred in connection therewith, shall be paid by in accordance with Section 3.7 of the Indenture.

The Company will make the required prepayments of principal on this Bond on the dates and in the amount specified in the First Supplemental Indenture. This Bond is also subject to optional prepayment, in whole or from time to time in part, at the times and on the terms specified in First Supplemental Indenture, but not otherwise.

If an Event of Default under the Indenture occurs and is continuing, the principal of this Bond may be declared or otherwise become due and payable in the manner, at the price (including any applicable Make-Whole Amount) and with the effect provided in the Indenture. In the event that the principal of this Bond shall have been declared or otherwise become due and payable as described in the preceding sentence, then, in addition to paying the Holder hereof the entire unpaid principal amount of this Bond and all accrued and unpaid interest hereon (including, but not limited to, interest accrued hereon at the Default Rate), the Company shall pay to the Holder hereof (to the full extent permitted by applicable law) an amount equal to the Make-Whole Amount determined in respect of such principal amount.

- 2 -

The Holder of this Bond shall have no right to enforce the provisions of the Indenture, or to institute action to enforce the covenants therein, or to take any action with respect to any default under the Indenture, or to institute, appear in or defend any suit or other proceeding with respect thereto, except as provided in the Indenture and the 2011 Series A Bond Purchase Agreement.

All acts and proceedings required by law and by the Articles of Incorporation and Bylaws of the Company necessary to make the 2011 Series A Bonds issued under the Indenture, when executed by the Company, authenticated and delivered by the Trustee and duly issued, the valid, binding and legal obligations of the Company, in accordance with its terms, have been done and taken.

It is the intention of the Holder to comply with the usury laws of the State of Alaska and of the United States of America. This Bond is hereby expressly limited such that in no contingency or event whatsoever, whether by reason of acceleration, prepayment, or otherwise, shall the amount of interest contracted for, charged or received by the Holder for the use, forbearance, or detention of the principal indebtedness or interest hereof, which remains unpaid from time to time, exceed the highest maximum rate permitted by applicable law. If fulfillment of any provisions hereof, at the time of performance of such provisions shall be due, shall involve transcending the valid limits prescribed by applicable law, then, ipso facto, the obligation to be fulfilled shall be reduced to the maximum rate allowed by applicable law. If any Holder receives as interest an amount which will exceed the maximum rate allowed by applicable law, such amount shall be applied to the reduction of the principal amount owing hereunder or on account of any other principal indebtedness owed to Holder and not to the payment of interest, or if such excessive interest exceeds the unpaid balance of principal hereof and such other indebtedness, such excess shall be refunded. To the extent not prohibited by applicable law, determination of the maximum rate allowed by applicable law shall at all times be made by amortizing, prorating, allocating and spreading in equal parts during the full term of this Bond, all interest at any time contracted for, charged or received from the Company in connection with this Bond, so that the actual rate of interest on account of such indebtedness is uniform throughout the term of this Bond. The terms of this paragraph shall control and supersede any other provisions of this Bond.

This Bond shall be construed in accordance with and governed by the law of the State of Alaska.

No covenant or agreement contained in this Bond, the Indenture or the First Supplemental Indenture shall be deemed to be a covenant or agreement of any official, officer, agent or employee of the Company in his individual capacity, and no officer of the Company executing this Bond shall be liable personally on this Bond or be subject to any personal liability or accountability by reason of the issuance of this Bond.

This Bond shall not be entitled to any benefit under the Indenture or be valid until this Bond shall have been authenticated by the execution by the Trustee, or its successor as Trustee, of the Certificate of Authentication inscribed hereon.

- 3 -

IN WITNESS WHEREOF, the Company has caused this Bond to be executed by a duly authorized officer of the Company.

CHUGACH ELECTRIC ASSOCIATION, INC.
By:	/s/ Michael R. Cunningham
Name:
Title:	C.F.O.

- 4 -

This is one of the Obligations of the series designated therein referred to in the within-mentioned Indenture.

U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By:	/s/ Thomas Zrust
	Authorized Signatory

Date of Authentication: January 21, 2011

- 5 -

THIS 2011 SERIES A BOND HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM EXCEPT UNDER CIRCUMSTANCES WHERE NEITHER SUCH REGISTRATION NOR SUCH EXEMPTION IS REQUIRED BY LAW.

THE COMPANY (DEFINED BELOW) IS PERSONALLY OBLIGATED AND FULLY LIABLE FOR THE AMOUNT DUE UNDER THIS BOND AND, SUBJECT TO THE PROVISIONS OF THE INDENTURE (DEFINED BELOW), EACH HOLDER (AS DEFINED IN THE INDENTURE) HAS THE RIGHT TO SUE ON THIS BOND AND OBTAIN A PERSONAL JUDGMENT AGAINST THE COMPANY FOR SATISFACTION OF THE AMOUNT UNDER THIS BOND EITHER BEFORE OR AFTER A FORECLOSURE OF THE INDENTURE UNDER ALASKA STATUTES 09.45.170-09.45.220.

CHUGACH ELECTRIC ASSOCIATION, INC.

FIRST MORTGAGE BONDS, 2011 SERIES A DUE MARCH 15, 2041

NO. RB-7	ISSUANCE DATE: JANUARY 21, 2011
$16,000,000	PPN: 171265 A@0

FOR VALUE RECEIVED, the undersigned, CHUGACH ELECTRIC ASSOCIATION, INC. (herein called the “Company”), an electric cooperative organized and existing under the laws of the State of Alaska, hereby promises to pay to THE LINCOLN NATIONAL LIFE INSURANCE COMPANY, or registered assigns, the principal sum of SIXTEEN MILLION DOLLARS (or so much thereof as shall not have been prepaid) on March 15, 2041, with interest computed on the basis of a 360-day year of twelve 30-day months (a) on the unpaid balance hereof at a rate of 4.75% per annum (plus, upon the occurrence and during the continuation of an Interest Rate Adjustment Event (as hereinafter defined), an additional 2% per annum) from the date hereof, payable semiannually on the 15th day of each March and September, commencing on September 15, 2011, until the principal hereof shall have become due and payable, and (b) to the extent permitted by law, on any overdue payment (including any overdue prepayment) of principal, any overdue payment of interest, any overdue payment of any Make-Whole Amount (as defined in the First Supplemental Indenture referred to below), payable semiannually as aforesaid (or, at the option of the registered Holder hereof, on demand), at the Default Rate (as defined in the First Supplemental Indenture referred to below).

“Interest Rate Adjustment Event” means the occurrence of any of the following:

(a)            the Company defaults in the performance of Section 7.1(a) or (b) or Section 7.2 of the 2011 Series A Bond Purchase Agreement (as defined below); or

(b)            any representation or warranty made in writing by or on behalf of the Company or by any officer of the Company in the Indenture or the 2011 Series A Bond Purchase Agreement (as defined below) or in any writing furnished in connection with the transactions contemplated by the First Supplemental Indenture (referred to below) proves to have been false or incorrect in any material respect on the date as of which made and, with respect to representations and warranties made after the date hereof, for which accurate information has not since been provided in writing to the Holder of this Bond.

Subject to Section 11 of the 2011 Series A Bond Purchase Agreement (defined below), payments of principal of, interest on, and any Make-Whole Amount with respect to this Bond are to be made in lawful money of the United States of America in accordance with the terms of the Indenture.

This Bond is one of the 2011 Series A Bonds (herein called the “Bonds”) issued pursuant to the First Supplemental Indenture, dated as of January 20, 2011 (as from time to time amended, the “First Supplemental Indenture”), between the Company and the Trustee named therein which amends and supplements the Second Amended and Restated Indenture of Trust, dated as of January 20, 2011 (as amended and supplemented from time to time, the “Indenture”) and is entitled to the benefits thereof and the 2011 Series A Bond Purchase Agreement dated January 21, 2011 between the Company and the purchasers listed in Schedule A thereto (the “2011 Series A Bond Purchase Agreement”). Each Holder of this Bond will be deemed, by its acceptance hereof, to have (i) agreed to the confidentiality provisions set forth in Section 18 of the 2011 Series A Bond Purchase Agreement and (ii) made the representations set forth in Section 6 of the 2011 Series A Bond Purchase Agreement. Unless otherwise indicated, capitalized terms used in this Bond shall have the respective meanings ascribed to such terms in the First Supplemental Indenture.

This Bond shall be registered in the name of the Holder hereof. This Bond is transferable, as provided in the Indenture, only upon the registration books of the Company maintained by the Obligation Registrar, which shall be the Trustee, kept at its principal office, upon presentation at said office of this Bond with the written request of the registered owner hereof or his attorney duly authorized in writing, and a written instrument of transfer satisfactory to the Obligation Registrar duly executed by the registered owner or his duly authorized attorney.

The Bonds shall be issued as fully registered Bonds without coupons and in minimum denominations of $1.00 and any integral multiple of $1.00 in excess thereof. The Trustee may impose a charge sufficient to reimburse the Company or the Trustee for any tax, fee or other governmental charge required to be paid with respect to such exchange or any transfer of a Bond. The cost, if any, of preparing each new Bond issued upon such exchange or transfer, and any other expenses of the Company or the Trustee incurred in connection therewith, shall be paid by in accordance with Section 3.7 of the Indenture.

The Company will make the required prepayments of principal on this Bond on the dates and in the amount specified in the First Supplemental Indenture. This Bond is also subject to optional prepayment, in whole or from time to time in part, at the times and on the terms specified in First Supplemental Indenture, but not otherwise.

If an Event of Default under the Indenture occurs and is continuing, the principal of this Bond may be declared or otherwise become due and payable in the manner, at the price (including any applicable Make-Whole Amount) and with the effect provided in the Indenture. In the event that the principal of this Bond shall have been declared or otherwise become due and payable as described in the preceding sentence, then, in addition to paying the Holder hereof the entire unpaid principal amount of this Bond and all accrued and unpaid interest hereon (including, but not limited to, interest accrued hereon at the Default Rate), the Company shall pay to the Holder hereof (to the full extent permitted by applicable law) an amount equal to the Make-Whole Amount determined in respect of such principal amount.

- 2 -

The Holder of this Bond shall have no right to enforce the provisions of the Indenture, or to institute action to enforce the covenants therein, or to take any action with respect to any default under the Indenture, or to institute, appear in or defend any suit or other proceeding with respect thereto, except as provided in the Indenture and the 2011 Series A Bond Purchase Agreement.

All acts and proceedings required by law and by the Articles of Incorporation and Bylaws of the Company necessary to make the 2011 Series A Bonds issued under the Indenture, when executed by the Company, authenticated and delivered by the Trustee and duly issued, the valid, binding and legal obligations of the Company, in accordance with its terms, have been done and taken.

It is the intention of the Holder to comply with the usury laws of the State of Alaska and of the United States of America. This Bond is hereby expressly limited such that in no contingency or event whatsoever, whether by reason of acceleration, prepayment, or otherwise, shall the amount of interest contracted for, charged or received by the Holder for the use, forbearance, or detention of the principal indebtedness or interest hereof, which remains unpaid from time to time, exceed the highest maximum rate permitted by applicable law. If fulfillment of any provisions hereof, at the time of performance of such provisions shall be due, shall involve transcending the valid limits prescribed by applicable law, then, ipso facto, the obligation to be fulfilled shall be reduced to the maximum rate allowed by applicable law. If any Holder receives as interest an amount which will exceed the maximum rate allowed by applicable law, such amount shall be applied to the reduction of the principal amount owing hereunder or on account of any other principal indebtedness owed to Holder and not to the payment of interest, or if such excessive interest exceeds the unpaid balance of principal hereof and such other indebtedness, such excess shall be refunded. To the extent not prohibited by applicable law, determination of the maximum rate allowed by applicable law shall at all times be made by amortizing, prorating, allocating and spreading in equal parts during the full term of this Bond, all interest at any time contracted for, charged or received from the Company in connection with this Bond, so that the actual rate of interest on account of such indebtedness is uniform throughout the term of this Bond. The terms of this paragraph shall control and supersede any other provisions of this Bond.

This Bond shall be construed in accordance with and governed by the law of the State of Alaska.

No covenant or agreement contained in this Bond, the Indenture or the First Supplemental Indenture shall be deemed to be a covenant or agreement of any official, officer, agent or employee of the Company in his individual capacity, and no officer of the Company executing this Bond shall be liable personally on this Bond or be subject to any personal liability or accountability by reason of the issuance of this Bond.

This Bond shall not be entitled to any benefit under the Indenture or be valid until this Bond shall have been authenticated by the execution by the Trustee, or its successor as Trustee, of the Certificate of Authentication inscribed hereon.

- 3 -

IN WITNESS WHEREOF, the Company has caused this Bond to be executed by a duly authorized officer of the Company.

CHUGACH ELECTRIC ASSOCIATION, INC.
By:	/s/ Michael R. Cunningham
Name:
Title:	C.F.O.

- 4 -

This is one of the Obligations of the series designated therein referred to in the within-mentioned Indenture.

U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By:	/s/ Thomas Zrust
	Authorized Signatory

Date of Authentication: January 21, 2011

- 5 -

THIS 2011 SERIES A BOND HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM EXCEPT UNDER CIRCUMSTANCES WHERE NEITHER SUCH REGISTRATION NOR SUCH EXEMPTION IS REQUIRED BY LAW.

THE COMPANY (DEFINED BELOW) IS PERSONALLY OBLIGATED AND FULLY LIABLE FOR THE AMOUNT DUE UNDER THIS BOND AND, SUBJECT TO THE PROVISIONS OF THE INDENTURE (DEFINED BELOW), EACH HOLDER (AS DEFINED IN THE INDENTURE) HAS THE RIGHT TO SUE ON THIS BOND AND OBTAIN A PERSONAL JUDGMENT AGAINST THE COMPANY FOR SATISFACTION OF THE AMOUNT UNDER THIS BOND EITHER BEFORE OR AFTER A FORECLOSURE OF THE INDENTURE UNDER ALASKA STATUTES 09.45.170-09.45.220.

CHUGACH ELECTRIC ASSOCIATION, INC.

FIRST MORTGAGE BONDS, 2011 SERIES A DUE MARCH 15, 2041

NO. RB-8	ISSUANCE DATE: JANUARY 21, 2011
$9,000,000	PPN: 171265 A@0

FOR VALUE RECEIVED, the undersigned, CHUGACH ELECTRIC ASSOCIATION, INC. (herein called the “Company”), an electric cooperative organized and existing under the laws of the State of Alaska, hereby promises to pay to THE LINCOLN NATIONAL LIFE INSURANCE COMPANY, or registered assigns, the principal sum of NINE MILLION DOLLARS (or so much thereof as shall not have been prepaid) on March 15, 2041, with interest computed on the basis of a 360-day year of twelve 30-day months (a) on the unpaid balance hereof at a rate of 4.75% per annum (plus, upon the occurrence and during the continuation of an Interest Rate Adjustment Event (as hereinafter defined), an additional 2% per annum) from the date hereof, payable semiannually on the 15th day of each March and September, commencing on September 15, 2011, until the principal hereof shall have become due and payable, and (b) to the extent permitted by law, on any overdue payment (including any overdue prepayment) of principal, any overdue payment of interest, any overdue payment of any Make-Whole Amount (as defined in the First Supplemental Indenture referred to below), payable semiannually as aforesaid (or, at the option of the registered Holder hereof, on demand), at the Default Rate (as defined in the First Supplemental Indenture referred to below).

“Interest Rate Adjustment Event” means the occurrence of any of the following:

(a)            the Company defaults in the performance of Section 7.1(a) or (b) or Section 7.2 of the 2011 Series A Bond Purchase Agreement (as defined below); or

(b)            any representation or warranty made in writing by or on behalf of the Company or by any officer of the Company in the Indenture or the 2011 Series A Bond Purchase Agreement (as defined below) or in any writing furnished in connection with the transactions contemplated by the First Supplemental Indenture (referred to below) proves to have been false or incorrect in any material respect on the date as of which made and, with respect to representations and warranties made after the date hereof, for which accurate information has not since been provided in writing to the Holder of this Bond.

Subject to Section 11 of the 2011 Series A Bond Purchase Agreement (defined below), payments of principal of, interest on, and any Make-Whole Amount with respect to this Bond are to be made in lawful money of the United States of America in accordance with the terms of the Indenture.

This Bond is one of the 2011 Series A Bonds (herein called the “Bonds”) issued pursuant to the First Supplemental Indenture, dated as of January 20, 2011 (as from time to time amended, the “First Supplemental Indenture”), between the Company and the Trustee named therein which amends and supplements the Second Amended and Restated Indenture of Trust, dated as of January 20, 2011 (as amended and supplemented from time to time, the “Indenture”) and is entitled to the benefits thereof and the 2011 Series A Bond Purchase Agreement dated January 21, 2011 between the Company and the purchasers listed in Schedule A thereto (the “2011 Series A Bond Purchase Agreement”). Each Holder of this Bond will be deemed, by its acceptance hereof, to have (i) agreed to the confidentiality provisions set forth in Section 18 of the 2011 Series A Bond Purchase Agreement and (ii) made the representations set forth in Section 6 of the 2011 Series A Bond Purchase Agreement. Unless otherwise indicated, capitalized terms used in this Bond shall have the respective meanings ascribed to such terms in the First Supplemental Indenture.

This Bond shall be registered in the name of the Holder hereof. This Bond is transferable, as provided in the Indenture, only upon the registration books of the Company maintained by the Obligation Registrar, which shall be the Trustee, kept at its principal office, upon presentation at said office of this Bond with the written request of the registered owner hereof or his attorney duly authorized in writing, and a written instrument of transfer satisfactory to the Obligation Registrar duly executed by the registered owner or his duly authorized attorney.

The Bonds shall be issued as fully registered Bonds without coupons and in minimum denominations of $1.00 and any integral multiple of $1.00 in excess thereof. The Trustee may impose a charge sufficient to reimburse the Company or the Trustee for any tax, fee or other governmental charge required to be paid with respect to such exchange or any transfer of a Bond. The cost, if any, of preparing each new Bond issued upon such exchange or transfer, and any other expenses of the Company or the Trustee incurred in connection therewith, shall be paid by in accordance with Section 3.7 of the Indenture.

The Company will make the required prepayments of principal on this Bond on the dates and in the amount specified in the First Supplemental Indenture. This Bond is also subject to optional prepayment, in whole or from time to time in part, at the times and on the terms specified in First Supplemental Indenture, but not otherwise.

If an Event of Default under the Indenture occurs and is continuing, the principal of this Bond may be declared or otherwise become due and payable in the manner, at the price (including any applicable Make-Whole Amount) and with the effect provided in the Indenture. In the event that the principal of this Bond shall have been declared or otherwise become due and payable as described in the preceding sentence, then, in addition to paying the Holder hereof the entire unpaid principal amount of this Bond and all accrued and unpaid interest hereon (including, but not limited to, interest accrued hereon at the Default Rate), the Company shall pay to the Holder hereof (to the full extent permitted by applicable law) an amount equal to the Make-Whole Amount determined in respect of such principal amount.

- 2 -

The Holder of this Bond shall have no right to enforce the provisions of the Indenture, or to institute action to enforce the covenants therein, or to take any action with respect to any default under the Indenture, or to institute, appear in or defend any suit or other proceeding with respect thereto, except as provided in the Indenture and the 2011 Series A Bond Purchase Agreement.

All acts and proceedings required by law and by the Articles of Incorporation and Bylaws of the Company necessary to make the 2011 Series A Bonds issued under the Indenture, when executed by the Company, authenticated and delivered by the Trustee and duly issued, the valid, binding and legal obligations of the Company, in accordance with its terms, have been done and taken.

It is the intention of the Holder to comply with the usury laws of the State of Alaska and of the United States of America. This Bond is hereby expressly limited such that in no contingency or event whatsoever, whether by reason of acceleration, prepayment, or otherwise, shall the amount of interest contracted for, charged or received by the Holder for the use, forbearance, or detention of the principal indebtedness or interest hereof, which remains unpaid from time to time, exceed the highest maximum rate permitted by applicable law. If fulfillment of any provisions hereof, at the time of performance of such provisions shall be due, shall involve transcending the valid limits prescribed by applicable law, then, ipso facto, the obligation to be fulfilled shall be reduced to the maximum rate allowed by applicable law. If any Holder receives as interest an amount which will exceed the maximum rate allowed by applicable law, such amount shall be applied to the reduction of the principal amount owing hereunder or on account of any other principal indebtedness owed to Holder and not to the payment of interest, or if such excessive interest exceeds the unpaid balance of principal hereof and such other indebtedness, such excess shall be refunded. To the extent not prohibited by applicable law, determination of the maximum rate allowed by applicable law shall at all times be made by amortizing, prorating, allocating and spreading in equal parts during the full term of this Bond, all interest at any time contracted for, charged or received from the Company in connection with this Bond, so that the actual rate of interest on account of such indebtedness is uniform throughout the term of this Bond. The terms of this paragraph shall control and supersede any other provisions of this Bond.

This Bond shall be construed in accordance with and governed by the law of the State of Alaska.

No covenant or agreement contained in this Bond, the Indenture or the First Supplemental Indenture shall be deemed to be a covenant or agreement of any official, officer, agent or employee of the Company in his individual capacity, and no officer of the Company executing this Bond shall be liable personally on this Bond or be subject to any personal liability or accountability by reason of the issuance of this Bond.

This Bond shall not be entitled to any benefit under the Indenture or be valid until this Bond shall have been authenticated by the execution by the Trustee, or its successor as Trustee, of the Certificate of Authentication inscribed hereon.

- 3 -

IN WITNESS WHEREOF, the Company has caused this Bond to be executed by a duly authorized officer of the Company.

CHUGACH ELECTRIC ASSOCIATION, INC.
By:	/s/ Michael R. Cunningham
Name:
Title:	C.F.O.

- 4 -

This is one of the Obligations of the series designated therein referred to in the within-mentioned Indenture.

U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By:	/s/ Thomas Zrust
	Authorized Signatory

Date of Authentication: January 21, 2011

- 5 -

THIS 2011 SERIES A BOND HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM EXCEPT UNDER CIRCUMSTANCES WHERE NEITHER SUCH REGISTRATION NOR SUCH EXEMPTION IS REQUIRED BY LAW.

THE COMPANY (DEFINED BELOW) IS PERSONALLY OBLIGATED AND FULLY LIABLE FOR THE AMOUNT DUE UNDER THIS BOND AND, SUBJECT TO THE PROVISIONS OF THE INDENTURE (DEFINED BELOW), EACH HOLDER (AS DEFINED IN THE INDENTURE) HAS THE RIGHT TO SUE ON THIS BOND AND OBTAIN A PERSONAL JUDGMENT AGAINST THE COMPANY FOR SATISFACTION OF THE AMOUNT UNDER THIS BOND EITHER BEFORE OR AFTER A FORECLOSURE OF THE INDENTURE UNDER ALASKA STATUTES 09.45.170-09.45.220.

CHUGACH ELECTRIC ASSOCIATION, INC.

FIRST MORTGAGE BONDS, 2011 SERIES A DUE MARCH 15, 2041

NO. RB-9	ISSUANCE DATE: JANUARY 21, 2011
$6,000,000	PPN: 171265 A@0

FOR VALUE RECEIVED, the undersigned, CHUGACH ELECTRIC ASSOCIATION, INC. (herein called the “Company”), an electric cooperative organized and existing under the laws of the State of Alaska, hereby promises to pay to THE LINCOLN NATIONAL LIFE INSURANCE COMPANY, or registered assigns, the principal sum of SIX MILLION DOLLARS (or so much thereof as shall not have been prepaid) on March 15, 2041, with interest computed on the basis of a 360-day year of twelve 30-day months (a) on the unpaid balance hereof at a rate of 4.75% per annum (plus, upon the occurrence and during the continuation of an Interest Rate Adjustment Event (as hereinafter defined), an additional 2% per annum) from the date hereof, payable semiannually on the 15th day of each March and September, commencing on September 15, 2011, until the principal hereof shall have become due and payable, and (b) to the extent permitted by law, on any overdue payment (including any overdue prepayment) of principal, any overdue payment of interest, any overdue payment of any Make-Whole Amount (as defined in the First Supplemental Indenture referred to below), payable semiannually as aforesaid (or, at the option of the registered Holder hereof, on demand), at the Default Rate (as defined in the First Supplemental Indenture referred to below).

“Interest Rate Adjustment Event” means the occurrence of any of the following:

(a)            the Company defaults in the performance of Section 7.1(a) or (b) or Section 7.2 of the 2011 Series A Bond Purchase Agreement (as defined below); or

(b)            any representation or warranty made in writing by or on behalf of the Company or by any officer of the Company in the Indenture or the 2011 Series A Bond Purchase Agreement (as defined below) or in any writing furnished in connection with the transactions contemplated by the First Supplemental Indenture (referred to below) proves to have been false or incorrect in any material respect on the date as of which made and, with respect to representations and warranties made after the date hereof, for which accurate information has not since been provided in writing to the Holder of this Bond.

Subject to Section 11 of the 2011 Series A Bond Purchase Agreement (defined below), payments of principal of, interest on, and any Make-Whole Amount with respect to this Bond are to be made in lawful money of the United States of America in accordance with the terms of the Indenture.

This Bond is one of the 2011 Series A Bonds (herein called the “Bonds”) issued pursuant to the First Supplemental Indenture, dated as of January 20, 2011 (as from time to time amended, the “First Supplemental Indenture”), between the Company and the Trustee named therein which amends and supplements the Second Amended and Restated Indenture of Trust, dated as of January 20, 2011 (as amended and supplemented from time to time, the “Indenture”) and is entitled to the benefits thereof and the 2011 Series A Bond Purchase Agreement dated January 21, 2011 between the Company and the purchasers listed in Schedule A thereto (the “2011 Series A Bond Purchase Agreement”). Each Holder of this Bond will be deemed, by its acceptance hereof, to have (i) agreed to the confidentiality provisions set forth in Section 18 of the 2011 Series A Bond Purchase Agreement and (ii) made the representations set forth in Section 6 of the 2011 Series A Bond Purchase Agreement. Unless otherwise indicated, capitalized terms used in this Bond shall have the respective meanings ascribed to such terms in the First Supplemental Indenture.

This Bond shall be registered in the name of the Holder hereof. This Bond is transferable, as provided in the Indenture, only upon the registration books of the Company maintained by the Obligation Registrar, which shall be the Trustee, kept at its principal office, upon presentation at said office of this Bond with the written request of the registered owner hereof or his attorney duly authorized in writing, and a written instrument of transfer satisfactory to the Obligation Registrar duly executed by the registered owner or his duly authorized attorney.

The Bonds shall be issued as fully registered Bonds without coupons and in minimum denominations of $1.00 and any integral multiple of $1.00 in excess thereof. The Trustee may impose a charge sufficient to reimburse the Company or the Trustee for any tax, fee or other governmental charge required to be paid with respect to such exchange or any transfer of a Bond. The cost, if any, of preparing each new Bond issued upon such exchange or transfer, and any other expenses of the Company or the Trustee incurred in connection therewith, shall be paid by in accordance with Section 3.7 of the Indenture.

The Company will make the required prepayments of principal on this Bond on the dates and in the amount specified in the First Supplemental Indenture. This Bond is also subject to optional prepayment, in whole or from time to time in part, at the times and on the terms specified in First Supplemental Indenture, but not otherwise.

If an Event of Default under the Indenture occurs and is continuing, the principal of this Bond may be declared or otherwise become due and payable in the manner, at the price (including any applicable Make-Whole Amount) and with the effect provided in the Indenture. In the event that the principal of this Bond shall have been declared or otherwise become due and payable as described in the preceding sentence, then, in addition to paying the Holder hereof the entire unpaid principal amount of this Bond and all accrued and unpaid interest hereon (including, but not limited to, interest accrued hereon at the Default Rate), the Company shall pay to the Holder hereof (to the full extent permitted by applicable law) an amount equal to the Make-Whole Amount determined in respect of such principal amount.

- 2 -

The Holder of this Bond shall have no right to enforce the provisions of the Indenture, or to institute action to enforce the covenants therein, or to take any action with respect to any default under the Indenture, or to institute, appear in or defend any suit or other proceeding with respect thereto, except as provided in the Indenture and the 2011 Series A Bond Purchase Agreement.

All acts and proceedings required by law and by the Articles of Incorporation and Bylaws of the Company necessary to make the 2011 Series A Bonds issued under the Indenture, when executed by the Company, authenticated and delivered by the Trustee and duly issued, the valid, binding and legal obligations of the Company, in accordance with its terms, have been done and taken.

It is the intention of the Holder to comply with the usury laws of the State of Alaska and of the United States of America. This Bond is hereby expressly limited such that in no contingency or event whatsoever, whether by reason of acceleration, prepayment, or otherwise, shall the amount of interest contracted for, charged or received by the Holder for the use, forbearance, or detention of the principal indebtedness or interest hereof, which remains unpaid from time to time, exceed the highest maximum rate permitted by applicable law. If fulfillment of any provisions hereof, at the time of performance of such provisions shall be due, shall involve transcending the valid limits prescribed by applicable law, then, ipso facto, the obligation to be fulfilled shall be reduced to the maximum rate allowed by applicable law. If any Holder receives as interest an amount which will exceed the maximum rate allowed by applicable law, such amount shall be applied to the reduction of the principal amount owing hereunder or on account of any other principal indebtedness owed to Holder and not to the payment of interest, or if such excessive interest exceeds the unpaid balance of principal hereof and such other indebtedness, such excess shall be refunded. To the extent not prohibited by applicable law, determination of the maximum rate allowed by applicable law shall at all times be made by amortizing, prorating, allocating and spreading in equal parts during the full term of this Bond, all interest at any time contracted for, charged or received from the Company in connection with this Bond, so that the actual rate of interest on account of such indebtedness is uniform throughout the term of this Bond. The terms of this paragraph shall control and supersede any other provisions of this Bond.

This Bond shall be construed in accordance with and governed by the law of the State of Alaska.

No covenant or agreement contained in this Bond, the Indenture or the First Supplemental Indenture shall be deemed to be a covenant or agreement of any official, officer, agent or employee of the Company in his individual capacity, and no officer of the Company executing this Bond shall be liable personally on this Bond or be subject to any personal liability or accountability by reason of the issuance of this Bond.

This Bond shall not be entitled to any benefit under the Indenture or be valid until this Bond shall have been authenticated by the execution by the Trustee, or its successor as Trustee, of the Certificate of Authentication inscribed hereon.

- 3 -

IN WITNESS WHEREOF, the Company has caused this Bond to be executed by a duly authorized officer of the Company.

CHUGACH ELECTRIC ASSOCIATION, INC.
By:	/s/ Michael R.Cunningham
Name:
Title:	C.F.O.

- 4 -

This is one of the Obligations of the series designated therein referred to in the within-mentioned Indenture.

U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By:	/s/ Thomas Zrust
	Authorized Signatory

Date of Authentication: January 21, 2011

- 5 -

THIS 2011 SERIES A BOND HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM EXCEPT UNDER CIRCUMSTANCES WHERE NEITHER SUCH REGISTRATION NOR SUCH EXEMPTION IS REQUIRED BY LAW.

THE COMPANY (DEFINED BELOW) IS PERSONALLY OBLIGATED AND FULLY LIABLE FOR THE AMOUNT DUE UNDER THIS BOND AND, SUBJECT TO THE PROVISIONS OF THE INDENTURE (DEFINED BELOW), EACH HOLDER (AS DEFINED IN THE INDENTURE) HAS THE RIGHT TO SUE ON THIS BOND AND OBTAIN A PERSONAL JUDGMENT AGAINST THE COMPANY FOR SATISFACTION OF THE AMOUNT UNDER THIS BOND EITHER BEFORE OR AFTER A FORECLOSURE OF THE INDENTURE UNDER ALASKA STATUTES 09.45.170-09.45.220.

CHUGACH ELECTRIC ASSOCIATION, INC.

FIRST MORTGAGE BONDS, 2011 SERIES A DUE MARCH 15, 2041

NO. RB-10	ISSUANCE DATE: JANUARY 21, 2011
$4,000,000	PPN: 171265 A@0

FOR VALUE RECEIVED, the undersigned, CHUGACH ELECTRIC ASSOCIATION, INC. (herein called the “Company”), an electric cooperative organized and existing under the laws of the State of Alaska, hereby promises to pay to THE LINCOLN NATIONAL LIFE INSURANCE COMPANY, or registered assigns, the principal sum of FOUR MILLION DOLLARS (or so much thereof as shall not have been prepaid) on March 15, 2041, with interest computed on the basis of a 360-day year of twelve 30-day months (a) on the unpaid balance hereof at a rate of 4.75% per annum (plus, upon the occurrence and during the continuation of an Interest Rate Adjustment Event (as hereinafter defined), an additional 2% per annum) from the date hereof, payable semiannually on the 15th day of each March and September, commencing on September 15, 2011, until the principal hereof shall have become due and payable, and (b) to the extent permitted by law, on any overdue payment (including any overdue prepayment) of principal, any overdue payment of interest, any overdue payment of any Make-Whole Amount (as defined in the First Supplemental Indenture referred to below), payable semiannually as aforesaid (or, at the option of the registered Holder hereof, on demand), at the Default Rate (as defined in the First Supplemental Indenture referred to below).

“Interest Rate Adjustment Event” means the occurrence of any of the following:

(a)            the Company defaults in the performance of Section 7.1(a) or (b) or Section 7.2 of the 2011 Series A Bond Purchase Agreement (as defined below); or

(b)            any representation or warranty made in writing by or on behalf of the Company or by any officer of the Company in the Indenture or the 2011 Series A Bond Purchase Agreement (as defined below) or in any writing furnished in connection with the transactions contemplated by the First Supplemental Indenture (referred to below) proves to have been false or incorrect in any material respect on the date as of which made and, with respect to representations and warranties made after the date hereof, for which accurate information has not since been provided in writing to the Holder of this Bond.

Subject to Section 11 of the 2011 Series A Bond Purchase Agreement (defined below), payments of principal of, interest on, and any Make-Whole Amount with respect to this Bond are to be made in lawful money of the United States of America in accordance with the terms of the Indenture.

This Bond is one of the 2011 Series A Bonds (herein called the “Bonds”) issued pursuant to the First Supplemental Indenture, dated as of January 20, 2011 (as from time to time amended, the “First Supplemental Indenture”), between the Company and the Trustee named therein which amends and supplements the Second Amended and Restated Indenture of Trust, dated as of January 20, 2011 (as amended and supplemented from time to time, the “Indenture”) and is entitled to the benefits thereof and the 2011 Series A Bond Purchase Agreement dated January 21, 2011 between the Company and the purchasers listed in Schedule A thereto (the “2011 Series A Bond Purchase Agreement”). Each Holder of this Bond will be deemed, by its acceptance hereof, to have (i) agreed to the confidentiality provisions set forth in Section 18 of the 2011 Series A Bond Purchase Agreement and (ii) made the representations set forth in Section 6 of the 2011 Series A Bond Purchase Agreement. Unless otherwise indicated, capitalized terms used in this Bond shall have the respective meanings ascribed to such terms in the First Supplemental Indenture.

This Bond shall be registered in the name of the Holder hereof. This Bond is transferable, as provided in the Indenture, only upon the registration books of the Company maintained by the Obligation Registrar, which shall be the Trustee, kept at its principal office, upon presentation at said office of this Bond with the written request of the registered owner hereof or his attorney duly authorized in writing, and a written instrument of transfer satisfactory to the Obligation Registrar duly executed by the registered owner or his duly authorized attorney.

The Bonds shall be issued as fully registered Bonds without coupons and in minimum denominations of $1.00 and any integral multiple of $1.00 in excess thereof. The Trustee may impose a charge sufficient to reimburse the Company or the Trustee for any tax, fee or other governmental charge required to be paid with respect to such exchange or any transfer of a Bond. The cost, if any, of preparing each new Bond issued upon such exchange or transfer, and any other expenses of the Company or the Trustee incurred in connection therewith, shall be paid by in accordance with Section 3.7 of the Indenture.

The Company will make the required prepayments of principal on this Bond on the dates and in the amount specified in the First Supplemental Indenture. This Bond is also subject to optional prepayment, in whole or from time to time in part, at the times and on the terms specified in First Supplemental Indenture, but not otherwise.

If an Event of Default under the Indenture occurs and is continuing, the principal of this Bond may be declared or otherwise become due and payable in the manner, at the price (including any applicable Make-Whole Amount) and with the effect provided in the Indenture. In the event that the principal of this Bond shall have been declared or otherwise become due and payable as described in the preceding sentence, then, in addition to paying the Holder hereof the entire unpaid principal amount of this Bond and all accrued and unpaid interest hereon (including, but not limited to, interest accrued hereon at the Default Rate), the Company shall pay to the Holder hereof (to the full extent permitted by applicable law) an amount equal to the Make-Whole Amount determined in respect of such principal amount.

- 2 -

The Holder of this Bond shall have no right to enforce the provisions of the Indenture, or to institute action to enforce the covenants therein, or to take any action with respect to any default under the Indenture, or to institute, appear in or defend any suit or other proceeding with respect thereto, except as provided in the Indenture and the 2011 Series A Bond Purchase Agreement.

All acts and proceedings required by law and by the Articles of Incorporation and Bylaws of the Company necessary to make the 2011 Series A Bonds issued under the Indenture, when executed by the Company, authenticated and delivered by the Trustee and duly issued, the valid, binding and legal obligations of the Company, in accordance with its terms, have been done and taken.

It is the intention of the Holder to comply with the usury laws of the State of Alaska and of the United States of America. This Bond is hereby expressly limited such that in no contingency or event whatsoever, whether by reason of acceleration, prepayment, or otherwise, shall the amount of interest contracted for, charged or received by the Holder for the use, forbearance, or detention of the principal indebtedness or interest hereof, which remains unpaid from time to time, exceed the highest maximum rate permitted by applicable law. If fulfillment of any provisions hereof, at the time of performance of such provisions shall be due, shall involve transcending the valid limits prescribed by applicable law, then, ipso facto, the obligation to be fulfilled shall be reduced to the maximum rate allowed by applicable law. If any Holder receives as interest an amount which will exceed the maximum rate allowed by applicable law, such amount shall be applied to the reduction of the principal amount owing hereunder or on account of any other principal indebtedness owed to Holder and not to the payment of interest, or if such excessive interest exceeds the unpaid balance of principal hereof and such other indebtedness, such excess shall be refunded. To the extent not prohibited by applicable law, determination of the maximum rate allowed by applicable law shall at all times be made by amortizing, prorating, allocating and spreading in equal parts during the full term of this Bond, all interest at any time contracted for, charged or received from the Company in connection with this Bond, so that the actual rate of interest on account of such indebtedness is uniform throughout the term of this Bond. The terms of this paragraph shall control and supersede any other provisions of this Bond.

This Bond shall be construed in accordance with and governed by the law of the State of Alaska.

No covenant or agreement contained in this Bond, the Indenture or the First Supplemental Indenture shall be deemed to be a covenant or agreement of any official, officer, agent or employee of the Company in his individual capacity, and no officer of the Company executing this Bond shall be liable personally on this Bond or be subject to any personal liability or accountability by reason of the issuance of this Bond.

This Bond shall not be entitled to any benefit under the Indenture or be valid until this Bond shall have been authenticated by the execution by the Trustee, or its successor as Trustee, of the Certificate of Authentication inscribed hereon.

- 3 -

IN WITNESS WHEREOF, the Company has caused this Bond to be executed by a duly authorized officer of the Company.

CHUGACH ELECTRIC ASSOCIATION, INC.
By:	/s/ Michael R. Cunningham
Name:
Title:	C.F.O.

- 4 -

This is one of the Obligations of the series designated therein referred to in the within-mentioned Indenture.

U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By:	/s/ Thomas Zrust
	Authorized Signatory

Date of Authentication: January 21, 2011

- 5 -

THIS 2011 SERIES A BOND HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM EXCEPT UNDER CIRCUMSTANCES WHERE NEITHER SUCH REGISTRATION NOR SUCH EXEMPTION IS REQUIRED BY LAW.

THE COMPANY (DEFINED BELOW) IS PERSONALLY OBLIGATED AND FULLY LIABLE FOR THE AMOUNT DUE UNDER THIS BOND AND, SUBJECT TO THE PROVISIONS OF THE INDENTURE (DEFINED BELOW), EACH HOLDER (AS DEFINED IN THE INDENTURE) HAS THE RIGHT TO SUE ON THIS BOND AND OBTAIN A PERSONAL JUDGMENT AGAINST THE COMPANY FOR SATISFACTION OF THE AMOUNT UNDER THIS BOND EITHER BEFORE OR AFTER A FORECLOSURE OF THE INDENTURE UNDER ALASKA STATUTES 09.45.170-09.45.220.

CHUGACH ELECTRIC ASSOCIATION, INC.

FIRST MORTGAGE BONDS, 2011 SERIES A DUE MARCH 15, 2041

NO. RB-11	ISSUANCE DATE: JANUARY 21, 2011
$5,000,000	PPN: 171265 A@0

FOR VALUE RECEIVED, the undersigned, CHUGACH ELECTRIC ASSOCIATION, INC. (herein called the “Company”), an electric cooperative organized and existing under the laws of the State of Alaska, hereby promises to pay to FIRST PENN-PACIFIC LIFE INSURANCE COMPANY, or registered assigns, the principal sum of FIVE MILLION DOLLARS (or so much thereof as shall not have been prepaid) on March 15, 2041, with interest computed on the basis of a 360-day year of twelve 30-day months (a) on the unpaid balance hereof at a rate of 4.75% per annum (plus, upon the occurrence and during the continuation of an Interest Rate Adjustment Event (as hereinafter defined), an additional 2% per annum) from the date hereof, payable semiannually on the 15th day of each March and September, commencing on September 15, 2011, until the principal hereof shall have become due and payable, and (b) to the extent permitted by law, on any overdue payment (including any overdue prepayment) of principal, any overdue payment of interest, any overdue payment of any Make-Whole Amount (as defined in the First Supplemental Indenture referred to below), payable semiannually as aforesaid (or, at the option of the registered Holder hereof, on demand), at the Default Rate (as defined in the First Supplemental Indenture referred to below).

“Interest Rate Adjustment Event” means the occurrence of any of the following:

(a)            the Company defaults in the performance of Section 7.1(a) or (b) or Section 7.2 of the 2011 Series A Bond Purchase Agreement (as defined below); or

(b)            any representation or warranty made in writing by or on behalf of the Company or by any officer of the Company in the Indenture or the 2011 Series A Bond Purchase Agreement (as defined below) or in any writing furnished in connection with the transactions contemplated by the First Supplemental Indenture (referred to below) proves to have been false or incorrect in any material respect on the date as of which made and, with respect to representations and warranties made after the date hereof, for which accurate information has not since been provided in writing to the Holder of this Bond.

Subject to Section 11 of the 2011 Series A Bond Purchase Agreement (defined below), payments of principal of, interest on, and any Make-Whole Amount with respect to this Bond are to be made in lawful money of the United States of America in accordance with the terms of the Indenture.

This Bond is one of the 2011 Series A Bonds (herein called the “Bonds”) issued pursuant to the First Supplemental Indenture, dated as of January 20, 2011 (as from time to time amended, the “First Supplemental Indenture”), between the Company and the Trustee named therein which amends and supplements the Second Amended and Restated Indenture of Trust, dated as of January 20, 2011 (as amended and supplemented from time to time, the “Indenture”) and is entitled to the benefits thereof and the 2011 Series A Bond Purchase Agreement dated January 21, 2011 between the Company and the purchasers listed in Schedule A thereto (the “2011 Series A Bond Purchase Agreement”). Each Holder of this Bond will be deemed, by its acceptance hereof, to have (i) agreed to the confidentiality provisions set forth in Section 18 of the 2011 Series A Bond Purchase Agreement and (ii) made the representations set forth in Section 6 of the 2011 Series A Bond Purchase Agreement. Unless otherwise indicated, capitalized terms used in this Bond shall have the respective meanings ascribed to such terms in the First Supplemental Indenture.

This Bond shall be registered in the name of the Holder hereof. This Bond is transferable, as provided in the Indenture, only upon the registration books of the Company maintained by the Obligation Registrar, which shall be the Trustee, kept at its principal office, upon presentation at said office of this Bond with the written request of the registered owner hereof or his attorney duly authorized in writing, and a written instrument of transfer satisfactory to the Obligation Registrar duly executed by the registered owner or his duly authorized attorney.

The Bonds shall be issued as fully registered Bonds without coupons and in minimum denominations of $1.00 and any integral multiple of $1.00 in excess thereof. The Trustee may impose a charge sufficient to reimburse the Company or the Trustee for any tax, fee or other governmental charge required to be paid with respect to such exchange or any transfer of a Bond. The cost, if any, of preparing each new Bond issued upon such exchange or transfer, and any other expenses of the Company or the Trustee incurred in connection therewith, shall be paid by in accordance with Section 3.7 of the Indenture.

The Company will make the required prepayments of principal on this Bond on the dates and in the amount specified in the First Supplemental Indenture. This Bond is also subject to optional prepayment, in whole or from time to time in part, at the times and on the terms specified in First Supplemental Indenture, but not otherwise.

If an Event of Default under the Indenture occurs and is continuing, the principal of this Bond may be declared or otherwise become due and payable in the manner, at the price (including any applicable Make-Whole Amount) and with the effect provided in the Indenture. In the event that the principal of this Bond shall have been declared or otherwise become due and payable as described in the preceding sentence, then, in addition to paying the Holder hereof the entire unpaid principal amount of this Bond and all accrued and unpaid interest hereon (including, but not limited to, interest accrued hereon at the Default Rate), the Company shall pay to the Holder hereof (to the full extent permitted by applicable law) an amount equal to the Make-Whole Amount determined in respect of such principal amount.

- 2 -

The Holder of this Bond shall have no right to enforce the provisions of the Indenture, or to institute action to enforce the covenants therein, or to take any action with respect to any default under the Indenture, or to institute, appear in or defend any suit or other proceeding with respect thereto, except as provided in the Indenture and the 2011 Series A Bond Purchase Agreement.

All acts and proceedings required by law and by the Articles of Incorporation and Bylaws of the Company necessary to make the 2011 Series A Bonds issued under the Indenture, when executed by the Company, authenticated and delivered by the Trustee and duly issued, the valid, binding and legal obligations of the Company, in accordance with its terms, have been done and taken.

It is the intention of the Holder to comply with the usury laws of the State of Alaska and of the United States of America. This Bond is hereby expressly limited such that in no contingency or event whatsoever, whether by reason of acceleration, prepayment, or otherwise, shall the amount of interest contracted for, charged or received by the Holder for the use, forbearance, or detention of the principal indebtedness or interest hereof, which remains unpaid from time to time, exceed the highest maximum rate permitted by applicable law. If fulfillment of any provisions hereof, at the time of performance of such provisions shall be due, shall involve transcending the valid limits prescribed by applicable law, then, ipso facto, the obligation to be fulfilled shall be reduced to the maximum rate allowed by applicable law. If any Holder receives as interest an amount which will exceed the maximum rate allowed by applicable law, such amount shall be applied to the reduction of the principal amount owing hereunder or on account of any other principal indebtedness owed to Holder and not to the payment of interest, or if such excessive interest exceeds the unpaid balance of principal hereof and such other indebtedness, such excess shall be refunded. To the extent not prohibited by applicable law, determination of the maximum rate allowed by applicable law shall at all times be made by amortizing, prorating, allocating and spreading in equal parts during the full term of this Bond, all interest at any time contracted for, charged or received from the Company in connection with this Bond, so that the actual rate of interest on account of such indebtedness is uniform throughout the term of this Bond. The terms of this paragraph shall control and supersede any other provisions of this Bond.

This Bond shall be construed in accordance with and governed by the law of the State of Alaska.

No covenant or agreement contained in this Bond, the Indenture or the First Supplemental Indenture shall be deemed to be a covenant or agreement of any official, officer, agent or employee of the Company in his individual capacity, and no officer of the Company executing this Bond shall be liable personally on this Bond or be subject to any personal liability or accountability by reason of the issuance of this Bond.

This Bond shall not be entitled to any benefit under the Indenture or be valid until this Bond shall have been authenticated by the execution by the Trustee, or its successor as Trustee, of the Certificate of Authentication inscribed hereon.

- 3 -

IN WITNESS WHEREOF, the Company has caused this Bond to be executed by a duly authorized officer of the Company.

CHUGACH ELECTRIC ASSOCIATION, INC.
By:	/s/ Michael R. Cunningham
Name:
Title:	C.F.O.

- 4 -

This is one of the Obligations of the series designated therein referred to in the within-mentioned Indenture.

U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By:	/s/ Thomas Zrust
	Authorized Signatory

Date of Authentication: January 21, 2011

- 5 -

THIS 2011 SERIES A BOND HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM EXCEPT UNDER CIRCUMSTANCES WHERE NEITHER SUCH REGISTRATION NOR SUCH EXEMPTION IS REQUIRED BY LAW.

THE COMPANY (DEFINED BELOW) IS PERSONALLY OBLIGATED AND FULLY LIABLE FOR THE AMOUNT DUE UNDER THIS BOND AND, SUBJECT TO THE PROVISIONS OF THE INDENTURE (DEFINED BELOW), EACH HOLDER (AS DEFINED IN THE INDENTURE) HAS THE RIGHT TO SUE ON THIS BOND AND OBTAIN A PERSONAL JUDGMENT AGAINST THE COMPANY FOR SATISFACTION OF THE AMOUNT UNDER THIS BOND EITHER BEFORE OR AFTER A FORECLOSURE OF THE INDENTURE UNDER ALASKA STATUTES 09.45.170-09.45.220.

CHUGACH ELECTRIC ASSOCIATION, INC.

FIRST MORTGAGE BONDS, 2011 SERIES A DUE MARCH 15, 2041

NO. RB-12	ISSUANCE DATE: JANUARY 21, 2011
$28,000,000	PPN: 171265 A@0

FOR VALUE RECEIVED, the undersigned, CHUGACH ELECTRIC ASSOCIATION, INC. (herein called the “Company”), an electric cooperative organized and existing under the laws of the State of Alaska, hereby promises to pay to MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY, or registered assigns, the principal sum of TWENTY-EIGHT MILLION DOLLARS (or so much thereof as shall not have been prepaid) on March 15, 2041, with interest computed on the basis of a 360-day year of twelve 30-day months (a) on the unpaid balance hereof at a rate of 4.75% per annum (plus, upon the occurrence and during the continuation of an Interest Rate Adjustment Event (as hereinafter defined), an additional 2% per annum) from the date hereof, payable semiannually on the 15th day of each March and September, commencing on September 15, 2011, until the principal hereof shall have become due and payable, and (b) to the extent permitted by law, on any overdue payment (including any overdue prepayment) of principal, any overdue payment of interest, any overdue payment of any Make-Whole Amount (as defined in the First Supplemental Indenture referred to below), payable semiannually as aforesaid (or, at the option of the registered Holder hereof, on demand), at the Default Rate (as defined in the First Supplemental Indenture referred to below).

“Interest Rate Adjustment Event” means the occurrence of any of the following:

(a)            the Company defaults in the performance of Section 7.1(a) or (b) or Section 7.2 of the 2011 Series A Bond Purchase Agreement (as defined below); or

(b)            any representation or warranty made in writing by or on behalf of the Company or by any officer of the Company in the Indenture or the 2011 Series A Bond Purchase Agreement (as defined below) or in any writing furnished in connection with the transactions contemplated by the First Supplemental Indenture (referred to below) proves to have been false or incorrect in any material respect on the date as of which made and, with respect to representations and warranties made after the date hereof, for which accurate information has not since been provided in writing to the Holder of this Bond.

Subject to Section 11 of the 2011 Series A Bond Purchase Agreement (defined below), payments of principal of, interest on, and any Make-Whole Amount with respect to this Bond are to be made in lawful money of the United States of America in accordance with the terms of the Indenture.

This Bond is one of the 2011 Series A Bonds (herein called the “Bonds”) issued pursuant to the First Supplemental Indenture, dated as of January 20, 2011 (as from time to time amended, the “First Supplemental Indenture”), between the Company and the Trustee named therein which amends and supplements the Second Amended and Restated Indenture of Trust, dated as of January 20, 2011 (as amended and supplemented from time to time, the “Indenture”) and is entitled to the benefits thereof and the 2011 Series A Bond Purchase Agreement dated January 21, 2011 between the Company and the purchasers listed in Schedule A thereto (the “2011 Series A Bond Purchase Agreement”). Each Holder of this Bond will be deemed, by its acceptance hereof, to have (i) agreed to the confidentiality provisions set forth in Section 18 of the 2011 Series A Bond Purchase Agreement and (ii) made the representations set forth in Section 6 of the 2011 Series A Bond Purchase Agreement. Unless otherwise indicated, capitalized terms used in this Bond shall have the respective meanings ascribed to such terms in the First Supplemental Indenture.

This Bond shall be registered in the name of the Holder hereof. This Bond is transferable, as provided in the Indenture, only upon the registration books of the Company maintained by the Obligation Registrar, which shall be the Trustee, kept at its principal office, upon presentation at said office of this Bond with the written request of the registered owner hereof or his attorney duly authorized in writing, and a written instrument of transfer satisfactory to the Obligation Registrar duly executed by the registered owner or his duly authorized attorney.

The Bonds shall be issued as fully registered Bonds without coupons and in minimum denominations of $1.00 and any integral multiple of $1.00 in excess thereof. The Trustee may impose a charge sufficient to reimburse the Company or the Trustee for any tax, fee or other governmental charge required to be paid with respect to such exchange or any transfer of a Bond. The cost, if any, of preparing each new Bond issued upon such exchange or transfer, and any other expenses of the Company or the Trustee incurred in connection therewith, shall be paid by in accordance with Section 3.7 of the Indenture.

The Company will make the required prepayments of principal on this Bond on the dates and in the amount specified in the First Supplemental Indenture. This Bond is also subject to optional prepayment, in whole or from time to time in part, at the times and on the terms specified in First Supplemental Indenture, but not otherwise.

If an Event of Default under the Indenture occurs and is continuing, the principal of this Bond may be declared or otherwise become due and payable in the manner, at the price (including any applicable Make-Whole Amount) and with the effect provided in the Indenture. In the event that the principal of this Bond shall have been declared or otherwise become due and payable as described in the preceding sentence, then, in addition to paying the Holder hereof the entire unpaid principal amount of this Bond and all accrued and unpaid interest hereon (including, but not limited to, interest accrued hereon at the Default Rate), the Company shall pay to the Holder hereof (to the full extent permitted by applicable law) an amount equal to the Make-Whole Amount determined in respect of such principal amount.

- 2 -

The Holder of this Bond shall have no right to enforce the provisions of the Indenture, or to institute action to enforce the covenants therein, or to take any action with respect to any default under the Indenture, or to institute, appear in or defend any suit or other proceeding with respect thereto, except as provided in the Indenture and the 2011 Series A Bond Purchase Agreement.

All acts and proceedings required by law and by the Articles of Incorporation and Bylaws of the Company necessary to make the 2011 Series A Bonds issued under the Indenture, when executed by the Company, authenticated and delivered by the Trustee and duly issued, the valid, binding and legal obligations of the Company, in accordance with its terms, have been done and taken.

It is the intention of the Holder to comply with the usury laws of the State of Alaska and of the United States of America. This Bond is hereby expressly limited such that in no contingency or event whatsoever, whether by reason of acceleration, prepayment, or otherwise, shall the amount of interest contracted for, charged or received by the Holder for the use, forbearance, or detention of the principal indebtedness or interest hereof, which remains unpaid from time to time, exceed the highest maximum rate permitted by applicable law. If fulfillment of any provisions hereof, at the time of performance of such provisions shall be due, shall involve transcending the valid limits prescribed by applicable law, then, ipso facto, the obligation to be fulfilled shall be reduced to the maximum rate allowed by applicable law. If any Holder receives as interest an amount which will exceed the maximum rate allowed by applicable law, such amount shall be applied to the reduction of the principal amount owing hereunder or on account of any other principal indebtedness owed to Holder and not to the payment of interest, or if such excessive interest exceeds the unpaid balance of principal hereof and such other indebtedness, such excess shall be refunded. To the extent not prohibited by applicable law, determination of the maximum rate allowed by applicable law shall at all times be made by amortizing, prorating, allocating and spreading in equal parts during the full term of this Bond, all interest at any time contracted for, charged or received from the Company in connection with this Bond, so that the actual rate of interest on account of such indebtedness is uniform throughout the term of this Bond. The terms of this paragraph shall control and supersede any other provisions of this Bond.

This Bond shall be construed in accordance with and governed by the law of the State of Alaska.

No covenant or agreement contained in this Bond, the Indenture or the First Supplemental Indenture shall be deemed to be a covenant or agreement of any official, officer, agent or employee of the Company in his individual capacity, and no officer of the Company executing this Bond shall be liable personally on this Bond or be subject to any personal liability or accountability by reason of the issuance of this Bond.

This Bond shall not be entitled to any benefit under the Indenture or be valid until this Bond shall have been authenticated by the execution by the Trustee, or its successor as Trustee, of the Certificate of Authentication inscribed hereon.

- 3 -

IN WITNESS WHEREOF, the Company has caused this Bond to be executed by a duly authorized officer of the Company.

CHUGACH ELECTRIC ASSOCIATION, INC.
By:	/s/ Michael R. Cunningham
Name:
Title:	C.F.O.

- 4 -

This is one of the Obligations of the series designated therein referred to in the within-mentioned Indenture.

U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By:	/s/ Thomas Zrust
	Authorized Signatory

Date of Authentication: January 21, 2011

- 5 -

THIS 2011 SERIES A BOND HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM EXCEPT UNDER CIRCUMSTANCES WHERE NEITHER SUCH REGISTRATION NOR SUCH EXEMPTION IS REQUIRED BY LAW.

THE COMPANY (DEFINED BELOW) IS PERSONALLY OBLIGATED AND FULLY LIABLE FOR THE AMOUNT DUE UNDER THIS BOND AND, SUBJECT TO THE PROVISIONS OF THE INDENTURE (DEFINED BELOW), EACH HOLDER (AS DEFINED IN THE INDENTURE) HAS THE RIGHT TO SUE ON THIS BOND AND OBTAIN A PERSONAL JUDGMENT AGAINST THE COMPANY FOR SATISFACTION OF THE AMOUNT UNDER THIS BOND EITHER BEFORE OR AFTER A FORECLOSURE OF THE INDENTURE UNDER ALASKA STATUTES 09.45.170-09.45.220.

CHUGACH ELECTRIC ASSOCIATION, INC.

FIRST MORTGAGE BONDS, 2011 SERIES A DUE MARCH 15, 2041

NO. RB-13	ISSUANCE DATE: JANUARY 21, 2011
$2,000,000	PPN: 171265 A@0

FOR VALUE RECEIVED, the undersigned, CHUGACH ELECTRIC ASSOCIATION, INC. (herein called the “Company”), an electric cooperative organized and existing under the laws of the State of Alaska, hereby promises to pay to C.M. LIFE INSURANCE COMPANY, or registered assigns, the principal sum of TWO MILLION DOLLARS (or so much thereof as shall not have been prepaid) on March 15, 2041, with interest computed on the basis of a 360-day year of twelve 30-day months (a) on the unpaid balance hereof at a rate of 4.75% per annum (plus, upon the occurrence and during the continuation of an Interest Rate Adjustment Event (as hereinafter defined), an additional 2% per annum) from the date hereof, payable semiannually on the 15th day of each March and September, commencing on September 15, 2011, until the principal hereof shall have become due and payable, and (b) to the extent permitted by law, on any overdue payment (including any overdue prepayment) of principal, any overdue payment of interest, any overdue payment of any Make-Whole Amount (as defined in the First Supplemental Indenture referred to below), payable semiannually as aforesaid (or, at the option of the registered Holder hereof, on demand), at the Default Rate (as defined in the First Supplemental Indenture referred to below).

“Interest Rate Adjustment Event” means the occurrence of any of the following:

(a)            the Company defaults in the performance of Section 7.1(a) or (b) or Section 7.2 of the 2011 Series A Bond Purchase Agreement (as defined below); or

(b)            any representation or warranty made in writing by or on behalf of the Company or by any officer of the Company in the Indenture or the 2011 Series A Bond Purchase Agreement (as defined below) or in any writing furnished in connection with the transactions contemplated by the First Supplemental Indenture (referred to below) proves to have been false or incorrect in any material respect on the date as of which made and, with respect to representations and warranties made after the date hereof, for which accurate information has not since been provided in writing to the Holder of this Bond.

Subject to Section 11 of the 2011 Series A Bond Purchase Agreement (defined below), payments of principal of, interest on, and any Make-Whole Amount with respect to this Bond are to be made in lawful money of the United States of America in accordance with the terms of the Indenture.

This Bond is one of the 2011 Series A Bonds (herein called the “Bonds”) issued pursuant to the First Supplemental Indenture, dated as of January 20, 2011 (as from time to time amended, the “First Supplemental Indenture”), between the Company and the Trustee named therein which amends and supplements the Second Amended and Restated Indenture of Trust, dated as of January 20, 2011 (as amended and supplemented from time to time, the “Indenture”) and is entitled to the benefits thereof and the 2011 Series A Bond Purchase Agreement dated January 21, 2011 between the Company and the purchasers listed in Schedule A thereto (the “2011 Series A Bond Purchase Agreement”). Each Holder of this Bond will be deemed, by its acceptance hereof, to have (i) agreed to the confidentiality provisions set forth in Section 18 of the 2011 Series A Bond Purchase Agreement and (ii) made the representations set forth in Section 6 of the 2011 Series A Bond Purchase Agreement. Unless otherwise indicated, capitalized terms used in this Bond shall have the respective meanings ascribed to such terms in the First Supplemental Indenture.

This Bond shall be registered in the name of the Holder hereof. This Bond is transferable, as provided in the Indenture, only upon the registration books of the Company maintained by the Obligation Registrar, which shall be the Trustee, kept at its principal office, upon presentation at said office of this Bond with the written request of the registered owner hereof or his attorney duly authorized in writing, and a written instrument of transfer satisfactory to the Obligation Registrar duly executed by the registered owner or his duly authorized attorney.

The Bonds shall be issued as fully registered Bonds without coupons and in minimum denominations of $1.00 and any integral multiple of $1.00 in excess thereof. The Trustee may impose a charge sufficient to reimburse the Company or the Trustee for any tax, fee or other governmental charge required to be paid with respect to such exchange or any transfer of a Bond. The cost, if any, of preparing each new Bond issued upon such exchange or transfer, and any other expenses of the Company or the Trustee incurred in connection therewith, shall be paid by in accordance with Section 3.7 of the Indenture.

The Company will make the required prepayments of principal on this Bond on the dates and in the amount specified in the First Supplemental Indenture. This Bond is also subject to optional prepayment, in whole or from time to time in part, at the times and on the terms specified in First Supplemental Indenture, but not otherwise.

If an Event of Default under the Indenture occurs and is continuing, the principal of this Bond may be declared or otherwise become due and payable in the manner, at the price (including any applicable Make-Whole Amount) and with the effect provided in the Indenture. In the event that the principal of this Bond shall have been declared or otherwise become due and payable as described in the preceding sentence, then, in addition to paying the Holder hereof the entire unpaid principal amount of this Bond and all accrued and unpaid interest hereon (including, but not limited to, interest accrued hereon at the Default Rate), the Company shall pay to the Holder hereof (to the full extent permitted by applicable law) an amount equal to the Make-Whole Amount determined in respect of such principal amount.

- 2 -

The Holder of this Bond shall have no right to enforce the provisions of the Indenture, or to institute action to enforce the covenants therein, or to take any action with respect to any default under the Indenture, or to institute, appear in or defend any suit or other proceeding with respect thereto, except as provided in the Indenture and the 2011 Series A Bond Purchase Agreement.

All acts and proceedings required by law and by the Articles of Incorporation and Bylaws of the Company necessary to make the 2011 Series A Bonds issued under the Indenture, when executed by the Company, authenticated and delivered by the Trustee and duly issued, the valid, binding and legal obligations of the Company, in accordance with its terms, have been done and taken.

It is the intention of the Holder to comply with the usury laws of the State of Alaska and of the United States of America. This Bond is hereby expressly limited such that in no contingency or event whatsoever, whether by reason of acceleration, prepayment, or otherwise, shall the amount of interest contracted for, charged or received by the Holder for the use, forbearance, or detention of the principal indebtedness or interest hereof, which remains unpaid from time to time, exceed the highest maximum rate permitted by applicable law. If fulfillment of any provisions hereof, at the time of performance of such provisions shall be due, shall involve transcending the valid limits prescribed by applicable law, then, ipso facto, the obligation to be fulfilled shall be reduced to the maximum rate allowed by applicable law. If any Holder receives as interest an amount which will exceed the maximum rate allowed by applicable law, such amount shall be applied to the reduction of the principal amount owing hereunder or on account of any other principal indebtedness owed to Holder and not to the payment of interest, or if such excessive interest exceeds the unpaid balance of principal hereof and such other indebtedness, such excess shall be refunded. To the extent not prohibited by applicable law, determination of the maximum rate allowed by applicable law shall at all times be made by amortizing, prorating, allocating and spreading in equal parts during the full term of this Bond, all interest at any time contracted for, charged or received from the Company in connection with this Bond, so that the actual rate of interest on account of such indebtedness is uniform throughout the term of this Bond. The terms of this paragraph shall control and supersede any other provisions of this Bond.

This Bond shall be construed in accordance with and governed by the law of the State of Alaska.

No covenant or agreement contained in this Bond, the Indenture or the First Supplemental Indenture shall be deemed to be a covenant or agreement of any official, officer, agent or employee of the Company in his individual capacity, and no officer of the Company executing this Bond shall be liable personally on this Bond or be subject to any personal liability or accountability by reason of the issuance of this Bond.

This Bond shall not be entitled to any benefit under the Indenture or be valid until this Bond shall have been authenticated by the execution by the Trustee, or its successor as Trustee, of the Certificate of Authentication inscribed hereon.

- 3 -

IN WITNESS WHEREOF, the Company has caused this Bond to be executed by a duly authorized officer of the Company.

CHUGACH ELECTRIC ASSOCIATION, INC.
By:	/s/ Michael R. Cunningham
Name:
Title:	C.F.O.

- 4 -

This is one of the Obligations of the series designated therein referred to in the within-mentioned Indenture.

U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By:	/s/ Thomas Zrust
	Authorized Signatory

Date of Authentication: January 21, 2011

- 5 -

THIS 2011 SERIES A BOND HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM EXCEPT UNDER CIRCUMSTANCES WHERE NEITHER SUCH REGISTRATION NOR SUCH EXEMPTION IS REQUIRED BY LAW.

THE COMPANY (DEFINED BELOW) IS PERSONALLY OBLIGATED AND FULLY LIABLE FOR THE AMOUNT DUE UNDER THIS BOND AND, SUBJECT TO THE PROVISIONS OF THE INDENTURE (DEFINED BELOW), EACH HOLDER (AS DEFINED IN THE INDENTURE) HAS THE RIGHT TO SUE ON THIS BOND AND OBTAIN A PERSONAL JUDGMENT AGAINST THE COMPANY FOR SATISFACTION OF THE AMOUNT UNDER THIS BOND EITHER BEFORE OR AFTER A FORECLOSURE OF THE INDENTURE UNDER ALASKA STATUTES 09.45.170-09.45.220.

CHUGACH ELECTRIC ASSOCIATION, INC.

FIRST MORTGAGE BONDS, 2011 SERIES A DUE MARCH 15, 2041

NO. RB-14	ISSUANCE DATE: JANUARY 21, 2011
$5,000,000	PPN: 171265 A@0

FOR VALUE RECEIVED, the undersigned, CHUGACH ELECTRIC ASSOCIATION, INC. (herein called the “Company”), an electric cooperative organized and existing under the laws of the State of Alaska, hereby promises to pay to AMERICAN UNITED LIFE INSURANCE COMPANY, or registered assigns, the principal sum of FIVE MILLION DOLLARS (or so much thereof as shall not have been prepaid) on March 15, 2041, with interest computed on the basis of a 360-day year of twelve 30-day months (a) on the unpaid balance hereof at a rate of 4.75% per annum (plus, upon the occurrence and during the continuation of an Interest Rate Adjustment Event (as hereinafter defined), an additional 2% per annum) from the date hereof, payable semiannually on the 15th day of each March and September, commencing on September 15, 2011, until the principal hereof shall have become due and payable, and (b) to the extent permitted by law, on any overdue payment (including any overdue prepayment) of principal, any overdue payment of interest, any overdue payment of any Make-Whole Amount (as defined in the First Supplemental Indenture referred to below), payable semiannually as aforesaid (or, at the option of the registered Holder hereof, on demand), at the Default Rate (as defined in the First Supplemental Indenture referred to below).

“Interest Rate Adjustment Event” means the occurrence of any of the following:

(a)            the Company defaults in the performance of Section 7.1(a) or (b) or Section 7.2 of the 2011 Series A Bond Purchase Agreement (as defined below); or

(b)            any representation or warranty made in writing by or on behalf of the Company or by any officer of the Company in the Indenture or the 2011 Series A Bond Purchase Agreement (as defined below) or in any writing furnished in connection with the transactions contemplated by the First Supplemental Indenture (referred to below) proves to have been false or incorrect in any material respect on the date as of which made and, with respect to representations and warranties made after the date hereof, for which accurate information has not since been provided in writing to the Holder of this Bond.

Subject to Section 11 of the 2011 Series A Bond Purchase Agreement (defined below), payments of principal of, interest on, and any Make-Whole Amount with respect to this Bond are to be made in lawful money of the United States of America in accordance with the terms of the Indenture.

This Bond is one of the 2011 Series A Bonds (herein called the “Bonds”) issued pursuant to the First Supplemental Indenture, dated as of January 20, 2011 (as from time to time amended, the “First Supplemental Indenture”), between the Company and the Trustee named therein which amends and supplements the Second Amended and Restated Indenture of Trust, dated as of January 20, 2011 (as amended and supplemented from time to time, the “Indenture”) and is entitled to the benefits thereof and the 2011 Series A Bond Purchase Agreement dated January 21, 2011 between the Company and the purchasers listed in Schedule A thereto (the “2011 Series A Bond Purchase Agreement”). Each Holder of this Bond will be deemed, by its acceptance hereof, to have (i) agreed to the confidentiality provisions set forth in Section 18 of the 2011 Series A Bond Purchase Agreement and (ii) made the representations set forth in Section 6 of the 2011 Series A Bond Purchase Agreement. Unless otherwise indicated, capitalized terms used in this Bond shall have the respective meanings ascribed to such terms in the First Supplemental Indenture.

This Bond shall be registered in the name of the Holder hereof. This Bond is transferable, as provided in the Indenture, only upon the registration books of the Company maintained by the Obligation Registrar, which shall be the Trustee, kept at its principal office, upon presentation at said office of this Bond with the written request of the registered owner hereof or his attorney duly authorized in writing, and a written instrument of transfer satisfactory to the Obligation Registrar duly executed by the registered owner or his duly authorized attorney.

The Bonds shall be issued as fully registered Bonds without coupons and in minimum denominations of $1.00 and any integral multiple of $1.00 in excess thereof. The Trustee may impose a charge sufficient to reimburse the Company or the Trustee for any tax, fee or other governmental charge required to be paid with respect to such exchange or any transfer of a Bond. The cost, if any, of preparing each new Bond issued upon such exchange or transfer, and any other expenses of the Company or the Trustee incurred in connection therewith, shall be paid by in accordance with Section 3.7 of the Indenture.

The Company will make the required prepayments of principal on this Bond on the dates and in the amount specified in the First Supplemental Indenture. This Bond is also subject to optional prepayment, in whole or from time to time in part, at the times and on the terms specified in First Supplemental Indenture, but not otherwise.

If an Event of Default under the Indenture occurs and is continuing, the principal of this Bond may be declared or otherwise become due and payable in the manner, at the price (including any applicable Make-Whole Amount) and with the effect provided in the Indenture. In the event that the principal of this Bond shall have been declared or otherwise become due and payable as described in the preceding sentence, then, in addition to paying the Holder hereof the entire unpaid principal amount of this Bond and all accrued and unpaid interest hereon (including, but not limited to, interest accrued hereon at the Default Rate), the Company shall pay to the Holder hereof (to the full extent permitted by applicable law) an amount equal to the Make-Whole Amount determined in respect of such principal amount.

- 2 -

The Holder of this Bond shall have no right to enforce the provisions of the Indenture, or to institute action to enforce the covenants therein, or to take any action with respect to any default under the Indenture, or to institute, appear in or defend any suit or other proceeding with respect thereto, except as provided in the Indenture and the 2011 Series A Bond Purchase Agreement.

All acts and proceedings required by law and by the Articles of Incorporation and Bylaws of the Company necessary to make the 2011 Series A Bonds issued under the Indenture, when executed by the Company, authenticated and delivered by the Trustee and duly issued, the valid, binding and legal obligations of the Company, in accordance with its terms, have been done and taken.

It is the intention of the Holder to comply with the usury laws of the State of Alaska and of the United States of America. This Bond is hereby expressly limited such that in no contingency or event whatsoever, whether by reason of acceleration, prepayment, or otherwise, shall the amount of interest contracted for, charged or received by the Holder for the use, forbearance, or detention of the principal indebtedness or interest hereof, which remains unpaid from time to time, exceed the highest maximum rate permitted by applicable law. If fulfillment of any provisions hereof, at the time of performance of such provisions shall be due, shall involve transcending the valid limits prescribed by applicable law, then, ipso facto, the obligation to be fulfilled shall be reduced to the maximum rate allowed by applicable law. If any Holder receives as interest an amount which will exceed the maximum rate allowed by applicable law, such amount shall be applied to the reduction of the principal amount owing hereunder or on account of any other principal indebtedness owed to Holder and not to the payment of interest, or if such excessive interest exceeds the unpaid balance of principal hereof and such other indebtedness, such excess shall be refunded. To the extent not prohibited by applicable law, determination of the maximum rate allowed by applicable law shall at all times be made by amortizing, prorating, allocating and spreading in equal parts during the full term of this Bond, all interest at any time contracted for, charged or received from the Company in connection with this Bond, so that the actual rate of interest on account of such indebtedness is uniform throughout the term of this Bond. The terms of this paragraph shall control and supersede any other provisions of this Bond.

This Bond shall be construed in accordance with and governed by the law of the State of Alaska.

No covenant or agreement contained in this Bond, the Indenture or the First Supplemental Indenture shall be deemed to be a covenant or agreement of any official, officer, agent or employee of the Company in his individual capacity, and no officer of the Company executing this Bond shall be liable personally on this Bond or be subject to any personal liability or accountability by reason of the issuance of this Bond.

This Bond shall not be entitled to any benefit under the Indenture or be valid until this Bond shall have been authenticated by the execution by the Trustee, or its successor as Trustee, of the Certificate of Authentication inscribed hereon.

- 3 -

IN WITNESS WHEREOF, the Company has caused this Bond to be executed by a duly authorized officer of the Company.

CHUGACH ELECTRIC ASSOCIATION, INC.
By:	/s/ Michael R. Cunningham
Name:
Title:	C.F.O.

- 4 -

This is one of the Obligations of the series designated therein referred to in the within-mentioned Indenture.

U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By:	/s/ Thomas Zrust
	Authorized Signatory

Date of Authentication: January 21, 2011

- 5 -

THIS 2011 SERIES A BOND HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM EXCEPT UNDER CIRCUMSTANCES WHERE NEITHER SUCH REGISTRATION NOR SUCH EXEMPTION IS REQUIRED BY LAW.

THE COMPANY (DEFINED BELOW) IS PERSONALLY OBLIGATED AND FULLY LIABLE FOR THE AMOUNT DUE UNDER THIS BOND AND, SUBJECT TO THE PROVISIONS OF THE INDENTURE (DEFINED BELOW), EACH HOLDER (AS DEFINED IN THE INDENTURE) HAS THE RIGHT TO SUE ON THIS BOND AND OBTAIN A PERSONAL JUDGMENT AGAINST THE COMPANY FOR SATISFACTION OF THE AMOUNT UNDER THIS BOND EITHER BEFORE OR AFTER A FORECLOSURE OF THE INDENTURE UNDER ALASKA STATUTES 09.45.170-09.45.220.

CHUGACH ELECTRIC ASSOCIATION, INC.

FIRST MORTGAGE BONDS, 2011 SERIES A DUE MARCH 15, 2041

NO. RB-15	ISSUANCE DATE: JANUARY 21, 2011
$2,500,000	PPN: 171265 A@0

FOR VALUE RECEIVED, the undersigned, CHUGACH ELECTRIC ASSOCIATION, INC. (herein called the “Company”), an electric cooperative organized and existing under the laws of the State of Alaska, hereby promises to pay to THE STATE LIFE INSURANCE COMPANY, or registered assigns, the principal sum of TWO MILLION FIVE HUNDRED THOUSAND DOLLARS (or so much thereof as shall not have been prepaid) on March 15, 2041, with interest computed on the basis of a 360-day year of twelve 30-day months (a) on the unpaid balance hereof at a rate of 4.75% per annum (plus, upon the occurrence and during the continuation of an Interest Rate Adjustment Event (as hereinafter defined), an additional 2% per annum) from the date hereof, payable semiannually on the 15th day of each March and September, commencing on September 15, 2011, until the principal hereof shall have become due and payable, and (b) to the extent permitted by law, on any overdue payment (including any overdue prepayment) of principal, any overdue payment of interest, any overdue payment of any Make-Whole Amount (as defined in the First Supplemental Indenture referred to below), payable semiannually as aforesaid (or, at the option of the registered Holder hereof, on demand), at the Default Rate (as defined in the First Supplemental Indenture referred to below).

“Interest Rate Adjustment Event” means the occurrence of any of the following:

(a)            the Company defaults in the performance of Section 7.1(a) or (b) or Section 7.2 of the 2011 Series A Bond Purchase Agreement (as defined below); or

(b)            any representation or warranty made in writing by or on behalf of the Company or by any officer of the Company in the Indenture or the 2011 Series A Bond Purchase Agreement (as defined below) or in any writing furnished in connection with the transactions contemplated by the First Supplemental Indenture (referred to below) proves to have been false or incorrect in any material respect on the date as of which made and, with respect to representations and warranties made after the date hereof, for which accurate information has not since been provided in writing to the Holder of this Bond.

Subject to Section 11 of the 2011 Series A Bond Purchase Agreement (defined below), payments of principal of, interest on, and any Make-Whole Amount with respect to this Bond are to be made in lawful money of the United States of America in accordance with the terms of the Indenture.

This Bond is one of the 2011 Series A Bonds (herein called the “Bonds”) issued pursuant to the First Supplemental Indenture, dated as of January 20, 2011 (as from time to time amended, the “First Supplemental Indenture”), between the Company and the Trustee named therein which amends and supplements the Second Amended and Restated Indenture of Trust, dated as of January 20, 2011 (as amended and supplemented from time to time, the “Indenture”) and is entitled to the benefits thereof and the 2011 Series A Bond Purchase Agreement dated January 21, 2011 between the Company and the purchasers listed in Schedule A thereto (the “2011 Series A Bond Purchase Agreement”). Each Holder of this Bond will be deemed, by its acceptance hereof, to have (i) agreed to the confidentiality provisions set forth in Section 18 of the 2011 Series A Bond Purchase Agreement and (ii) made the representations set forth in Section 6 of the 2011 Series A Bond Purchase Agreement. Unless otherwise indicated, capitalized terms used in this Bond shall have the respective meanings ascribed to such terms in the First Supplemental Indenture.

This Bond shall be registered in the name of the Holder hereof. This Bond is transferable, as provided in the Indenture, only upon the registration books of the Company maintained by the Obligation Registrar, which shall be the Trustee, kept at its principal office, upon presentation at said office of this Bond with the written request of the registered owner hereof or his attorney duly authorized in writing, and a written instrument of transfer satisfactory to the Obligation Registrar duly executed by the registered owner or his duly authorized attorney.

The Bonds shall be issued as fully registered Bonds without coupons and in minimum denominations of $1.00 and any integral multiple of $1.00 in excess thereof. The Trustee may impose a charge sufficient to reimburse the Company or the Trustee for any tax, fee or other governmental charge required to be paid with respect to such exchange or any transfer of a Bond. The cost, if any, of preparing each new Bond issued upon such exchange or transfer, and any other expenses of the Company or the Trustee incurred in connection therewith, shall be paid by in accordance with Section 3.7 of the Indenture.

The Company will make the required prepayments of principal on this Bond on the dates and in the amount specified in the First Supplemental Indenture. This Bond is also subject to optional prepayment, in whole or from time to time in part, at the times and on the terms specified in First Supplemental Indenture, but not otherwise.

If an Event of Default under the Indenture occurs and is continuing, the principal of this Bond may be declared or otherwise become due and payable in the manner, at the price (including any applicable Make-Whole Amount) and with the effect provided in the Indenture. In the event that the principal of this Bond shall have been declared or otherwise become due and payable as described in the preceding sentence, then, in addition to paying the Holder hereof the entire unpaid principal amount of this Bond and all accrued and unpaid interest hereon (including, but not limited to, interest accrued hereon at the Default Rate), the Company shall pay to the Holder hereof (to the full extent permitted by applicable law) an amount equal to the Make-Whole Amount determined in respect of such principal amount.

- 2 -

The Holder of this Bond shall have no right to enforce the provisions of the Indenture, or to institute action to enforce the covenants therein, or to take any action with respect to any default under the Indenture, or to institute, appear in or defend any suit or other proceeding with respect thereto, except as provided in the Indenture and the 2011 Series A Bond Purchase Agreement.

All acts and proceedings required by law and by the Articles of Incorporation and Bylaws of the Company necessary to make the 2011 Series A Bonds issued under the Indenture, when executed by the Company, authenticated and delivered by the Trustee and duly issued, the valid, binding and legal obligations of the Company, in accordance with its terms, have been done and taken.

It is the intention of the Holder to comply with the usury laws of the State of Alaska and of the United States of America. This Bond is hereby expressly limited such that in no contingency or event whatsoever, whether by reason of acceleration, prepayment, or otherwise, shall the amount of interest contracted for, charged or received by the Holder for the use, forbearance, or detention of the principal indebtedness or interest hereof, which remains unpaid from time to time, exceed the highest maximum rate permitted by applicable law. If fulfillment of any provisions hereof, at the time of performance of such provisions shall be due, shall involve transcending the valid limits prescribed by applicable law, then, ipso facto, the obligation to be fulfilled shall be reduced to the maximum rate allowed by applicable law. If any Holder receives as interest an amount which will exceed the maximum rate allowed by applicable law, such amount shall be applied to the reduction of the principal amount owing hereunder or on account of any other principal indebtedness owed to Holder and not to the payment of interest, or if such excessive interest exceeds the unpaid balance of principal hereof and such other indebtedness, such excess shall be refunded. To the extent not prohibited by applicable law, determination of the maximum rate allowed by applicable law shall at all times be made by amortizing, prorating, allocating and spreading in equal parts during the full term of this Bond, all interest at any time contracted for, charged or received from the Company in connection with this Bond, so that the actual rate of interest on account of such indebtedness is uniform throughout the term of this Bond. The terms of this paragraph shall control and supersede any other provisions of this Bond.

This Bond shall be construed in accordance with and governed by the law of the State of Alaska.

No covenant or agreement contained in this Bond, the Indenture or the First Supplemental Indenture shall be deemed to be a covenant or agreement of any official, officer, agent or employee of the Company in his individual capacity, and no officer of the Company executing this Bond shall be liable personally on this Bond or be subject to any personal liability or accountability by reason of the issuance of this Bond.

This Bond shall not be entitled to any benefit under the Indenture or be valid until this Bond shall have been authenticated by the execution by the Trustee, or its successor as Trustee, of the Certificate of Authentication inscribed hereon.

- 3 -

IN WITNESS WHEREOF, the Company has caused this Bond to be executed by a duly authorized officer of the Company.

CHUGACH ELECTRIC ASSOCIATION, INC.
By:	/s/ Michael R. Cunningham
Name:
Title:	C.F.O.

- 4 -

This is one of the Obligations of the series designated therein referred to in the within-mentioned Indenture.

U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By:	/s/ Thomas Zrust
	Authorized Signatory

Date of Authentication: January 21, 2011

- 5 -

THIS 2011 SERIES A BOND HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM EXCEPT UNDER CIRCUMSTANCES WHERE NEITHER SUCH REGISTRATION NOR SUCH EXEMPTION IS REQUIRED BY LAW.

THE COMPANY (DEFINED BELOW) IS PERSONALLY OBLIGATED AND FULLY LIABLE FOR THE AMOUNT DUE UNDER THIS BOND AND, SUBJECT TO THE PROVISIONS OF THE INDENTURE (DEFINED BELOW), EACH HOLDER (AS DEFINED IN THE INDENTURE) HAS THE RIGHT TO SUE ON THIS BOND AND OBTAIN A PERSONAL JUDGMENT AGAINST THE COMPANY FOR SATISFACTION OF THE AMOUNT UNDER THIS BOND EITHER BEFORE OR AFTER A FORECLOSURE OF THE INDENTURE UNDER ALASKA STATUTES 09.45.170-09.45.220.

CHUGACH ELECTRIC ASSOCIATION, INC.

FIRST MORTGAGE BONDS, 2011 SERIES A DUE MARCH 15, 2041

NO. RB-16	ISSUANCE DATE: JANUARY 21, 2011
$500,000	PPN: 171265 A@0

FOR VALUE RECEIVED, the undersigned, CHUGACH ELECTRIC ASSOCIATION, INC. (herein called the “Company”), an electric cooperative organized and existing under the laws of the State of Alaska, hereby promises to pay to PIONEER MUTUAL LIFE INSURANCE COMPANY, or registered assigns, the principal sum of FIVE HUNDRED THOUSAND DOLLARS (or so much thereof as shall not have been prepaid) on March 15, 2041, with interest computed on the basis of a 360-day year of twelve 30-day months (a) on the unpaid balance hereof at a rate of 4.75% per annum (plus, upon the occurrence and during the continuation of an Interest Rate Adjustment Event (as hereinafter defined), an additional 2% per annum) from the date hereof, payable semiannually on the 15th day of each March and September, commencing on September 15, 2011, until the principal hereof shall have become due and payable, and (b) to the extent permitted by law, on any overdue payment (including any overdue prepayment) of principal, any overdue payment of interest, any overdue payment of any Make-Whole Amount (as defined in the First Supplemental Indenture referred to below), payable semiannually as aforesaid (or, at the option of the registered Holder hereof, on demand), at the Default Rate (as defined in the First Supplemental Indenture referred to below).

“Interest Rate Adjustment Event” means the occurrence of any of the following:

(a)            the Company defaults in the performance of Section 7.1(a) or (b) or Section 7.2 of the 2011 Series A Bond Purchase Agreement (as defined below); or

(b)            any representation or warranty made in writing by or on behalf of the Company or by any officer of the Company in the Indenture or the 2011 Series A Bond Purchase Agreement (as defined below) or in any writing furnished in connection with the transactions contemplated by the First Supplemental Indenture (referred to below) proves to have been false or incorrect in any material respect on the date as of which made and, with respect to representations and warranties made after the date hereof, for which accurate information has not since been provided in writing to the Holder of this Bond.

Subject to Section 11 of the 2011 Series A Bond Purchase Agreement (defined below), payments of principal of, interest on, and any Make-Whole Amount with respect to this Bond are to be made in lawful money of the United States of America in accordance with the terms of the Indenture.

This Bond is one of the 2011 Series A Bonds (herein called the “Bonds”) issued pursuant to the First Supplemental Indenture, dated as of January 20, 2011 (as from time to time amended, the “First Supplemental Indenture”), between the Company and the Trustee named therein which amends and supplements the Second Amended and Restated Indenture of Trust, dated as of January 20, 2011 (as amended and supplemented from time to time, the “Indenture”) and is entitled to the benefits thereof and the 2011 Series A Bond Purchase Agreement dated January 21, 2011 between the Company and the purchasers listed in Schedule A thereto (the “2011 Series A Bond Purchase Agreement”). Each Holder of this Bond will be deemed, by its acceptance hereof, to have (i) agreed to the confidentiality provisions set forth in Section 18 of the 2011 Series A Bond Purchase Agreement and (ii) made the representations set forth in Section 6 of the 2011 Series A Bond Purchase Agreement. Unless otherwise indicated, capitalized terms used in this Bond shall have the respective meanings ascribed to such terms in the First Supplemental Indenture.

This Bond shall be registered in the name of the Holder hereof. This Bond is transferable, as provided in the Indenture, only upon the registration books of the Company maintained by the Obligation Registrar, which shall be the Trustee, kept at its principal office, upon presentation at said office of this Bond with the written request of the registered owner hereof or his attorney duly authorized in writing, and a written instrument of transfer satisfactory to the Obligation Registrar duly executed by the registered owner or his duly authorized attorney.

The Bonds shall be issued as fully registered Bonds without coupons and in minimum denominations of $1.00 and any integral multiple of $1.00 in excess thereof. The Trustee may impose a charge sufficient to reimburse the Company or the Trustee for any tax, fee or other governmental charge required to be paid with respect to such exchange or any transfer of a Bond. The cost, if any, of preparing each new Bond issued upon such exchange or transfer, and any other expenses of the Company or the Trustee incurred in connection therewith, shall be paid by in accordance with Section 3.7 of the Indenture.

The Company will make the required prepayments of principal on this Bond on the dates and in the amount specified in the First Supplemental Indenture. This Bond is also subject to optional prepayment, in whole or from time to time in part, at the times and on the terms specified in First Supplemental Indenture, but not otherwise.

If an Event of Default under the Indenture occurs and is continuing, the principal of this Bond may be declared or otherwise become due and payable in the manner, at the price (including any applicable Make-Whole Amount) and with the effect provided in the Indenture. In the event that the principal of this Bond shall have been declared or otherwise become due and payable as described in the preceding sentence, then, in addition to paying the Holder hereof the entire unpaid principal amount of this Bond and all accrued and unpaid interest hereon (including, but not limited to, interest accrued hereon at the Default Rate), the Company shall pay to the Holder hereof (to the full extent permitted by applicable law) an amount equal to the Make-Whole Amount determined in respect of such principal amount.

- 2 -

The Holder of this Bond shall have no right to enforce the provisions of the Indenture, or to institute action to enforce the covenants therein, or to take any action with respect to any default under the Indenture, or to institute, appear in or defend any suit or other proceeding with respect thereto, except as provided in the Indenture and the 2011 Series A Bond Purchase Agreement.

All acts and proceedings required by law and by the Articles of Incorporation and Bylaws of the Company necessary to make the 2011 Series A Bonds issued under the Indenture, when executed by the Company, authenticated and delivered by the Trustee and duly issued, the valid, binding and legal obligations of the Company, in accordance with its terms, have been done and taken.

It is the intention of the Holder to comply with the usury laws of the State of Alaska and of the United States of America. This Bond is hereby expressly limited such that in no contingency or event whatsoever, whether by reason of acceleration, prepayment, or otherwise, shall the amount of interest contracted for, charged or received by the Holder for the use, forbearance, or detention of the principal indebtedness or interest hereof, which remains unpaid from time to time, exceed the highest maximum rate permitted by applicable law. If fulfillment of any provisions hereof, at the time of performance of such provisions shall be due, shall involve transcending the valid limits prescribed by applicable law, then, ipso facto, the obligation to be fulfilled shall be reduced to the maximum rate allowed by applicable law. If any Holder receives as interest an amount which will exceed the maximum rate allowed by applicable law, such amount shall be applied to the reduction of the principal amount owing hereunder or on account of any other principal indebtedness owed to Holder and not to the payment of interest, or if such excessive interest exceeds the unpaid balance of principal hereof and such other indebtedness, such excess shall be refunded. To the extent not prohibited by applicable law, determination of the maximum rate allowed by applicable law shall at all times be made by amortizing, prorating, allocating and spreading in equal parts during the full term of this Bond, all interest at any time contracted for, charged or received from the Company in connection with this Bond, so that the actual rate of interest on account of such indebtedness is uniform throughout the term of this Bond. The terms of this paragraph shall control and supersede any other provisions of this Bond.

This Bond shall be construed in accordance with and governed by the law of the State of Alaska.

No covenant or agreement contained in this Bond, the Indenture or the First Supplemental Indenture shall be deemed to be a covenant or agreement of any official, officer, agent or employee of the Company in his individual capacity, and no officer of the Company executing this Bond shall be liable personally on this Bond or be subject to any personal liability or accountability by reason of the issuance of this Bond.

This Bond shall not be entitled to any benefit under the Indenture or be valid until this Bond shall have been authenticated by the execution by the Trustee, or its successor as Trustee, of the Certificate of Authentication inscribed hereon.

- 3 -

IN WITNESS WHEREOF, the Company has caused this Bond to be executed by a duly authorized officer of the Company.

CHUGACH ELECTRIC ASSOCIATION, INC.
By:	/s/ Michael R. Cunningham
Name:
Title:	C.F.O.

- 4 -

This is one of the Obligations of the series designated therein referred to in the within-mentioned Indenture.

U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By:	/s/ Thomas Zrust
	Authorized Signatory

Date of Authentication: January 21, 2011

- 5 -

THIS 2011 SERIES A BOND HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM EXCEPT UNDER CIRCUMSTANCES WHERE NEITHER SUCH REGISTRATION NOR SUCH EXEMPTION IS REQUIRED BY LAW.

THE COMPANY (DEFINED BELOW) IS PERSONALLY OBLIGATED AND FULLY LIABLE FOR THE AMOUNT DUE UNDER THIS BOND AND, SUBJECT TO THE PROVISIONS OF THE INDENTURE (DEFINED BELOW), EACH HOLDER (AS DEFINED IN THE INDENTURE) HAS THE RIGHT TO SUE ON THIS BOND AND OBTAIN A PERSONAL JUDGMENT AGAINST THE COMPANY FOR SATISFACTION OF THE AMOUNT UNDER THIS BOND EITHER BEFORE OR AFTER A FORECLOSURE OF THE INDENTURE UNDER ALASKA STATUTES 09.45.170-09.45.220.

CHUGACH ELECTRIC ASSOCIATION, INC.

FIRST MORTGAGE BONDS, 2011 SERIES A DUE MARCH 15, 2041

NO. RB-17	ISSUANCE DATE: JANUARY 21, 2011
$5,000,000	PPN: 171265 A@0

FOR VALUE RECEIVED, the undersigned, CHUGACH ELECTRIC ASSOCIATION, INC. (herein called the “Company”), an electric cooperative organized and existing under the laws of the State of Alaska, hereby promises to pay to CUDD & CO., or registered assigns, the principal sum of FIVE MILLION DOLLARS (or so much thereof as shall not have been prepaid) on March 15, 2041, with interest computed on the basis of a 360-day year of twelve 30-day months (a) on the unpaid balance hereof at a rate of 4.75% per annum (plus, upon the occurrence and during the continuation of an Interest Rate Adjustment Event (as hereinafter defined), an additional 2% per annum) from the date hereof, payable semiannually on the 15th day of each March and September, commencing on September 15, 2011, until the principal hereof shall have become due and payable, and (b) to the extent permitted by law, on any overdue payment (including any overdue prepayment) of principal, any overdue payment of interest, any overdue payment of any Make-Whole Amount (as defined in the First Supplemental Indenture referred to below), payable semiannually as aforesaid (or, at the option of the registered Holder hereof, on demand), at the Default Rate (as defined in the First Supplemental Indenture referred to below).

“Interest Rate Adjustment Event” means the occurrence of any of the following:

(a)            the Company defaults in the performance of Section 7.1(a) or (b) or Section 7.2 of the 2011 Series A Bond Purchase Agreement (as defined below); or

(b)            any representation or warranty made in writing by or on behalf of the Company or by any officer of the Company in the Indenture or the 2011 Series A Bond Purchase Agreement (as defined below) or in any writing furnished in connection with the transactions contemplated by the First Supplemental Indenture (referred to below) proves to have been false or incorrect in any material respect on the date as of which made and, with respect to representations and warranties made after the date hereof, for which accurate information has not since been provided in writing to the Holder of this Bond.

Subject to Section 11 of the 2011 Series A Bond Purchase Agreement (defined below), payments of principal of, interest on, and any Make-Whole Amount with respect to this Bond are to be made in lawful money of the United States of America in accordance with the terms of the Indenture.

This Bond is one of the 2011 Series A Bonds (herein called the “Bonds”) issued pursuant to the First Supplemental Indenture, dated as of January 20, 2011 (as from time to time amended, the “First Supplemental Indenture”), between the Company and the Trustee named therein which amends and supplements the Second Amended and Restated Indenture of Trust, dated as of January 20, 2011 (as amended and supplemented from time to time, the “Indenture”) and is entitled to the benefits thereof and the 2011 Series A Bond Purchase Agreement dated January 21, 2011 between the Company and the purchasers listed in Schedule A thereto (the “2011 Series A Bond Purchase Agreement”). Each Holder of this Bond will be deemed, by its acceptance hereof, to have (i) agreed to the confidentiality provisions set forth in Section 18 of the 2011 Series A Bond Purchase Agreement and (ii) made the representations set forth in Section 6 of the 2011 Series A Bond Purchase Agreement. Unless otherwise indicated, capitalized terms used in this Bond shall have the respective meanings ascribed to such terms in the First Supplemental Indenture.

This Bond shall be registered in the name of the Holder hereof. This Bond is transferable, as provided in the Indenture, only upon the registration books of the Company maintained by the Obligation Registrar, which shall be the Trustee, kept at its principal office, upon presentation at said office of this Bond with the written request of the registered owner hereof or his attorney duly authorized in writing, and a written instrument of transfer satisfactory to the Obligation Registrar duly executed by the registered owner or his duly authorized attorney.

The Bonds shall be issued as fully registered Bonds without coupons and in minimum denominations of $1.00 and any integral multiple of $1.00 in excess thereof. The Trustee may impose a charge sufficient to reimburse the Company or the Trustee for any tax, fee or other governmental charge required to be paid with respect to such exchange or any transfer of a Bond. The cost, if any, of preparing each new Bond issued upon such exchange or transfer, and any other expenses of the Company or the Trustee incurred in connection therewith, shall be paid by in accordance with Section 3.7 of the Indenture.

The Company will make the required prepayments of principal on this Bond on the dates and in the amount specified in the First Supplemental Indenture. This Bond is also subject to optional prepayment, in whole or from time to time in part, at the times and on the terms specified in First Supplemental Indenture, but not otherwise.

If an Event of Default under the Indenture occurs and is continuing, the principal of this Bond may be declared or otherwise become due and payable in the manner, at the price (including any applicable Make-Whole Amount) and with the effect provided in the Indenture. In the event that the principal of this Bond shall have been declared or otherwise become due and payable as described in the preceding sentence, then, in addition to paying the Holder hereof the entire unpaid principal amount of this Bond and all accrued and unpaid interest hereon (including, but not limited to, interest accrued hereon at the Default Rate), the Company shall pay to the Holder hereof (to the full extent permitted by applicable law) an amount equal to the Make-Whole Amount determined in respect of such principal amount.

- 2 -

The Holder of this Bond shall have no right to enforce the provisions of the Indenture, or to institute action to enforce the covenants therein, or to take any action with respect to any default under the Indenture, or to institute, appear in or defend any suit or other proceeding with respect thereto, except as provided in the Indenture and the 2011 Series A Bond Purchase Agreement.

All acts and proceedings required by law and by the Articles of Incorporation and Bylaws of the Company necessary to make the 2011 Series A Bonds issued under the Indenture, when executed by the Company, authenticated and delivered by the Trustee and duly issued, the valid, binding and legal obligations of the Company, in accordance with its terms, have been done and taken.

It is the intention of the Holder to comply with the usury laws of the State of Alaska and of the United States of America. This Bond is hereby expressly limited such that in no contingency or event whatsoever, whether by reason of acceleration, prepayment, or otherwise, shall the amount of interest contracted for, charged or received by the Holder for the use, forbearance, or detention of the principal indebtedness or interest hereof, which remains unpaid from time to time, exceed the highest maximum rate permitted by applicable law. If fulfillment of any provisions hereof, at the time of performance of such provisions shall be due, shall involve transcending the valid limits prescribed by applicable law, then, ipso facto, the obligation to be fulfilled shall be reduced to the maximum rate allowed by applicable law. If any Holder receives as interest an amount which will exceed the maximum rate allowed by applicable law, such amount shall be applied to the reduction of the principal amount owing hereunder or on account of any other principal indebtedness owed to Holder and not to the payment of interest, or if such excessive interest exceeds the unpaid balance of principal hereof and such other indebtedness, such excess shall be refunded. To the extent not prohibited by applicable law, determination of the maximum rate allowed by applicable law shall at all times be made by amortizing, prorating, allocating and spreading in equal parts during the full term of this Bond, all interest at any time contracted for, charged or received from the Company in connection with this Bond, so that the actual rate of interest on account of such indebtedness is uniform throughout the term of this Bond. The terms of this paragraph shall control and supersede any other provisions of this Bond.

This Bond shall be construed in accordance with and governed by the law of the State of Alaska.

No covenant or agreement contained in this Bond, the Indenture or the First Supplemental Indenture shall be deemed to be a covenant or agreement of any official, officer, agent or employee of the Company in his individual capacity, and no officer of the Company executing this Bond shall be liable personally on this Bond or be subject to any personal liability or accountability by reason of the issuance of this Bond.

This Bond shall not be entitled to any benefit under the Indenture or be valid until this Bond shall have been authenticated by the execution by the Trustee, or its successor as Trustee, of the Certificate of Authentication inscribed hereon.

- 3 -

IN WITNESS WHEREOF, the Company has caused this Bond to be executed by a duly authorized officer of the Company.

CHUGACH ELECTRIC ASSOCIATION, INC.
By:	/s/ Michael R. Cunningham
Name:
Title:	C.F.O.

- 4 -

This is one of the Obligations of the series designated therein referred to in the within-mentioned Indenture.

U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By:	/s/ Thomas Zrust
	Authorized Signatory

Date of Authentication: January 21, 2011

- 5 -

THIS 2011 SERIES A BOND HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM EXCEPT UNDER CIRCUMSTANCES WHERE NEITHER SUCH REGISTRATION NOR SUCH EXEMPTION IS REQUIRED BY LAW.

THE COMPANY (DEFINED BELOW) IS PERSONALLY OBLIGATED AND FULLY LIABLE FOR THE AMOUNT DUE UNDER THIS BOND AND, SUBJECT TO THE PROVISIONS OF THE INDENTURE (DEFINED BELOW), EACH HOLDER (AS DEFINED IN THE INDENTURE) HAS THE RIGHT TO SUE ON THIS BOND AND OBTAIN A PERSONAL JUDGMENT AGAINST THE COMPANY FOR SATISFACTION OF THE AMOUNT UNDER THIS BOND EITHER BEFORE OR AFTER A FORECLOSURE OF THE INDENTURE UNDER ALASKA STATUTES 09.45.170-09.45.220.

CHUGACH ELECTRIC ASSOCIATION, INC.

FIRST MORTGAGE BONDS, 2011 SERIES A DUE MARCH 15, 2041

NO. RB-18	ISSUANCE DATE: JANUARY 21, 2011
$2,000,000	PPN: 171265 A@0

FOR VALUE RECEIVED, the undersigned, CHUGACH ELECTRIC ASSOCIATION, INC. (herein called the “Company”), an electric cooperative organized and existing under the laws of the State of Alaska, hereby promises to pay to CUDD & CO., or registered assigns, the principal sum of TWO MILLION DOLLARS (or so much thereof as shall not have been prepaid) on March 15, 2041, with interest computed on the basis of a 360-day year of twelve 30-day months (a) on the unpaid balance hereof at a rate of 4.75% per annum (plus, upon the occurrence and during the continuation of an Interest Rate Adjustment Event (as hereinafter defined), an additional 2% per annum) from the date hereof, payable semiannually on the 15th day of each March and September, commencing on September 15, 2011, until the principal hereof shall have become due and payable, and (b) to the extent permitted by law, on any overdue payment (including any overdue prepayment) of principal, any overdue payment of interest, any overdue payment of any Make-Whole Amount (as defined in the First Supplemental Indenture referred to below), payable semiannually as aforesaid (or, at the option of the registered Holder hereof, on demand), at the Default Rate (as defined in the First Supplemental Indenture referred to below).

“Interest Rate Adjustment Event” means the occurrence of any of the following:

(a)            the Company defaults in the performance of Section 7.1(a) or (b) or Section 7.2 of the 2011 Series A Bond Purchase Agreement (as defined below); or

(b)            any representation or warranty made in writing by or on behalf of the Company or by any officer of the Company in the Indenture or the 2011 Series A Bond Purchase Agreement (as defined below) or in any writing furnished in connection with the transactions contemplated by the First Supplemental Indenture (referred to below) proves to have been false or incorrect in any material respect on the date as of which made and, with respect to representations and warranties made after the date hereof, for which accurate information has not since been provided in writing to the Holder of this Bond.

Subject to Section 11 of the 2011 Series A Bond Purchase Agreement (defined below), payments of principal of, interest on, and any Make-Whole Amount with respect to this Bond are to be made in lawful money of the United States of America in accordance with the terms of the Indenture.

This Bond is one of the 2011 Series A Bonds (herein called the “Bonds”) issued pursuant to the First Supplemental Indenture, dated as of January 20, 2011 (as from time to time amended, the “First Supplemental Indenture”), between the Company and the Trustee named therein which amends and supplements the Second Amended and Restated Indenture of Trust, dated as of January 20, 2011 (as amended and supplemented from time to time, the “Indenture”) and is entitled to the benefits thereof and the 2011 Series A Bond Purchase Agreement dated January 21, 2011 between the Company and the purchasers listed in Schedule A thereto (the “2011 Series A Bond Purchase Agreement”). Each Holder of this Bond will be deemed, by its acceptance hereof, to have (i) agreed to the confidentiality provisions set forth in Section 18 of the 2011 Series A Bond Purchase Agreement and (ii) made the representations set forth in Section 6 of the 2011 Series A Bond Purchase Agreement. Unless otherwise indicated, capitalized terms used in this Bond shall have the respective meanings ascribed to such terms in the First Supplemental Indenture.

This Bond shall be registered in the name of the Holder hereof. This Bond is transferable, as provided in the Indenture, only upon the registration books of the Company maintained by the Obligation Registrar, which shall be the Trustee, kept at its principal office, upon presentation at said office of this Bond with the written request of the registered owner hereof or his attorney duly authorized in writing, and a written instrument of transfer satisfactory to the Obligation Registrar duly executed by the registered owner or his duly authorized attorney.

The Bonds shall be issued as fully registered Bonds without coupons and in minimum denominations of $1.00 and any integral multiple of $1.00 in excess thereof. The Trustee may impose a charge sufficient to reimburse the Company or the Trustee for any tax, fee or other governmental charge required to be paid with respect to such exchange or any transfer of a Bond. The cost, if any, of preparing each new Bond issued upon such exchange or transfer, and any other expenses of the Company or the Trustee incurred in connection therewith, shall be paid by in accordance with Section 3.7 of the Indenture.

The Company will make the required prepayments of principal on this Bond on the dates and in the amount specified in the First Supplemental Indenture. This Bond is also subject to optional prepayment, in whole or from time to time in part, at the times and on the terms specified in First Supplemental Indenture, but not otherwise.

If an Event of Default under the Indenture occurs and is continuing, the principal of this Bond may be declared or otherwise become due and payable in the manner, at the price (including any applicable Make-Whole Amount) and with the effect provided in the Indenture. In the event that the principal of this Bond shall have been declared or otherwise become due and payable as described in the preceding sentence, then, in addition to paying the Holder hereof the entire unpaid principal amount of this Bond and all accrued and unpaid interest hereon (including, but not limited to, interest accrued hereon at the Default Rate), the Company shall pay to the Holder hereof (to the full extent permitted by applicable law) an amount equal to the Make-Whole Amount determined in respect of such principal amount.

- 2 -

The Holder of this Bond shall have no right to enforce the provisions of the Indenture, or to institute action to enforce the covenants therein, or to take any action with respect to any default under the Indenture, or to institute, appear in or defend any suit or other proceeding with respect thereto, except as provided in the Indenture and the 2011 Series A Bond Purchase Agreement.

All acts and proceedings required by law and by the Articles of Incorporation and Bylaws of the Company necessary to make the 2011 Series A Bonds issued under the Indenture, when executed by the Company, authenticated and delivered by the Trustee and duly issued, the valid, binding and legal obligations of the Company, in accordance with its terms, have been done and taken.

It is the intention of the Holder to comply with the usury laws of the State of Alaska and of the United States of America. This Bond is hereby expressly limited such that in no contingency or event whatsoever, whether by reason of acceleration, prepayment, or otherwise, shall the amount of interest contracted for, charged or received by the Holder for the use, forbearance, or detention of the principal indebtedness or interest hereof, which remains unpaid from time to time, exceed the highest maximum rate permitted by applicable law. If fulfillment of any provisions hereof, at the time of performance of such provisions shall be due, shall involve transcending the valid limits prescribed by applicable law, then, ipso facto, the obligation to be fulfilled shall be reduced to the maximum rate allowed by applicable law. If any Holder receives as interest an amount which will exceed the maximum rate allowed by applicable law, such amount shall be applied to the reduction of the principal amount owing hereunder or on account of any other principal indebtedness owed to Holder and not to the payment of interest, or if such excessive interest exceeds the unpaid balance of principal hereof and such other indebtedness, such excess shall be refunded. To the extent not prohibited by applicable law, determination of the maximum rate allowed by applicable law shall at all times be made by amortizing, prorating, allocating and spreading in equal parts during the full term of this Bond, all interest at any time contracted for, charged or received from the Company in connection with this Bond, so that the actual rate of interest on account of such indebtedness is uniform throughout the term of this Bond. The terms of this paragraph shall control and supersede any other provisions of this Bond.

This Bond shall be construed in accordance with and governed by the law of the State of Alaska.

No covenant or agreement contained in this Bond, the Indenture or the First Supplemental Indenture shall be deemed to be a covenant or agreement of any official, officer, agent or employee of the Company in his individual capacity, and no officer of the Company executing this Bond shall be liable personally on this Bond or be subject to any personal liability or accountability by reason of the issuance of this Bond.

This Bond shall not be entitled to any benefit under the Indenture or be valid until this Bond shall have been authenticated by the execution by the Trustee, or its successor as Trustee, of the Certificate of Authentication inscribed hereon.

- 3 -

IN WITNESS WHEREOF, the Company has caused this Bond to be executed by a duly authorized officer of the Company.

CHUGACH ELECTRIC ASSOCIATION, INC.
By:	/s/ Michael R. Cunningham
Name:
Title:	C.F.O.

- 4 -

This is one of the Obligations of the series designated therein referred to in the within-mentioned Indenture.

U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By:	/s/ Thomas Zrust
	Authorized Signatory

Date of Authentication: January 21, 2011

- 5 -

THIS 2011 SERIES A BOND HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM EXCEPT UNDER CIRCUMSTANCES WHERE NEITHER SUCH REGISTRATION NOR SUCH EXEMPTION IS REQUIRED BY LAW.

THE COMPANY (DEFINED BELOW) IS PERSONALLY OBLIGATED AND FULLY LIABLE FOR THE AMOUNT DUE UNDER THIS BOND AND, SUBJECT TO THE PROVISIONS OF THE INDENTURE (DEFINED BELOW), EACH HOLDER (AS DEFINED IN THE INDENTURE) HAS THE RIGHT TO SUE ON THIS BOND AND OBTAIN A PERSONAL JUDGMENT AGAINST THE COMPANY FOR SATISFACTION OF THE AMOUNT UNDER THIS BOND EITHER BEFORE OR AFTER A FORECLOSURE OF THE INDENTURE UNDER ALASKA STATUTES 09.45.170-09.45.220.

CHUGACH ELECTRIC ASSOCIATION, INC.

FIRST MORTGAGE BONDS, 2011 SERIES A DUE MARCH 15, 2041

NO. RB-19	ISSUANCE DATE: JANUARY 21, 2011
$3,000,000	PPN: 171265 A@0

FOR VALUE RECEIVED, the undersigned, CHUGACH ELECTRIC ASSOCIATION, INC. (herein called the “Company”), an electric cooperative organized and existing under the laws of the State of Alaska, hereby promises to pay to COUNTRY LIFE INSURANCE COMPANY, or registered assigns, the principal sum of THREE MILLION DOLLARS (or so much thereof as shall not have been prepaid) on March 15, 2041, with interest computed on the basis of a 360-day year of twelve 30-day months (a) on the unpaid balance hereof at a rate of 4.75% per annum (plus, upon the occurrence and during the continuation of an Interest Rate Adjustment Event (as hereinafter defined), an additional 2% per annum) from the date hereof, payable semiannually on the 15th day of each March and September, commencing on September 15, 2011, until the principal hereof shall have become due and payable, and (b) to the extent permitted by law, on any overdue payment (including any overdue prepayment) of principal, any overdue payment of interest, any overdue payment of any Make-Whole Amount (as defined in the First Supplemental Indenture referred to below), payable semiannually as aforesaid (or, at the option of the registered Holder hereof, on demand), at the Default Rate (as defined in the First Supplemental Indenture referred to below).

“Interest Rate Adjustment Event” means the occurrence of any of the following:

(a)            the Company defaults in the performance of Section 7.1(a) or (b) or Section 7.2 of the 2011 Series A Bond Purchase Agreement (as defined below); or

(b)            any representation or warranty made in writing by or on behalf of the Company or by any officer of the Company in the Indenture or the 2011 Series A Bond Purchase Agreement (as defined below) or in any writing furnished in connection with the transactions contemplated by the First Supplemental Indenture (referred to below) proves to have been false or incorrect in any material respect on the date as of which made and, with respect to representations and warranties made after the date hereof, for which accurate information has not since been provided in writing to the Holder of this Bond.

Subject to Section 11 of the 2011 Series A Bond Purchase Agreement (defined below), payments of principal of, interest on, and any Make-Whole Amount with respect to this Bond are to be made in lawful money of the United States of America in accordance with the terms of the Indenture.

This Bond is one of the 2011 Series A Bonds (herein called the “Bonds”) issued pursuant to the First Supplemental Indenture, dated as of January 20, 2011 (as from time to time amended, the “First Supplemental Indenture”), between the Company and the Trustee named therein which amends and supplements the Second Amended and Restated Indenture of Trust, dated as of January 20, 2011 (as amended and supplemented from time to time, the “Indenture”) and is entitled to the benefits thereof and the 2011 Series A Bond Purchase Agreement dated January 21, 2011 between the Company and the purchasers listed in Schedule A thereto (the “2011 Series A Bond Purchase Agreement”). Each Holder of this Bond will be deemed, by its acceptance hereof, to have (i) agreed to the confidentiality provisions set forth in Section 18 of the 2011 Series A Bond Purchase Agreement and (ii) made the representations set forth in Section 6 of the 2011 Series A Bond Purchase Agreement. Unless otherwise indicated, capitalized terms used in this Bond shall have the respective meanings ascribed to such terms in the First Supplemental Indenture.

This Bond shall be registered in the name of the Holder hereof. This Bond is transferable, as provided in the Indenture, only upon the registration books of the Company maintained by the Obligation Registrar, which shall be the Trustee, kept at its principal office, upon presentation at said office of this Bond with the written request of the registered owner hereof or his attorney duly authorized in writing, and a written instrument of transfer satisfactory to the Obligation Registrar duly executed by the registered owner or his duly authorized attorney.

The Bonds shall be issued as fully registered Bonds without coupons and in minimum denominations of $1.00 and any integral multiple of $1.00 in excess thereof. The Trustee may impose a charge sufficient to reimburse the Company or the Trustee for any tax, fee or other governmental charge required to be paid with respect to such exchange or any transfer of a Bond. The cost, if any, of preparing each new Bond issued upon such exchange or transfer, and any other expenses of the Company or the Trustee incurred in connection therewith, shall be paid by in accordance with Section 3.7 of the Indenture.

The Company will make the required prepayments of principal on this Bond on the dates and in the amount specified in the First Supplemental Indenture. This Bond is also subject to optional prepayment, in whole or from time to time in part, at the times and on the terms specified in First Supplemental Indenture, but not otherwise.

If an Event of Default under the Indenture occurs and is continuing, the principal of this Bond may be declared or otherwise become due and payable in the manner, at the price (including any applicable Make-Whole Amount) and with the effect provided in the Indenture. In the event that the principal of this Bond shall have been declared or otherwise become due and payable as described in the preceding sentence, then, in addition to paying the Holder hereof the entire unpaid principal amount of this Bond and all accrued and unpaid interest hereon (including, but not limited to, interest accrued hereon at the Default Rate), the Company shall pay to the Holder hereof (to the full extent permitted by applicable law) an amount equal to the Make-Whole Amount determined in respect of such principal amount.

- 2 -

The Holder of this Bond shall have no right to enforce the provisions of the Indenture, or to institute action to enforce the covenants therein, or to take any action with respect to any default under the Indenture, or to institute, appear in or defend any suit or other proceeding with respect thereto, except as provided in the Indenture and the 2011 Series A Bond Purchase Agreement.

All acts and proceedings required by law and by the Articles of Incorporation and Bylaws of the Company necessary to make the 2011 Series A Bonds issued under the Indenture, when executed by the Company, authenticated and delivered by the Trustee and duly issued, the valid, binding and legal obligations of the Company, in accordance with its terms, have been done and taken.

It is the intention of the Holder to comply with the usury laws of the State of Alaska and of the United States of America. This Bond is hereby expressly limited such that in no contingency or event whatsoever, whether by reason of acceleration, prepayment, or otherwise, shall the amount of interest contracted for, charged or received by the Holder for the use, forbearance, or detention of the principal indebtedness or interest hereof, which remains unpaid from time to time, exceed the highest maximum rate permitted by applicable law. If fulfillment of any provisions hereof, at the time of performance of such provisions shall be due, shall involve transcending the valid limits prescribed by applicable law, then, ipso facto, the obligation to be fulfilled shall be reduced to the maximum rate allowed by applicable law. If any Holder receives as interest an amount which will exceed the maximum rate allowed by applicable law, such amount shall be applied to the reduction of the principal amount owing hereunder or on account of any other principal indebtedness owed to Holder and not to the payment of interest, or if such excessive interest exceeds the unpaid balance of principal hereof and such other indebtedness, such excess shall be refunded. To the extent not prohibited by applicable law, determination of the maximum rate allowed by applicable law shall at all times be made by amortizing, prorating, allocating and spreading in equal parts during the full term of this Bond, all interest at any time contracted for, charged or received from the Company in connection with this Bond, so that the actual rate of interest on account of such indebtedness is uniform throughout the term of this Bond. The terms of this paragraph shall control and supersede any other provisions of this Bond.

This Bond shall be construed in accordance with and governed by the law of the State of Alaska.

No covenant or agreement contained in this Bond, the Indenture or the First Supplemental Indenture shall be deemed to be a covenant or agreement of any official, officer, agent or employee of the Company in his individual capacity, and no officer of the Company executing this Bond shall be liable personally on this Bond or be subject to any personal liability or accountability by reason of the issuance of this Bond.

This Bond shall not be entitled to any benefit under the Indenture or be valid until this Bond shall have been authenticated by the execution by the Trustee, or its successor as Trustee, of the Certificate of Authentication inscribed hereon.

- 3 -

IN WITNESS WHEREOF, the Company has caused this Bond to be executed by a duly authorized officer of the Company.

CHUGACH ELECTRIC ASSOCIATION, INC.
By:	/s/ Michael R. Cunningham
Name:
Title:	C.F.O.

- 4 -

This is one of the Obligations of the series designated therein referred to in the within-mentioned Indenture.

U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By:	/s/ Thomas Zrust
	Authorized Signatory

Date of Authentication: January 21, 2011

- 5 -

THIS 2011 SERIES A BOND HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM EXCEPT UNDER CIRCUMSTANCES WHERE NEITHER SUCH REGISTRATION NOR SUCH EXEMPTION IS REQUIRED BY LAW.

THE COMPANY (DEFINED BELOW) IS PERSONALLY OBLIGATED AND FULLY LIABLE FOR THE AMOUNT DUE UNDER THIS BOND AND, SUBJECT TO THE PROVISIONS OF THE INDENTURE (DEFINED BELOW), EACH HOLDER (AS DEFINED IN THE INDENTURE) HAS THE RIGHT TO SUE ON THIS BOND AND OBTAIN A PERSONAL JUDGMENT AGAINST THE COMPANY FOR SATISFACTION OF THE AMOUNT UNDER THIS BOND EITHER BEFORE OR AFTER A FORECLOSURE OF THE INDENTURE UNDER ALASKA STATUTES 09.45.170-09.45.220.

CHUGACH ELECTRIC ASSOCIATION, INC.

FIRST MORTGAGE BONDS, 2011 SERIES A DUE MARCH 15, 2041

NO. RB-20	ISSUANCE DATE: JANUARY 21, 2011
$1,000,000	PPN: 171265 A@0

FOR VALUE RECEIVED, the undersigned, CHUGACH ELECTRIC ASSOCIATION, INC. (herein called the “Company”), an electric cooperative organized and existing under the laws of the State of Alaska, hereby promises to pay to COTTON STATES LIFE INSURANCE COMPANY, or registered assigns, the principal sum of ONE MILLION DOLLARS (or so much thereof as shall not have been prepaid) on March 15, 2041, with interest computed on the basis of a 360-day year of twelve 30-day months (a) on the unpaid balance hereof at a rate of 4.75% per annum (plus, upon the occurrence and during the continuation of an Interest Rate Adjustment Event (as hereinafter defined), an additional 2% per annum) from the date hereof, payable semiannually on the 15th day of each March and September, commencing on September 15, 2011, until the principal hereof shall have become due and payable, and (b) to the extent permitted by law, on any overdue payment (including any overdue prepayment) of principal, any overdue payment of interest, any overdue payment of any Make-Whole Amount (as defined in the First Supplemental Indenture referred to below), payable semiannually as aforesaid (or, at the option of the registered Holder hereof, on demand), at the Default Rate (as defined in the First Supplemental Indenture referred to below).

“Interest Rate Adjustment Event” means the occurrence of any of the following:

(a)            the Company defaults in the performance of Section 7.1(a) or (b) or Section 7.2 of the 2011 Series A Bond Purchase Agreement (as defined below); or

(b)            any representation or warranty made in writing by or on behalf of the Company or by any officer of the Company in the Indenture or the 2011 Series A Bond Purchase Agreement (as defined below) or in any writing furnished in connection with the transactions contemplated by the First Supplemental Indenture (referred to below) proves to have been false or incorrect in any material respect on the date as of which made and, with respect to representations and warranties made after the date hereof, for which accurate information has not since been provided in writing to the Holder of this Bond.

Subject to Section 11 of the 2011 Series A Bond Purchase Agreement (defined below), payments of principal of, interest on, and any Make-Whole Amount with respect to this Bond are to be made in lawful money of the United States of America in accordance with the terms of the Indenture.

This Bond is one of the 2011 Series A Bonds (herein called the “Bonds”) issued pursuant to the First Supplemental Indenture, dated as of January 20, 2011 (as from time to time amended, the “First Supplemental Indenture”), between the Company and the Trustee named therein which amends and supplements the Second Amended and Restated Indenture of Trust, dated as of January 20, 2011 (as amended and supplemented from time to time, the “Indenture”) and is entitled to the benefits thereof and the 2011 Series A Bond Purchase Agreement dated January 21, 2011 between the Company and the purchasers listed in Schedule A thereto (the “2011 Series A Bond Purchase Agreement”). Each Holder of this Bond will be deemed, by its acceptance hereof, to have (i) agreed to the confidentiality provisions set forth in Section 18 of the 2011 Series A Bond Purchase Agreement and (ii) made the representations set forth in Section 6 of the 2011 Series A Bond Purchase Agreement. Unless otherwise indicated, capitalized terms used in this Bond shall have the respective meanings ascribed to such terms in the First Supplemental Indenture.

This Bond shall be registered in the name of the Holder hereof. This Bond is transferable, as provided in the Indenture, only upon the registration books of the Company maintained by the Obligation Registrar, which shall be the Trustee, kept at its principal office, upon presentation at said office of this Bond with the written request of the registered owner hereof or his attorney duly authorized in writing, and a written instrument of transfer satisfactory to the Obligation Registrar duly executed by the registered owner or his duly authorized attorney.

The Bonds shall be issued as fully registered Bonds without coupons and in minimum denominations of $1.00 and any integral multiple of $1.00 in excess thereof. The Trustee may impose a charge sufficient to reimburse the Company or the Trustee for any tax, fee or other governmental charge required to be paid with respect to such exchange or any transfer of a Bond. The cost, if any, of preparing each new Bond issued upon such exchange or transfer, and any other expenses of the Company or the Trustee incurred in connection therewith, shall be paid by in accordance with Section 3.7 of the Indenture.

The Company will make the required prepayments of principal on this Bond on the dates and in the amount specified in the First Supplemental Indenture. This Bond is also subject to optional prepayment, in whole or from time to time in part, at the times and on the terms specified in First Supplemental Indenture, but not otherwise.

If an Event of Default under the Indenture occurs and is continuing, the principal of this Bond may be declared or otherwise become due and payable in the manner, at the price (including any applicable Make-Whole Amount) and with the effect provided in the Indenture. In the event that the principal of this Bond shall have been declared or otherwise become due and payable as described in the preceding sentence, then, in addition to paying the Holder hereof the entire unpaid principal amount of this Bond and all accrued and unpaid interest hereon (including, but not limited to, interest accrued hereon at the Default Rate), the Company shall pay to the Holder hereof (to the full extent permitted by applicable law) an amount equal to the Make-Whole Amount determined in respect of such principal amount.

- 2 -

The Holder of this Bond shall have no right to enforce the provisions of the Indenture, or to institute action to enforce the covenants therein, or to take any action with respect to any default under the Indenture, or to institute, appear in or defend any suit or other proceeding with respect thereto, except as provided in the Indenture and the 2011 Series A Bond Purchase Agreement.

All acts and proceedings required by law and by the Articles of Incorporation and Bylaws of the Company necessary to make the 2011 Series A Bonds issued under the Indenture, when executed by the Company, authenticated and delivered by the Trustee and duly issued, the valid, binding and legal obligations of the Company, in accordance with its terms, have been done and taken.

It is the intention of the Holder to comply with the usury laws of the State of Alaska and of the United States of America. This Bond is hereby expressly limited such that in no contingency or event whatsoever, whether by reason of acceleration, prepayment, or otherwise, shall the amount of interest contracted for, charged or received by the Holder for the use, forbearance, or detention of the principal indebtedness or interest hereof, which remains unpaid from time to time, exceed the highest maximum rate permitted by applicable law. If fulfillment of any provisions hereof, at the time of performance of such provisions shall be due, shall involve transcending the valid limits prescribed by applicable law, then, ipso facto, the obligation to be fulfilled shall be reduced to the maximum rate allowed by applicable law. If any Holder receives as interest an amount which will exceed the maximum rate allowed by applicable law, such amount shall be applied to the reduction of the principal amount owing hereunder or on account of any other principal indebtedness owed to Holder and not to the payment of interest, or if such excessive interest exceeds the unpaid balance of principal hereof and such other indebtedness, such excess shall be refunded. To the extent not prohibited by applicable law, determination of the maximum rate allowed by applicable law shall at all times be made by amortizing, prorating, allocating and spreading in equal parts during the full term of this Bond, all interest at any time contracted for, charged or received from the Company in connection with this Bond, so that the actual rate of interest on account of such indebtedness is uniform throughout the term of this Bond. The terms of this paragraph shall control and supersede any other provisions of this Bond.

This Bond shall be construed in accordance with and governed by the law of the State of Alaska.

No covenant or agreement contained in this Bond, the Indenture or the First Supplemental Indenture shall be deemed to be a covenant or agreement of any official, officer, agent or employee of the Company in his individual capacity, and no officer of the Company executing this Bond shall be liable personally on this Bond or be subject to any personal liability or accountability by reason of the issuance of this Bond.

This Bond shall not be entitled to any benefit under the Indenture or be valid until this Bond shall have been authenticated by the execution by the Trustee, or its successor as Trustee, of the Certificate of Authentication inscribed hereon.

- 3 -

IN WITNESS WHEREOF, the Company has caused this Bond to be executed by a duly authorized officer of the Company.

CHUGACH ELECTRIC ASSOCIATION, INC.
By:	/s/ Michael R. Cunningham
Name:
Title:	C.F.O.

- 4 -

This is one of the Obligations of the series designated therein referred to in the within-mentioned Indenture.

U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By:	/s/ Thomas Zrust
	Authorized Signatory

Date of Authentication: January 21, 2011

- 5 -

THIS 2011 SERIES A BOND HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM EXCEPT UNDER CIRCUMSTANCES WHERE NEITHER SUCH REGISTRATION NOR SUCH EXEMPTION IS REQUIRED BY LAW.

THE COMPANY (DEFINED BELOW) IS PERSONALLY OBLIGATED AND FULLY LIABLE FOR THE AMOUNT DUE UNDER THIS BOND AND, SUBJECT TO THE PROVISIONS OF THE INDENTURE (DEFINED BELOW), EACH HOLDER (AS DEFINED IN THE INDENTURE) HAS THE RIGHT TO SUE ON THIS BOND AND OBTAIN A PERSONAL JUDGMENT AGAINST THE COMPANY FOR SATISFACTION OF THE AMOUNT UNDER THIS BOND EITHER BEFORE OR AFTER A FORECLOSURE OF THE INDENTURE UNDER ALASKA STATUTES 09.45.170-09.45.220.

CHUGACH ELECTRIC ASSOCIATION, INC.

FIRST MORTGAGE BONDS, 2011 SERIES A DUE MARCH 15, 2041

NO. RB-21	ISSUANCE DATE: JANUARY 21, 2011
$2,000,000	PPN: 171265 A@0

FOR VALUE RECEIVED, the undersigned, CHUGACH ELECTRIC ASSOCIATION, INC. (herein called the “Company”), an electric cooperative organized and existing under the laws of the State of Alaska, hereby promises to pay to PHOENIX LIFE INSURANCE COMPANY, or registered assigns, the principal sum of TWO MILLION DOLLARS (or so much thereof as shall not have been prepaid) on March 15, 2041, with interest computed on the basis of a 360-day year of twelve 30-day months (a) on the unpaid balance hereof at a rate of 4.75% per annum (plus, upon the occurrence and during the continuation of an Interest Rate Adjustment Event (as hereinafter defined), an additional 2% per annum) from the date hereof, payable semiannually on the 15th day of each March and September, commencing on September 15, 2011, until the principal hereof shall have become due and payable, and (b) to the extent permitted by law, on any overdue payment (including any overdue prepayment) of principal, any overdue payment of interest, any overdue payment of any Make-Whole Amount (as defined in the First Supplemental Indenture referred to below), payable semiannually as aforesaid (or, at the option of the registered Holder hereof, on demand), at the Default Rate (as defined in the First Supplemental Indenture referred to below).

“Interest Rate Adjustment Event” means the occurrence of any of the following:

(a)            the Company defaults in the performance of Section 7.1(a) or (b) or Section 7.2 of the 2011 Series A Bond Purchase Agreement (as defined below); or

(b)            any representation or warranty made in writing by or on behalf of the Company or by any officer of the Company in the Indenture or the 2011 Series A Bond Purchase Agreement (as defined below) or in any writing furnished in connection with the transactions contemplated by the First Supplemental Indenture (referred to below) proves to have been false or incorrect in any material respect on the date as of which made and, with respect to representations and warranties made after the date hereof, for which accurate information has not since been provided in writing to the Holder of this Bond.

Subject to Section 11 of the 2011 Series A Bond Purchase Agreement (defined below), payments of principal of, interest on, and any Make-Whole Amount with respect to this Bond are to be made in lawful money of the United States of America in accordance with the terms of the Indenture.

This Bond is one of the 2011 Series A Bonds (herein called the “Bonds”) issued pursuant to the First Supplemental Indenture, dated as of January 20, 2011 (as from time to time amended, the “First Supplemental Indenture”), between the Company and the Trustee named therein which amends and supplements the Second Amended and Restated Indenture of Trust, dated as of January 20, 2011 (as amended and supplemented from time to time, the “Indenture”) and is entitled to the benefits thereof and the 2011 Series A Bond Purchase Agreement dated January 21, 2011 between the Company and the purchasers listed in Schedule A thereto (the “2011 Series A Bond Purchase Agreement”). Each Holder of this Bond will be deemed, by its acceptance hereof, to have (i) agreed to the confidentiality provisions set forth in Section 18 of the 2011 Series A Bond Purchase Agreement and (ii) made the representations set forth in Section 6 of the 2011 Series A Bond Purchase Agreement. Unless otherwise indicated, capitalized terms used in this Bond shall have the respective meanings ascribed to such terms in the First Supplemental Indenture.

This Bond shall be registered in the name of the Holder hereof. This Bond is transferable, as provided in the Indenture, only upon the registration books of the Company maintained by the Obligation Registrar, which shall be the Trustee, kept at its principal office, upon presentation at said office of this Bond with the written request of the registered owner hereof or his attorney duly authorized in writing, and a written instrument of transfer satisfactory to the Obligation Registrar duly executed by the registered owner or his duly authorized attorney.

The Bonds shall be issued as fully registered Bonds without coupons and in minimum denominations of $1.00 and any integral multiple of $1.00 in excess thereof. The Trustee may impose a charge sufficient to reimburse the Company or the Trustee for any tax, fee or other governmental charge required to be paid with respect to such exchange or any transfer of a Bond. The cost, if any, of preparing each new Bond issued upon such exchange or transfer, and any other expenses of the Company or the Trustee incurred in connection therewith, shall be paid by in accordance with Section 3.7 of the Indenture.

The Company will make the required prepayments of principal on this Bond on the dates and in the amount specified in the First Supplemental Indenture. This Bond is also subject to optional prepayment, in whole or from time to time in part, at the times and on the terms specified in First Supplemental Indenture, but not otherwise.

If an Event of Default under the Indenture occurs and is continuing, the principal of this Bond may be declared or otherwise become due and payable in the manner, at the price (including any applicable Make-Whole Amount) and with the effect provided in the Indenture. In the event that the principal of this Bond shall have been declared or otherwise become due and payable as described in the preceding sentence, then, in addition to paying the Holder hereof the entire unpaid principal amount of this Bond and all accrued and unpaid interest hereon (including, but not limited to, interest accrued hereon at the Default Rate), the Company shall pay to the Holder hereof (to the full extent permitted by applicable law) an amount equal to the Make-Whole Amount determined in respect of such principal amount.

- 2 -

The Holder of this Bond shall have no right to enforce the provisions of the Indenture, or to institute action to enforce the covenants therein, or to take any action with respect to any default under the Indenture, or to institute, appear in or defend any suit or other proceeding with respect thereto, except as provided in the Indenture and the 2011 Series A Bond Purchase Agreement.

All acts and proceedings required by law and by the Articles of Incorporation and Bylaws of the Company necessary to make the 2011 Series A Bonds issued under the Indenture, when executed by the Company, authenticated and delivered by the Trustee and duly issued, the valid, binding and legal obligations of the Company, in accordance with its terms, have been done and taken.

It is the intention of the Holder to comply with the usury laws of the State of Alaska and of the United States of America. This Bond is hereby expressly limited such that in no contingency or event whatsoever, whether by reason of acceleration, prepayment, or otherwise, shall the amount of interest contracted for, charged or received by the Holder for the use, forbearance, or detention of the principal indebtedness or interest hereof, which remains unpaid from time to time, exceed the highest maximum rate permitted by applicable law. If fulfillment of any provisions hereof, at the time of performance of such provisions shall be due, shall involve transcending the valid limits prescribed by applicable law, then, ipso facto, the obligation to be fulfilled shall be reduced to the maximum rate allowed by applicable law. If any Holder receives as interest an amount which will exceed the maximum rate allowed by applicable law, such amount shall be applied to the reduction of the principal amount owing hereunder or on account of any other principal indebtedness owed to Holder and not to the payment of interest, or if such excessive interest exceeds the unpaid balance of principal hereof and such other indebtedness, such excess shall be refunded. To the extent not prohibited by applicable law, determination of the maximum rate allowed by applicable law shall at all times be made by amortizing, prorating, allocating and spreading in equal parts during the full term of this Bond, all interest at any time contracted for, charged or received from the Company in connection with this Bond, so that the actual rate of interest on account of such indebtedness is uniform throughout the term of this Bond. The terms of this paragraph shall control and supersede any other provisions of this Bond.

This Bond shall be construed in accordance with and governed by the law of the State of Alaska.

No covenant or agreement contained in this Bond, the Indenture or the First Supplemental Indenture shall be deemed to be a covenant or agreement of any official, officer, agent or employee of the Company in his individual capacity, and no officer of the Company executing this Bond shall be liable personally on this Bond or be subject to any personal liability or accountability by reason of the issuance of this Bond.

This Bond shall not be entitled to any benefit under the Indenture or be valid until this Bond shall have been authenticated by the execution by the Trustee, or its successor as Trustee, of the Certificate of Authentication inscribed hereon.

- 3 -

IN WITNESS WHEREOF, the Company has caused this Bond to be executed by a duly authorized officer of the Company.

CHUGACH ELECTRIC ASSOCIATION, INC.
By:	/s/ Michael R. Cunningham
Name:
Title:	C.F.O.

- 4 -

This is one of the Obligations of the series designated therein referred to in the within-mentioned Indenture.

U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By:	/s/ Thomas Zrust
	Authorized Signatory

Date of Authentication: January 21, 2011

- 5 -

THIS 2011 SERIES A BOND HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM EXCEPT UNDER CIRCUMSTANCES WHERE NEITHER SUCH REGISTRATION NOR SUCH EXEMPTION IS REQUIRED BY LAW.

THE COMPANY (DEFINED BELOW) IS PERSONALLY OBLIGATED AND FULLY LIABLE FOR THE AMOUNT DUE UNDER THIS BOND AND, SUBJECT TO THE PROVISIONS OF THE INDENTURE (DEFINED BELOW), EACH HOLDER (AS DEFINED IN THE INDENTURE) HAS THE RIGHT TO SUE ON THIS BOND AND OBTAIN A PERSONAL JUDGMENT AGAINST THE COMPANY FOR SATISFACTION OF THE AMOUNT UNDER THIS BOND EITHER BEFORE OR AFTER A FORECLOSURE OF THE INDENTURE UNDER ALASKA STATUTES 09.45.170-09.45.220.

CHUGACH ELECTRIC ASSOCIATION, INC.

FIRST MORTGAGE BONDS, 2011 SERIES A DUE MARCH 15, 2041

NO. RB-22	ISSUANCE DATE: JANUARY 21, 2011
$1,000,000	PPN: 171265 A@0

FOR VALUE RECEIVED, the undersigned, CHUGACH ELECTRIC ASSOCIATION, INC. (herein called the “Company”), an electric cooperative organized and existing under the laws of the State of Alaska, hereby promises to pay to PHL VARIABLE INSURANCE COMPANY, or registered assigns, the principal sum of ONE MILLION DOLLARS (or so much thereof as shall not have been prepaid) on March 15, 2041, with interest computed on the basis of a 360-day year of twelve 30-day months (a) on the unpaid balance hereof at a rate of 4.75% per annum (plus, upon the occurrence and during the continuation of an Interest Rate Adjustment Event (as hereinafter defined), an additional 2% per annum) from the date hereof, payable semiannually on the 15th day of each March and September, commencing on September 15, 2011, until the principal hereof shall have become due and payable, and (b) to the extent permitted by law, on any overdue payment (including any overdue prepayment) of principal, any overdue payment of interest, any overdue payment of any Make-Whole Amount (as defined in the First Supplemental Indenture referred to below), payable semiannually as aforesaid (or, at the option of the registered Holder hereof, on demand), at the Default Rate (as defined in the First Supplemental Indenture referred to below).

“Interest Rate Adjustment Event” means the occurrence of any of the following:

(a)            the Company defaults in the performance of Section 7.1(a) or (b) or Section 7.2 of the 2011 Series A Bond Purchase Agreement (as defined below); or

(b)            any representation or warranty made in writing by or on behalf of the Company or by any officer of the Company in the Indenture or the 2011 Series A Bond Purchase Agreement (as defined below) or in any writing furnished in connection with the transactions contemplated by the First Supplemental Indenture (referred to below) proves to have been false or incorrect in any material respect on the date as of which made and, with respect to representations and warranties made after the date hereof, for which accurate information has not since been provided in writing to the Holder of this Bond.

Subject to Section 11 of the 2011 Series A Bond Purchase Agreement (defined below), payments of principal of, interest on, and any Make-Whole Amount with respect to this Bond are to be made in lawful money of the United States of America in accordance with the terms of the Indenture.

This Bond is one of the 2011 Series A Bonds (herein called the “Bonds”) issued pursuant to the First Supplemental Indenture, dated as of January 20, 2011 (as from time to time amended, the “First Supplemental Indenture”), between the Company and the Trustee named therein which amends and supplements the Second Amended and Restated Indenture of Trust, dated as of January 20, 2011 (as amended and supplemented from time to time, the “Indenture”) and is entitled to the benefits thereof and the 2011 Series A Bond Purchase Agreement dated January 21, 2011 between the Company and the purchasers listed in Schedule A thereto (the “2011 Series A Bond Purchase Agreement”). Each Holder of this Bond will be deemed, by its acceptance hereof, to have (i) agreed to the confidentiality provisions set forth in Section 18 of the 2011 Series A Bond Purchase Agreement and (ii) made the representations set forth in Section 6 of the 2011 Series A Bond Purchase Agreement. Unless otherwise indicated, capitalized terms used in this Bond shall have the respective meanings ascribed to such terms in the First Supplemental Indenture.

This Bond shall be registered in the name of the Holder hereof. This Bond is transferable, as provided in the Indenture, only upon the registration books of the Company maintained by the Obligation Registrar, which shall be the Trustee, kept at its principal office, upon presentation at said office of this Bond with the written request of the registered owner hereof or his attorney duly authorized in writing, and a written instrument of transfer satisfactory to the Obligation Registrar duly executed by the registered owner or his duly authorized attorney.

The Bonds shall be issued as fully registered Bonds without coupons and in minimum denominations of $1.00 and any integral multiple of $1.00 in excess thereof. The Trustee may impose a charge sufficient to reimburse the Company or the Trustee for any tax, fee or other governmental charge required to be paid with respect to such exchange or any transfer of a Bond. The cost, if any, of preparing each new Bond issued upon such exchange or transfer, and any other expenses of the Company or the Trustee incurred in connection therewith, shall be paid by in accordance with Section 3.7 of the Indenture.

The Company will make the required prepayments of principal on this Bond on the dates and in the amount specified in the First Supplemental Indenture. This Bond is also subject to optional prepayment, in whole or from time to time in part, at the times and on the terms specified in First Supplemental Indenture, but not otherwise.

If an Event of Default under the Indenture occurs and is continuing, the principal of this Bond may be declared or otherwise become due and payable in the manner, at the price (including any applicable Make-Whole Amount) and with the effect provided in the Indenture. In the event that the principal of this Bond shall have been declared or otherwise become due and payable as described in the preceding sentence, then, in addition to paying the Holder hereof the entire unpaid principal amount of this Bond and all accrued and unpaid interest hereon (including, but not limited to, interest accrued hereon at the Default Rate), the Company shall pay to the Holder hereof (to the full extent permitted by applicable law) an amount equal to the Make-Whole Amount determined in respect of such principal amount.

- 2 -

The Holder of this Bond shall have no right to enforce the provisions of the Indenture, or to institute action to enforce the covenants therein, or to take any action with respect to any default under the Indenture, or to institute, appear in or defend any suit or other proceeding with respect thereto, except as provided in the Indenture and the 2011 Series A Bond Purchase Agreement.

All acts and proceedings required by law and by the Articles of Incorporation and Bylaws of the Company necessary to make the 2011 Series A Bonds issued under the Indenture, when executed by the Company, authenticated and delivered by the Trustee and duly issued, the valid, binding and legal obligations of the Company, in accordance with its terms, have been done and taken.

It is the intention of the Holder to comply with the usury laws of the State of Alaska and of the United States of America. This Bond is hereby expressly limited such that in no contingency or event whatsoever, whether by reason of acceleration, prepayment, or otherwise, shall the amount of interest contracted for, charged or received by the Holder for the use, forbearance, or detention of the principal indebtedness or interest hereof, which remains unpaid from time to time, exceed the highest maximum rate permitted by applicable law. If fulfillment of any provisions hereof, at the time of performance of such provisions shall be due, shall involve transcending the valid limits prescribed by applicable law, then, ipso facto, the obligation to be fulfilled shall be reduced to the maximum rate allowed by applicable law. If any Holder receives as interest an amount which will exceed the maximum rate allowed by applicable law, such amount shall be applied to the reduction of the principal amount owing hereunder or on account of any other principal indebtedness owed to Holder and not to the payment of interest, or if such excessive interest exceeds the unpaid balance of principal hereof and such other indebtedness, such excess shall be refunded. To the extent not prohibited by applicable law, determination of the maximum rate allowed by applicable law shall at all times be made by amortizing, prorating, allocating and spreading in equal parts during the full term of this Bond, all interest at any time contracted for, charged or received from the Company in connection with this Bond, so that the actual rate of interest on account of such indebtedness is uniform throughout the term of this Bond. The terms of this paragraph shall control and supersede any other provisions of this Bond.

This Bond shall be construed in accordance with and governed by the law of the State of Alaska.

No covenant or agreement contained in this Bond, the Indenture or the First Supplemental Indenture shall be deemed to be a covenant or agreement of any official, officer, agent or employee of the Company in his individual capacity, and no officer of the Company executing this Bond shall be liable personally on this Bond or be subject to any personal liability or accountability by reason of the issuance of this Bond.

This Bond shall not be entitled to any benefit under the Indenture or be valid until this Bond shall have been authenticated by the execution by the Trustee, or its successor as Trustee, of the Certificate of Authentication inscribed hereon.

- 3 -

IN WITNESS WHEREOF, the Company has caused this Bond to be executed by a duly authorized officer of the Company.

CHUGACH ELECTRIC ASSOCIATION, INC.
By:	/s/ Michael R. Cunningham
Name:
Title:	C.F.O.

- 4 -

This is one of the Obligations of the series designated therein referred to in the within-mentioned Indenture.

U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By:	/s/ Thomas Zrust
	Authorized Signatory

Date of Authentication: January 21, 2011

- 5 -

THIS 2011 SERIES A BOND HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM EXCEPT UNDER CIRCUMSTANCES WHERE NEITHER SUCH REGISTRATION NOR SUCH EXEMPTION IS REQUIRED BY LAW.

THE COMPANY (DEFINED BELOW) IS PERSONALLY OBLIGATED AND FULLY LIABLE FOR THE AMOUNT DUE UNDER THIS BOND AND, SUBJECT TO THE PROVISIONS OF THE INDENTURE (DEFINED BELOW), EACH HOLDER (AS DEFINED IN THE INDENTURE) HAS THE RIGHT TO SUE ON THIS BOND AND OBTAIN A PERSONAL JUDGMENT AGAINST THE COMPANY FOR SATISFACTION OF THE AMOUNT UNDER THIS BOND EITHER BEFORE OR AFTER A FORECLOSURE OF THE INDENTURE UNDER ALASKA STATUTES 09.45.170-09.45.220.

CHUGACH ELECTRIC ASSOCIATION, INC.

FIRST MORTGAGE BONDS, 2011 SERIES A DUE MARCH 15, 2041

NO. RB-23	ISSUANCE DATE: JANUARY 21, 2011
$1,000,000	PPN: 171265 A@0

FOR VALUE RECEIVED, the undersigned, CHUGACH ELECTRIC ASSOCIATION, INC. (herein called the “Company”), an electric cooperative organized and existing under the laws of the State of Alaska, hereby promises to pay to PHL VARIABLE INSURANCE COMPANY, or registered assigns, the principal sum of ONE MILLION DOLLARS (or so much thereof as shall not have been prepaid) on March 15, 2041, with interest computed on the basis of a 360-day year of twelve 30-day months (a) on the unpaid balance hereof at a rate of 4.75% per annum (plus, upon the occurrence and during the continuation of an Interest Rate Adjustment Event (as hereinafter defined), an additional 2% per annum) from the date hereof, payable semiannually on the 15th day of each March and September, commencing on September 15, 2011, until the principal hereof shall have become due and payable, and (b) to the extent permitted by law, on any overdue payment (including any overdue prepayment) of principal, any overdue payment of interest, any overdue payment of any Make-Whole Amount (as defined in the First Supplemental Indenture referred to below), payable semiannually as aforesaid (or, at the option of the registered Holder hereof, on demand), at the Default Rate (as defined in the First Supplemental Indenture referred to below).

“Interest Rate Adjustment Event” means the occurrence of any of the following:

(a)            the Company defaults in the performance of Section 7.1(a) or (b) or Section 7.2 of the 2011 Series A Bond Purchase Agreement (as defined below); or

(b)            any representation or warranty made in writing by or on behalf of the Company or by any officer of the Company in the Indenture or the 2011 Series A Bond Purchase Agreement (as defined below) or in any writing furnished in connection with the transactions contemplated by the First Supplemental Indenture (referred to below) proves to have been false or incorrect in any material respect on the date as of which made and, with respect to representations and warranties made after the date hereof, for which accurate information has not since been provided in writing to the Holder of this Bond.

Subject to Section 11 of the 2011 Series A Bond Purchase Agreement (defined below), payments of principal of, interest on, and any Make-Whole Amount with respect to this Bond are to be made in lawful money of the United States of America in accordance with the terms of the Indenture.

This Bond is one of the 2011 Series A Bonds (herein called the “Bonds”) issued pursuant to the First Supplemental Indenture, dated as of January 20, 2011 (as from time to time amended, the “First Supplemental Indenture”), between the Company and the Trustee named therein which amends and supplements the Second Amended and Restated Indenture of Trust, dated as of January 20, 2011 (as amended and supplemented from time to time, the “Indenture”) and is entitled to the benefits thereof and the 2011 Series A Bond Purchase Agreement dated January 21, 2011 between the Company and the purchasers listed in Schedule A thereto (the “2011 Series A Bond Purchase Agreement”). Each Holder of this Bond will be deemed, by its acceptance hereof, to have (i) agreed to the confidentiality provisions set forth in Section 18 of the 2011 Series A Bond Purchase Agreement and (ii) made the representations set forth in Section 6 of the 2011 Series A Bond Purchase Agreement. Unless otherwise indicated, capitalized terms used in this Bond shall have the respective meanings ascribed to such terms in the First Supplemental Indenture.

This Bond shall be registered in the name of the Holder hereof. This Bond is transferable, as provided in the Indenture, only upon the registration books of the Company maintained by the Obligation Registrar, which shall be the Trustee, kept at its principal office, upon presentation at said office of this Bond with the written request of the registered owner hereof or his attorney duly authorized in writing, and a written instrument of transfer satisfactory to the Obligation Registrar duly executed by the registered owner or his duly authorized attorney.

The Bonds shall be issued as fully registered Bonds without coupons and in minimum denominations of $1.00 and any integral multiple of $1.00 in excess thereof. The Trustee may impose a charge sufficient to reimburse the Company or the Trustee for any tax, fee or other governmental charge required to be paid with respect to such exchange or any transfer of a Bond. The cost, if any, of preparing each new Bond issued upon such exchange or transfer, and any other expenses of the Company or the Trustee incurred in connection therewith, shall be paid by in accordance with Section 3.7 of the Indenture.

The Company will make the required prepayments of principal on this Bond on the dates and in the amount specified in the First Supplemental Indenture. This Bond is also subject to optional prepayment, in whole or from time to time in part, at the times and on the terms specified in First Supplemental Indenture, but not otherwise.

If an Event of Default under the Indenture occurs and is continuing, the principal of this Bond may be declared or otherwise become due and payable in the manner, at the price (including any applicable Make-Whole Amount) and with the effect provided in the Indenture. In the event that the principal of this Bond shall have been declared or otherwise become due and payable as described in the preceding sentence, then, in addition to paying the Holder hereof the entire unpaid principal amount of this Bond and all accrued and unpaid interest hereon (including, but not limited to, interest accrued hereon at the Default Rate), the Company shall pay to the Holder hereof (to the full extent permitted by applicable law) an amount equal to the Make-Whole Amount determined in respect of such principal amount.

- 2 -

The Holder of this Bond shall have no right to enforce the provisions of the Indenture, or to institute action to enforce the covenants therein, or to take any action with respect to any default under the Indenture, or to institute, appear in or defend any suit or other proceeding with respect thereto, except as provided in the Indenture and the 2011 Series A Bond Purchase Agreement.

All acts and proceedings required by law and by the Articles of Incorporation and Bylaws of the Company necessary to make the 2011 Series A Bonds issued under the Indenture, when executed by the Company, authenticated and delivered by the Trustee and duly issued, the valid, binding and legal obligations of the Company, in accordance with its terms, have been done and taken.

It is the intention of the Holder to comply with the usury laws of the State of Alaska and of the United States of America. This Bond is hereby expressly limited such that in no contingency or event whatsoever, whether by reason of acceleration, prepayment, or otherwise, shall the amount of interest contracted for, charged or received by the Holder for the use, forbearance, or detention of the principal indebtedness or interest hereof, which remains unpaid from time to time, exceed the highest maximum rate permitted by applicable law. If fulfillment of any provisions hereof, at the time of performance of such provisions shall be due, shall involve transcending the valid limits prescribed by applicable law, then, ipso facto, the obligation to be fulfilled shall be reduced to the maximum rate allowed by applicable law. If any Holder receives as interest an amount which will exceed the maximum rate allowed by applicable law, such amount shall be applied to the reduction of the principal amount owing hereunder or on account of any other principal indebtedness owed to Holder and not to the payment of interest, or if such excessive interest exceeds the unpaid balance of principal hereof and such other indebtedness, such excess shall be refunded. To the extent not prohibited by applicable law, determination of the maximum rate allowed by applicable law shall at all times be made by amortizing, prorating, allocating and spreading in equal parts during the full term of this Bond, all interest at any time contracted for, charged or received from the Company in connection with this Bond, so that the actual rate of interest on account of such indebtedness is uniform throughout the term of this Bond. The terms of this paragraph shall control and supersede any other provisions of this Bond.

This Bond shall be construed in accordance with and governed by the law of the State of Alaska.

No covenant or agreement contained in this Bond, the Indenture or the First Supplemental Indenture shall be deemed to be a covenant or agreement of any official, officer, agent or employee of the Company in his individual capacity, and no officer of the Company executing this Bond shall be liable personally on this Bond or be subject to any personal liability or accountability by reason of the issuance of this Bond.

This Bond shall not be entitled to any benefit under the Indenture or be valid until this Bond shall have been authenticated by the execution by the Trustee, or its successor as Trustee, of the Certificate of Authentication inscribed hereon.

- 3 -

IN WITNESS WHEREOF, the Company has caused this Bond to be executed by a duly authorized officer of the Company.

CHUGACH ELECTRIC ASSOCIATION, INC.
By:	/s/ Michael R. Cunningham
Name:
Title:	C.F.O.

- 4 -

This is one of the Obligations of the series designated therein referred to in the within-mentioned Indenture.

U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By:	/s/ Thomas Zrust
	Authorized Signatory

Date of Authentication: January 21, 2011

- 5 -

THIS 2011 SERIES A BOND HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM EXCEPT UNDER CIRCUMSTANCES WHERE NEITHER SUCH REGISTRATION NOR SUCH EXEMPTION IS REQUIRED BY LAW.

THE COMPANY (DEFINED BELOW) IS PERSONALLY OBLIGATED AND FULLY LIABLE FOR THE AMOUNT DUE UNDER THIS BOND AND, SUBJECT TO THE PROVISIONS OF THE INDENTURE (DEFINED BELOW), EACH HOLDER (AS DEFINED IN THE INDENTURE) HAS THE RIGHT TO SUE ON THIS BOND AND OBTAIN A PERSONAL JUDGMENT AGAINST THE COMPANY FOR SATISFACTION OF THE AMOUNT UNDER THIS BOND EITHER BEFORE OR AFTER A FORECLOSURE OF THE INDENTURE UNDER ALASKA STATUTES 09.45.170-09.45.220.

CHUGACH ELECTRIC ASSOCIATION, INC.

FIRST MORTGAGE BONDS, 2011 SERIES A DUE MARCH 15, 2041

NO. RB-24	ISSUANCE DATE: JANUARY 21, 2011
$2,000,000	PPN: 171265 A@0

FOR VALUE RECEIVED, the undersigned, CHUGACH ELECTRIC ASSOCIATION, INC. (herein called the “Company”), an electric cooperative organized and existing under the laws of the State of Alaska, hereby promises to pay to MARSHALL & ILSLEY TRUST COMPANY CUSTODIAN FOR THE NATIONAL MUTUAL BENEFIT ACCOUNT FIXED INCOME, or registered assigns, the principal sum of TWO MILLION DOLLARS (or so much thereof as shall not have been prepaid) on March 15, 2041, with interest computed on the basis of a 360-day year of twelve 30-day months (a) on the unpaid balance hereof at a rate of 4.75% per annum (plus, upon the occurrence and during the continuation of an Interest Rate Adjustment Event (as hereinafter defined), an additional 2% per annum) from the date hereof, payable semiannually on the 15th day of each March and September, commencing on September 15, 2011, until the principal hereof shall have become due and payable, and (b) to the extent permitted by law, on any overdue payment (including any overdue prepayment) of principal, any overdue payment of interest, any overdue payment of any Make-Whole Amount (as defined in the First Supplemental Indenture referred to below), payable semiannually as aforesaid (or, at the option of the registered Holder hereof, on demand), at the Default Rate (as defined in the First Supplemental Indenture referred to below).

“Interest Rate Adjustment Event” means the occurrence of any of the following:

(a)            the Company defaults in the performance of Section 7.1(a) or (b) or Section 7.2 of the 2011 Series A Bond Purchase Agreement (as defined below); or

(b)            any representation or warranty made in writing by or on behalf of the Company or by any officer of the Company in the Indenture or the 2011 Series A Bond Purchase Agreement (as defined below) or in any writing furnished in connection with the transactions contemplated by the First Supplemental Indenture (referred to below) proves to have been false or incorrect in any material respect on the date as of which made and, with respect to representations and warranties made after the date hereof, for which accurate information has not since been provided in writing to the Holder of this Bond.

Subject to Section 11 of the 2011 Series A Bond Purchase Agreement (defined below), payments of principal of, interest on, and any Make-Whole Amount with respect to this Bond are to be made in lawful money of the United States of America in accordance with the terms of the Indenture.

This Bond is one of the 2011 Series A Bonds (herein called the “Bonds”) issued pursuant to the First Supplemental Indenture, dated as of January 20, 2011 (as from time to time amended, the “First Supplemental Indenture”), between the Company and the Trustee named therein which amends and supplements the Second Amended and Restated Indenture of Trust, dated as of January 20, 2011 (as amended and supplemented from time to time, the “Indenture”) and is entitled to the benefits thereof and the 2011 Series A Bond Purchase Agreement dated January 21, 2011 between the Company and the purchasers listed in Schedule A thereto (the “2011 Series A Bond Purchase Agreement”). Each Holder of this Bond will be deemed, by its acceptance hereof, to have (i) agreed to the confidentiality provisions set forth in Section 18 of the 2011 Series A Bond Purchase Agreement and (ii) made the representations set forth in Section 6 of the 2011 Series A Bond Purchase Agreement. Unless otherwise indicated, capitalized terms used in this Bond shall have the respective meanings ascribed to such terms in the First Supplemental Indenture.

This Bond shall be registered in the name of the Holder hereof. This Bond is transferable, as provided in the Indenture, only upon the registration books of the Company maintained by the Obligation Registrar, which shall be the Trustee, kept at its principal office, upon presentation at said office of this Bond with the written request of the registered owner hereof or his attorney duly authorized in writing, and a written instrument of transfer satisfactory to the Obligation Registrar duly executed by the registered owner or his duly authorized attorney.

The Bonds shall be issued as fully registered Bonds without coupons and in minimum denominations of $1.00 and any integral multiple of $1.00 in excess thereof. The Trustee may impose a charge sufficient to reimburse the Company or the Trustee for any tax, fee or other governmental charge required to be paid with respect to such exchange or any transfer of a Bond. The cost, if any, of preparing each new Bond issued upon such exchange or transfer, and any other expenses of the Company or the Trustee incurred in connection therewith, shall be paid by in accordance with Section 3.7 of the Indenture.

The Company will make the required prepayments of principal on this Bond on the dates and in the amount specified in the First Supplemental Indenture. This Bond is also subject to optional prepayment, in whole or from time to time in part, at the times and on the terms specified in First Supplemental Indenture, but not otherwise.

If an Event of Default under the Indenture occurs and is continuing, the principal of this Bond may be declared or otherwise become due and payable in the manner, at the price (including any applicable Make-Whole Amount) and with the effect provided in the Indenture. In the event that the principal of this Bond shall have been declared or otherwise become due and payable as described in the preceding sentence, then, in addition to paying the Holder hereof the entire unpaid principal amount of this Bond and all accrued and unpaid interest hereon (including, but not limited to, interest accrued hereon at the Default Rate), the Company shall pay to the Holder hereof (to the full extent permitted by applicable law) an amount equal to the Make-Whole Amount determined in respect of such principal amount.

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The Holder of this Bond shall have no right to enforce the provisions of the Indenture, or to institute action to enforce the covenants therein, or to take any action with respect to any default under the Indenture, or to institute, appear in or defend any suit or other proceeding with respect thereto, except as provided in the Indenture and the 2011 Series A Bond Purchase Agreement.

All acts and proceedings required by law and by the Articles of Incorporation and Bylaws of the Company necessary to make the 2011 Series A Bonds issued under the Indenture, when executed by the Company, authenticated and delivered by the Trustee and duly issued, the valid, binding and legal obligations of the Company, in accordance with its terms, have been done and taken.

It is the intention of the Holder to comply with the usury laws of the State of Alaska and of the United States of America. This Bond is hereby expressly limited such that in no contingency or event whatsoever, whether by reason of acceleration, prepayment, or otherwise, shall the amount of interest contracted for, charged or received by the Holder for the use, forbearance, or detention of the principal indebtedness or interest hereof, which remains unpaid from time to time, exceed the highest maximum rate permitted by applicable law. If fulfillment of any provisions hereof, at the time of performance of such provisions shall be due, shall involve transcending the valid limits prescribed by applicable law, then, ipso facto, the obligation to be fulfilled shall be reduced to the maximum rate allowed by applicable law. If any Holder receives as interest an amount which will exceed the maximum rate allowed by applicable law, such amount shall be applied to the reduction of the principal amount owing hereunder or on account of any other principal indebtedness owed to Holder and not to the payment of interest, or if such excessive interest exceeds the unpaid balance of principal hereof and such other indebtedness, such excess shall be refunded. To the extent not prohibited by applicable law, determination of the maximum rate allowed by applicable law shall at all times be made by amortizing, prorating, allocating and spreading in equal parts during the full term of this Bond, all interest at any time contracted for, charged or received from the Company in connection with this Bond, so that the actual rate of interest on account of such indebtedness is uniform throughout the term of this Bond. The terms of this paragraph shall control and supersede any other provisions of this Bond.

This Bond shall be construed in accordance with and governed by the law of the State of Alaska.

No covenant or agreement contained in this Bond, the Indenture or the First Supplemental Indenture shall be deemed to be a covenant or agreement of any official, officer, agent or employee of the Company in his individual capacity, and no officer of the Company executing this Bond shall be liable personally on this Bond or be subject to any personal liability or accountability by reason of the issuance of this Bond.

This Bond shall not be entitled to any benefit under the Indenture or be valid until this Bond shall have been authenticated by the execution by the Trustee, or its successor as Trustee, of the Certificate of Authentication inscribed hereon.

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IN WITNESS WHEREOF, the Company has caused this Bond to be executed by a duly authorized officer of the Company.

CHUGACH ELECTRIC ASSOCIATION, INC.
By:	/s/ Michael R Cunningham
Name:
Title:	C.F.O.

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This is one of the Obligations of the series designated therein referred to in the within-mentioned Indenture.

U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By:	/s/ Thomas Zrust
	Authorized Signatory

Date of Authentication: January 21, 2011

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EX-10.45.8

Exhibit 10.45.8

MLA No. 000976A

AMENDED AND RESTATED MASTER LOAN AGREEMENT

THIS AMENDED AND RESTATED MASTER LOAN AGREEMENT (this “Agreement”) is entered into as of January 19, 2011, (the “Effective Date”) between CHUGACH ELECTRIC ASSOCIATION, INC. (the “Company”) and CoBANK, ACB (“CoBank”).

BACKGROUND

CoBank and the Company are parties to a Master Loan Agreement, dated as of December 27, 2002 (the “Existing Master Loan Agreement”).  As of the date of this Agreement, there is one loan outstanding under the Existing Master Loan Agreement (the “Existing Loan”), which loan is governed by the terms of the Existing Master Loan Agreement and the Amended and Restated Promissory Note and Multiple Advance Term Loan Supplement, dated as of August 8, 2007, between CoBank and the Company (the “Existing MLA Supplement”).

CoBank and the Company desire to amend and restate the Existing Master Loan Agreement in its entirety as set forth in this Agreement.  On and after the Effective Date hereof, the Existing Loan shall be governed by this Agreement and that certain Second Amended and Restated Supplement, dated as of even date herewith (the “Initial Supplement”), by and between CoBank and the Company, and the Company’s obligations under the Existing Loan shall be evidenced by that certain 2011 CoBank Note (ML0976-T1B), dated the date of its authentication, made by the Company to CoBank (the “2011 CoBank Note”).

The Company also has outstanding certain unsecured indebtedness to other creditors under that certain Amended and Restated Indenture, dated as of April 1, 2001, between the Company and U.S. Bank National Association, as Trustee (as amended and supplemented prior to the date hereof, the “Existing Indenture”).  The Company is proposing to enter into a Second Amended and Restated Indenture, dated as of January 20, 2011, pursuant to which the Company will grant to U.S. Bank National Association, as Trustee, liens and security interests in certain of the Company’s property as security for obligations issued and authenticated thereunder (as the same may be amended, supplemented and restated from time to time, the “New Mortgage Indenture”).

The New Mortgage Indenture will be in the form attached to that certain First Supplemental Indenture to the Existing Indenture, dated as of January 19, 2011, between the Company and U.S. Bank National Association, as Trustee (the “First Supplemental Indenture”).

The Company and CoBank desire to provide for, among other things, the 2011 CoBank Note to be authenticated as an “Additional Obligation” (as defined in the Existing Indenture) outstanding under the Existing Indenture, and, upon the effectiveness of the New Mortgage Indenture, to be secured as a “Pre-Existing Obligation” (as defined in the New Mortgage Indenture) under the New Mortgage Indenture and for all Promissory Notes (as defined in Section 2.01(B) of this Agreement) hereafter made under this Agreement to be secured as “Additional Obligations” (as defined in the New Mortgage Indenture) under the New Mortgage Indenture.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties, intending to be legally bound, agree as follows:

ARTICLE 1

DEFINITIONS AND ACCOUNTING TERMS

SECTION 1.01.           Definitions.  Capitalized terms used and not otherwise defined in this Agreement shall have the meanings set forth in Exhibit A hereto.

SECTION 1.02.           Rules of Interpretation.  The rules of interpretation set forth in Exhibit A shall apply to this Agreement.

ARTICLE 2

THE SUPPLEMENTS AND THE PROMISSORY NOTES

SECTION 2.01.           The Promissory Notes and the Supplements.

(A)           Amendment and Restatement of Existing Master Loan Agreement; Initial Promissory Note and Initial Supplement.  On the Effective Date hereof, the Existing Master Loan Agreement shall be amended and restated in its entirety as set forth in this Agreement.  On and after the Effective Date hereof, the Existing Loan shall be governed by this Agreement and the Initial Supplement and shall be evidenced by the 2011 CoBank Note.

(B)           New Promissory Notes and New Supplements.  If on or after the Effective Date, the Company would like to obtain one or more new Loans from CoBank to be governed by the terms of this Agreement, and CoBank is willing to make such new Loan or Loans to the Company, the parties will enter into one or more additional supplements to this Agreement (each, a “Supplement” and collectively, the “Supplements”).  Each such Supplement will set forth CoBank’s commitment to make a loan or loans (each, a “Loan” and collectively, the “Loans”), the amount of the Loan(s), the purpose of the Loan(s), the interest rate or interest rate options applicable to the Loan(s), the Company’s promise to repay the Loans, and any other terms and conditions applicable to the particular Loan(s).  Each Loan will be governed by the terms and conditions set forth in this Agreement, in the Supplement and in the Promissory Note (as hereinafter defined in this Section 2.01(B)) relating to that Loan.

The Company’s obligation to repay the Loans made under each Supplement shall be evidenced by a promissory note in form and content acceptable to CoBank (such notes, as they may be amended, modified, supplemented, extended, restated or replaced from time to time, collectively, the “Promissory Notes,” and each a “Promissory Note”).  In the absence of a Supplement hereto and a Promissory Note duly executed by the Company, CoBank shall have no obligation to make any new Loan to the Company under this Agreement.

SECTION 2.02            Notice and Manner of Borrowing New Loans. Except as otherwise provided in a Supplement: (A) new Loans will be made available on any Business Day upon the written or telephonic request of an authorized employee of the Company (which telephonic request, if required by CoBank, shall be promptly confirmed in writing by the Company); (B) requests for new Loans must be received by 12:00 noon Mountain time on the date the Loan is to be made; and (C) Loans will be made available by wire transfer of immediately available funds to such account or accounts as may be authorized by the Company on forms supplied by CoBank.

SECTION 2.03.           Method of Payment (All Loans).  The Company shall make all payments to CoBank under this Agreement, each Supplement hereto and each Promissory Note by wire transfer of immediately available funds or, if specified by separate agreement between the Company and CoBank, by automated clearing house or other similar cash handling processes.  Wire transfers shall be made to ABA No. 307088754 for advice to and credit of “CoBANK” (or to such other account as CoBank may direct by notice).  The Company shall give CoBank telephonic notice no later than 12:00 noon Mountain time of its intent to pay by wire, and funds received after 3:00 p.m. Mountain time shall be credited on the next Business Day.

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SECTION 2.04.           Security.  The Company’s obligations hereunder and under each other Loan Document to which the Company is a party (whether executed contemporaneously herewith or at a later date) shall be secured by a statutory first priority Lien on all stock and other equity which the Company may now own or hereafter acquire or be allocated in CoBank.  Upon the authentication of the 2011 CoBank Note as a “Pre-Existing Obligation” (as defined in the New Mortgage Indenture) concurrently with the effectiveness of the New Mortgage Indenture (as required by Section 5.09 hereof), the 2011 CoBank Note shall be secured by the New Mortgage Indenture.  Each additional Promissory Note issued pursuant to this Agreement shall be authenticated under the New Mortgage Indenture and secured as an “Additional Obligation” (as defined in the New Mortgage Indenture).

ARTICLE 3

CONDITIONS PRECEDENT

SECTION 3.01.           Conditions Precedent to this Agreement and the Initial Supplement Hereto and the Initial Promissory Note.  The effectiveness of this Agreement, the Initial Supplement hereto and the 2011 CoBank Note is subject to the following conditions precedent, which, in the case of instruments, certificates, opinions, and documents, must be in form and content acceptable to CoBank:

(A)           This Agreement.  CoBank shall have received a duly executed original copy of this Agreement.

(B)           Initial Supplement and Initial Promissory Note.  CoBank shall have received a duly executed original copy of the Initial Supplement hereto and the 2011 CoBank Note.

(C)           Evidence of Authority.  CoBank shall have received a copy, certified by the Secretary of the Company as of the date hereof, of board resolutions and certificates of incumbency evidencing that this Agreement, the Initial Supplement, the 2011 CoBank Note, the First Supplemental Indenture and all other Indenture Documents relating to this Agreement, the Initial Supplement and the 2011 CoBank Note shall have been duly authorized, executed and delivered by the Company.

(D)           Reserved.

(E)           Opinion of Counsel.  CoBank shall have received a duly executed original copy of an opinion of counsel to the Company (acceptable to CoBank) with respect to this Agreement, the Initial Supplement, the 2011 CoBank Note and the Existing Indenture.

(F)           Representations and Warranties.  Each of the representations and warranties set forth in Section 4.01 hereof shall be true and correct and CoBank shall have received a duly executed original copy of a certificate of an officer of the Company (which, if other than the General Manager or an Executive Manager of the Company, must be acceptable to CoBank) to the effect that such officer is not aware of any inaccuracy therein.

(G)           No Default.  No Default or Event of Default shall exist hereunder and CoBank shall have received a duly executed original copy of a certificate of an officer of the Company (which, if other than the General Manager or an Executive Manager of the Company, must be acceptable to CoBank) to the effect that such officer is not aware of any Default or Event of Default hereunder.

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(H)           Reserved.

(I)           Existing Indenture. All conditions precedent under the Existing Indenture to the authentication of the 2011 CoBank Note as an “Additional Obligation” (as defined in the Existing Indenture) by the Indenture Trustee in accordance with the terms of the Existing Indenture shall have been satisfied, the 2011 CoBank Note shall have been so authenticated and CoBank shall have received copies of all certificates, opinions and documents delivered to or by the Indenture Trustee in connection therewith, certified as true and complete copies by an officer of the Company (which, if other than the General Manager or an Executive Manager of the Company, must be acceptable to CoBank).

SECTION 3.02.           Conditions to Each Supplement.  CoBank’s obligation to make the initial Loan under each Supplement that evidences one or more new Loans to be made to the Company is subject to the following conditions precedent (which in the case of instruments, certificates, opinions,  and documents, must be in form and content acceptable to CoBank):

(A)           Supplement and Promissory Note. CoBank shall have received from the Company a duly executed original copy of the Supplement and the related Promissory Note and all Loan Documents required by such Supplement.

(B)           Evidence of Authority.  CoBank shall have received copies, certified by the Secretary of the Company as of the date of such Supplement, of such board resolutions, evidence of incumbency, and other evidence that CoBank may require that such Supplement and all Loan Documents and all Indenture Documents executed in connection therewith have been duly authorized, executed an delivered.

(C)           Consents and Approvals.  CoBank shall have received such evidence as CoBank may require that all consents and approvals referred to in Section 4.01(K) and 4.02(E) hereof, have been obtained and are in full force and effect.

(D)           Fees and Other Charges. CoBank shall have received from the Company any fees or other charges provided for herein or in such Supplement.

(E)           Insurance.  CoBank shall have received such evidence as CoBank may require that the Company is in compliance with Section 5.03 hereof.

(F)           Opinion of Counsel. CoBank shall have received a duly executed original copy of an opinion of counsel to the Company (acceptable to CoBank), with respect to this Agreement, such Supplement, the Promissory Note and the Indenture Documents.

(G)           Security.  The execution and delivery by the Company and the Indenture Trustee of a Supplemental Indenture to the New Mortgage Indenture providing for the issuance by the Company of the Promissory Note as an “Additional Obligation” (as defined in the New Mortgage Indenture) secured by the New Mortgage Indenture.

(H)           New Mortgage Indenture.  All conditions precedent under the New Mortgage Indenture to the issuance and authentication of the Promissory Note as an “Additional Obligation” (as defined in the New Mortgage Indenture) by the Indenture Trustee in accordance with the terms of the New Mortgage Indenture shall have been satisfied, the Promissory Note shall have been so authenticated and CoBank shall have received copies of all certificates, opinions and documents delivered to or by the Indenture Trustee in connection therewith, certified as true and complete copies by an officer of the Company (which, if other than the General Manager or an Executive Manager of the Company, must be acceptable to CoBank).

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SECTION 3.03.           Conditions to Each Loan. CoBank’s obligation under each Supplement (other than the Initial Supplement) to make any new Loan to the Company thereunder, including the initial Loan thereunder, is subject to the conditions precedent that: (1) no Default or Event of Default shall have occurred and be continuing; (2) each of the representations and warranties of the Company contained in Section 4.02 hereof and in all other Loan Documents executed or furnished in connection with such Supplement shall be true and correct as of the date of the Loan; and (3) the Company shall have satisfied all conditions and requirements set forth in the Supplement relating to that Loan.

ARTICLE 4

REPRESENTATIONS AND WARRANTIES

SECTION 4.01.           This Agreement, the Initial Supplement Hereto and the Initial Promissory Note.  To induce CoBank to enter into this Agreement, the Initial Supplement hereto and the 2011 CoBank Note,the Company represents and warrants that:

(A)           Organization.  The Company: (1) is an electric cooperative duly organized, validly existing, and in good standing under the Laws of the State of Alaska; (2) has the power and authority to own its assets and to transact the business in which it is engaged or proposes to engage; and (3) is duly qualified to do business in, and is in good standing under the Laws of, each jurisdiction in which such qualification is required.

(B)           Loan Documents.  The Loan Documents and all Indenture Documents relating to any Loan: (1) have been duly authorized, executed and delivered by the Company and each other Person that is a party thereto (other than CoBank); and (2) create legal, valid and binding obligations of the Company and each other party thereto (other than CoBank) which are enforceable in accordance with their terms, except to the extent that enforcement may be limited by applicable bankruptcy, insolvency or similar Laws affecting creditors’ rights generally.

(C)           Operation of Business.  The Company possesses all licenses, certificates, permits, authorizations, approvals, franchises, patents, copyrights, trademarks, trade names, rights thereto, or the like which are material to the operation of its business or required by Law, and there is no violation by the Company of the rights of others with respect thereto which could have a Material Adverse Effect.

(D)           Litigation.  Except as disclosed in any application or officer’s certificate submitted in connection with this Agreement, the Initial Supplement hereto and the Initial Promissory, there are no pending or threatened actions or proceedings against or affecting the Company before any court, governmental agency, mediator, arbitrator, or the like which could, in any one case or in the aggregate, if adversely decided, have a Material Adverse Effect.

(E)           Ownership of Company and Subsidiaries.  The Company: (1) is an electric generation, transmission and distribution cooperative which is owned by its customers; and (2) has no Subsidiaries.

(F)           Financial Statements.  The balance sheet of the Company as at December 31, 2009, and the related statements of revenues, expenses and patronage capital and statement of cash flows of the Company for the fiscal year then ended, and the accompanying notes and schedules, together with the opinion thereon, dated March 4, 2010, of KPMG LLP, the Company’s independent certified public accountants, copies of which have been furnished to CoBank, are complete and correct and fairly present the financial condition of the Company as at such dates and the results of the operations of the Company for the periods covered by such statements, all in accordance with GAAP consistently applied, and since December 31, 2009, there has been no material adverse change in the condition (financial or otherwise), business or operations of the Company.  There are no liabilities of the Company, fixed or contingent, which are material but not reflected in the financial statements or in the notes thereto.

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(G)           Ownership and Liens.  The Company has such title to, or valid leasehold interests in, all of its properties, real and personal, including the property and leasehold interests reflected in the balance sheets referred to above (other than any property disposed of in the ordinary course of business), as is necessary to carry on its business and conduct its activities as they are currently conducted (subject to any irregularity or deficiency in the record evidence of title which does not substantially impair the usefulness of such property for the purposes of the Company), and none of the properties or leasehold interests of the Company comprising the Trust Estate is subject to any Lien except such as is permitted pursuant to Section 6.01.

(H)           Compliance with Law.  Except as disclosed in any application or officer’s certificate submitted in connection with this Agreement, the Initial Supplement hereto and the 2011 CoBank Note, all of the properties owned by the Company and all of its operations, are in compliance in all material respects with all Laws (including all Laws relating to the environment) which, if not complied with, could have a Material Adverse Effect.

(I)           Environment.  Except as disclosed in any application or officer’s certificate submitted in connection with this Agreement, the Initial Supplement hereto and the 2011 CoBank Note: (1) no property owned or leased by the Company is being used, or to its knowledge, has been used for the disposal, treatment, storage, processing or handling of hazardous waste or materials (as defined under any applicable environmental Law) in violation of any applicable Law; (2) no investigation, claim, litigation, proceedings, order, judgment, decree, settlement, Lien or the like with respect to any environmental matter is proposed, threatened, anticipated or in existence with respect to the properties or operations of the Company which could have a Material Adverse Effect; and (3) the Company is not aware of any environmental contamination or condition that currently exists on any property of the Company which, if required to be remedied, could have a Material Adverse Effect.

(J)           ERISA.  The Company is in compliance with all requirements of ERISA, and no suit, claim or other proceeding exists or is threatened alleging any violation of ERISA.

(K)           Conflicting Agreements.  None of the Loan Documents or Indenture Documents conflicts with, or constitutes (with or without the giving of notice and/or the passage of time and/or the occurrence of any other condition) a default under, any other agreement to which the Company is or expects to become a party or by which the Company or any of its properties may be bound or affected, or conflicts with any provision of the bylaws, articles of incorporation, or other organizational documents of the Company.

(L)           Consents and Approvals.  Except for such as shall have been obtained and are in full force and effect, and except to the extent that future rate increases may be subject to the approval of the appropriate regulatory agency, no consent, permission, authorization, order or license of any governmental authority or of any party to any agreement to which the Company is a party or by which it or any of its property may be bound or affected, is necessary in connection with the execution, delivery, performance or enforcement of the Loan Documents and the Indenture Documents.

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(M)           Compliance and No Default. The Company is in compliance with all of the terms of the Loan Documents and the Indenture Documents and no Default or Event of Default exists.

SECTION 4.02.           Each Supplement.  The execution by the Company of each Supplement hereto (other than the Initial Supplement) shall constitute a representation and warranty that, except as otherwise provided in an officer’s certificate executed by the Company and delivered to CoBank in connection with such Supplement:

(A)           Reaffirmation.  Each of the representations and warranties set forth in Section 4.01 hereof are true and correct as of the date of such Supplement, except that: (1) the references to the financial statements in Section 4.01(F) hereof, and all references in Section 4.01(G) hereof to such statements, shall be deemed to be to the latest annual financial statements and, if more recent than the latest annual financial statements, to the latest quarterly financial statements furnished to CoBank under Section 5.06(A) and (B) hereof; (2) the references in Sections 4.01(D), (H) and (I) to the application or officer’s certificate furnished in connection with this Agreement and the Initial Supplement hereto shall be deemed to refer to any application and/or officer’s certificate furnished in connection with the Supplement being executed at the time.

(B)           Compliance.  The Company is in compliance with all of the terms of the Loan Documents (including, without limitation, Sections 5.06(D) and (E) hereof) and the Indenture Documents, and no Default or Event of Default exists.

(C)           Applications, Officer’s Certificate.  Each representation and warranty and all information set forth in any application or officer’s certificate submitted in connection with, or to induce CoBank to enter into, such Supplement is correct in all material respects as of the date of such Supplement.

(D)           Budgets.  All budgets, projections, feasibility studies, and other documentation submitted by the Company to CoBank in connection with, or to induce CoBank to enter into, such Supplement are based upon assumptions that are reasonable, and as of the date of such Supplement, no fact has come to light, and no event has occurred, which would cause any material assumption made therein to not be reasonable.

(E)           Authorizations.  Except for such as shall have been obtained and are in full force and effect, no consent, permission, authorization, order or license of any governmental authority or of any party to any agreement to which the Company is a party or by which it or any of its property may be bound or affected, is necessary in connection with: (1) execution, delivery, performance or enforcement of the Loan Documents or the Indenture Documents; or (2) the project, acquisition, or other activity being financed by Loan(s) under such Supplement, except for consents, permissions, authorizations, orders and licenses that: (a) are not required to be obtained at the time of the Company’s execution of such Supplement; and (b) can be obtained in the ordinary course of business.

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ARTICLE 5

AFFIRMATIVE COVENANTS

Unless otherwise agreed to in writing by CoBank, while this Agreement is in effect, the Company agrees to:

SECTION 5.01.           Maintenance of Existence.  Preserve and maintain its existence and good standing in the jurisdiction of its formation, qualify and remain qualified to transact business in all jurisdictions where such qualification is required, and obtain and maintain all licenses, permits, franchises, patents, copyrights, trademarks, tradenames, or rights thereto which are material to the conduct of its business or required by Law.

SECTION 5.02.           Compliance With Laws.  Comply in all material respects with all applicable Laws (including all Laws relating to the environment), which, if not complied with, could have a Material Adverse Effect.  In addition, the Company agrees to use reasonable efforts to cause all Persons occupying or present on any of its properties that the Company knows or should know is in violation of any Laws to comply in all material respects with all such Laws.

SECTION 5.03.           Insurance.  Maintain insurance with financially sound and reputable insurance companies or associations in such amounts and covering such risks as are usually carried by companies engaged in the same business and similarly situated.  The Company agrees to furnish to CoBank such proof of compliance with this Section as CoBank may from time-to-time reasonably require.

SECTION 5.04.           Property Maintenance.  Maintain all of its properties that are necessary to or useful in the proper conduct of its business in good repair, working order and condition, ordinary wear and tear excepted, and make all alterations, replacements and improvements thereto as may from time to time be necessary in order to ensure that its properties remain in good working order and condition.

SECTION 5.05.           Books and Records. Keep adequate records and books of account in which complete entries will be made in accordance with GAAP.

SECTION 5.06.           Reports and Notices. Furnish to CoBank:

(A)           Annual Financial Statements.  As soon as available, but in no event more than 120 days after the end of each fiscal year of the Company occurring during the term hereof, annual financial statements of the Company prepared in accordance with GAAP consistently applied.  Such financial statements shall: (a) be audited by a nationally recognized firm of independent certified public accountants selected by the Company; (b) be accompanied by a report of such accountants to the effect that the financial statements: (i) were audited in accordance with generally accepted auditing standards; and (ii) present fairly, in all material respects, the financial position of the Company as at the end of the year and the results of its operations for the year then ended, in conformity with GAAP; (c) be prepared in reasonable detail and in comparative form; and (d) include a balance sheet, a statement of revenues, expenses and patronage capital, and a statement of cash flows, and all notes and schedules relating thereto.

(B)           Interim Financial Statements.  If requested by CoBank, as soon as available, but in no event more than 60 days after the end of each fiscal quarter of the Company occurring during the term hereof, a balance sheet of the Company as of the end of such quarter, a statement of revenues, expenses and patronage capital for the Company for such period and for the period year to date, and such other interim statements as CoBank may specifically request, all prepared in reasonable detail and in comparative form in accordance with GAAP consistently applied.

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(C)           Officer’s Certificate.  Together with each set of financial statements delivered to CoBank pursuant to Subsection (A) of this Section 5.06, a certificate of an officer of the Company acceptable to CoBank: (1) computing the financial covenants set forth in Article 7 hereof; and (2) certifying that, to the best knowledge of such officer, no Default or Event of Default occurred during the period covered by such statements or, if a Default or Event of Default did occur during such period, a statement as to the nature thereof, whether such Default or Event of Default is continuing, and, if continuing, the action which is proposed to be taken with respect thereto.

(D)           Notice of Litigation.  Promptly after becoming aware thereof, notice of: (a) the commencement of any action, suit or proceeding before any court, governmental instrumentality, arbitrator, mediator or the like which, if adversely decided, could have a Material Adverse Effect; (b) the receipt of any notice, indictment, pleading, or other communication alleging a condition that: (i) may require the Company to undertake or to contribute to a clean-up or other response under any environmental Law, or which seeks penalties, damages, injunctive relief, criminal sanctions or other relief as a result of an alleged violation of any such Law, or which claims personal injury or property damage as a result of environmental factors or conditions; and (ii) if true or proven, could have a Material Adverse Effect; and (c) the rendering of any order, judgment, ruling and the like which could have a Material Adverse Effect.

(E)           Notice of Default.  Promptly after becoming aware thereof, notice of the occurrence of a Default or an Event of Default.

(F)           Default Notices.  Promptly after furnishing or receiving same, a copy of all notices of default (including notices of the occurrence of an event which, with the giving of notice and/or the passage of time and/or the occurrence of any other condition, would become a default) furnished by or to the Company under the Indenture Documents, any loan or other credit agreement relating to any Obligation, or any other loan or credit agreement evidencing Funded Debt.

(G)           Ratings.  Promptly after obtaining same, a copy of all Credit Ratings issued by a Rating Agency.

(H)           Other Notices. Such other notices as may be required by any Supplement or any other Loan Document.

(I)           Other Information.  Such other information regarding the condition or operations, financial or otherwise, of the Company as CoBank may from time to time reasonably request, including, but not limited to, copies of all pleadings, notices and communications referred to in Section 5.06(D) hereof.

SECTION 5.07.           Conduct of Business. Continue to engage in the business conducted by it on the date of this Agreement.

SECTION 5.08.           Capital.  Acquire equity in CoBank in such amounts and at such times as CoBank may from time to time require in accordance with its Bylaws and Capital Plan (as each may be amended from time to time), except that the maximum amount of equity that the Company may be required to purchase in connection with a Loan may not exceed the maximum amount permitted by the Bylaws at the time the Supplement relating to such Loan is entered into or such Loan is renewed or refinanced by CoBank.  The rights and obligations of the parties with respect to such equity and any patronage or other distributions made by CoBank shall be governed by CoBank’s Bylaws and Capital Plan (as each may be amended from time to time).

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SECTION 5.09.           Inspection.  Permit CoBank or its agents, upon reasonable notice and during normal business hours or at such other times as the parties may agree, to examine the properties, books and records of the Company, and to discuss its or their affairs, finances and accounts with its or their officers, directors, employees, and independent certified public accountants.

SECTION 5.09.           New Mortgage Indenture.  Concurrently with the effectiveness of the New Mortgage Indenture, as provided for in the First Supplemental Indenture, (i) the Company shall  cause the 2011 CoBank Note to be authenticated as a “Pre-Existing Obligation” (as defined in the New Mortgage Indenture) and secured under the New Mortgage Indenture, and (ii) CoBank shall receive an opinion of counsel to the Company, in such form and substance acceptable to CoBank, as to, among other things, the enforceability of the New Mortgage Indenture against the Company, the due authentication and securing of the 2011 CoBank Note under the New Mortgage Indenture equally and ratably with all other Outstanding Debt Obligations (as defined in the New Mortgage Indenture), and the perfection of the lien and security interest of the New Mortgage Indenture.

ARTICLE 6

NEGATIVE COVENANTS

While this Agreement is in effect, the Company will not, without the prior written consent of CoBank (which consent will not be unreasonably withheld or delayed):

SECTION 6.01.           Liens.  Create, incur, assume, or suffer to exist any Lien on any of its properties comprising the Trust Estate, except:

(A)           Liens in favor of CoBank;

(B)           Liens granted pursuant to the New Mortgage Indenture; and

(C)           Liens on any of its property that meet the definition of “Permitted Encumbrances” (as defined in the New Mortgage Indenture) or are permitted by Section 14.6 of the New Mortgage Indenture.

SECTION 6.02.           Sale, Transfer or Lease of Assets.  Sell, lease or otherwise dispose of any of its assets except for: (A) the sale, lease or other disposition of inventory in the ordinary course of business; and (B) the sale, lease or other disposition of equipment or other property which is: (i) obsolete, worn-out or no longer necessary for the provision of electric service to customers in its service territory; and (ii) not occasioned by the discontinuance of service to any portion of its service territory.

SECTION 6.03.           Distributions.  Directly or indirectly declare or pay any dividend or make any payments of, distributions of, or retirements of patronage capital to its members (each a “Distribution”) if, at the time thereof or after giving effect thereto, (i) an Event of Default shall exist, or (ii) the Company’s equities and margins (determined in accordance with Accounting Requirements) as of the end of the Company’s most recent fiscal quarter would be less than thirty percent (30%) of the Company’s total long-term debt and equities and margins (determined in accordance with Accounting Requirements) at such time; provided, however, that, so long as no Event of Default exists and the ratio of the Company's equities and margins to the sum of total long-term debt plus equities and margins (all as determined above) would not be less than 22%, the Company may, in any fiscal year, make a Distribution of up to the lesser of (x) five percent (5%) of the Company’s aggregate equities and margins on the books of the Company as of the end of the immediately preceding fiscal year or (y) fifty percent (50%) of the prior fiscal year’s assignable margins (determined in accordance with the definition of Margins for Interest set forth in the Applicable Indenture), whether or not allocated to members.  For purposes of this Section 6.03, determination of aggregate margins and equities and total long-term debt and equities shall not include any amount on account of earnings retained in any Subsidiary or Affiliate of the Company and any such determination of total long-term debt and equities shall exclude the debt of any Subsidiary or Affiliate.

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SECTION 6.04.           Contingent Liabilities.  Assume, guarantee, endorse, or otherwise be or become directly or contingently responsible or liable for the obligations of any Person (including by means of an agreement to: (A) purchase any obligation, stock, assets, or services; (B) supply or advance any funds, assets, or services; or (C) cause any Person to maintain a minimum working capital or net worth or other financial test), except by endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business, if the Company would be in violation of this Agreement (including all financial covenants set forth herein) if such obligations were treated as direct obligations of the Company.

SECTION 6.05.           Mergers.  Merge or consolidate with any other Person or acquire all or a material part of the assets of any other Person.

SECTION 6.06.           Change in Business.  Make capital expenditures for assets primarily devoted to any business activities or operations substantially different from or unrelated to its present business activities or operations, where such expenditures exceed $5,000,000 in any calendar year or result in a book value for such assets that exceeds $5,000,000 at any one time.

SECTION 6.07.           Subsidiaries.  Commence operations under any other name, or make capital contributions to any Subsidiaries or Affiliates, where such contributions exceed $5,000,000 in any calendar year or result in an aggregate book value for the Company’s interest in such Subsidiaries or Affiliates that exceeds $5,000,000 at any one time.

SECTION 6.08.           Prepayment or Defeasance.  While any Default of Event of Default shall have occurred and be continuing, prepay or defease any Obligation or any other Funded Debt.

SECTION 6.09.           Indenture Requirements.

(A)           Elect pursuant to the Applicable Indenture, to apply Accounting Requirements in effect as of the date of execution and delivery of the Applicable Indenture.

(B)           Enter into a Supplemental Indenture pursuant to the Applicable Indenture permitting the creation of any lien ranking prior to or on parity with the Applicable Indenture with respect to any of the Trust Estate.

ARTICLE 7

FINANCIAL COVENANTS

SECTION 7.01.           Financial Covenants.  Unless otherwise agreed to in writing by CoBank, while this Agreement is in effect:

(A)           Rate Covenant.  The Company shall establish and collect rates, rents, charges, fees and other compensation (collectively, “Rates”) for the use or the sale of the output, capacity or service of the properties of the System that: (1) together with other moneys available to the Company, produce moneys sufficient to enable the Company to comply with all its covenants under the Indenture Documents; and (2) are reasonably expected to yield Margins For Interest for each fiscal year of the Company equal to at least 1.10 times Interest Charges for such period.

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(B)           Reserved.

(C)           Reserved.

(D)           Equity to Total Capitalization Ratio.  If at the end of any fiscal year, the ratio of the Company’s Equity to Total Capitalization is equal to or less than 22%, then: (1) the Company will hire an independent consultant, satisfactory to CoBank, to recommend a course of action to improve such ratio to 25%; and (2) will, subject to any necessary regulatory approval and unless CoBank otherwise consents, implement the recommendations.

ARTICLE 8

EVENTS OF DEFAULT

SECTION 8.01.           Events of Default.  Each of the following shall constitute an “Event of Default” hereunder:

(A)           Payment Default.  The Company should fail to make when due any payment to CoBank hereunder, under any Promissory Note, under any Supplement, or under any other Loan Document.

(B)           Representations and Warranties.  Any opinion, certificate or like document furnished to CoBank by or on behalf of the Company, or any representation or warranty made by the Company herein or in any other Loan Document, shall prove to have been false or misleading in any material respect on or as of the date furnished or made.

(C)           Covenants.  The Company should fail to perform or comply with any covenant set forth in Article 5 hereof (other than Sections 5.01 and 5.06(E) hereof) or any other covenant or agreement contained herein, in any Supplement or in any other Loan Document, and such failure continues for 30 days after written notice thereof shall have been delivered to the Company by CoBank.

(D)           Other Covenants and Agreements.  The Company should fail to perform or comply with Sections 5.01 or 5.06(E) hereof or shall use the proceeds of any Loan for any unauthorized purpose.

(E)           Cross Default.  The Company should, after any applicable grace period, breach or be in default under the terms of any other Loan Document or other agreement with CoBank.

(F)           Other Indebtedness.  The Company’s obligation to repay any Funded Debt shall be accelerated or declared due and payable prior to its scheduled due date as a result of the occurrence of any breach or default under any agreement relating to such indebtedness or obligation.  Notwithstanding the foregoing or any other provision hereof, the Company agrees that upon the occurrence and during the continuance of any event giving rise to the right to accelerate such indebtedness or obligation (whether or not such right is conditioned upon the giving of notice and/or the passage of time and/or the occurrence of any other condition), a Default shall be deemed to have occurred and be continuing hereunder.

(G)           Reserved.

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(H)           Insolvency.  The Company shall: (1) become insolvent or shall generally not, or shall be unable to, or shall admit in writing its inability to, pay its debts as they become due; or (2) suspend its business operations or a material part thereof; or (3) apply for, consent to, or acquiesce in the appointment of a trustee, receiver, or other custodian for it or any of its property; or (4) have entered against it (i) a decree or order for relief in respect of the Company in an involuntary case under any applicable Federal or state bankruptcy, insolvency, reorganization or other similar law or (ii) a decree or order adjudging the Company a bankrupt or insolvent, or approving as properly filed a petition seeking reorganization, arrangement, adjustment or composition of or in respect of the Company under any applicable Federal or state law, or appointing a custodian, received, liquidator, assignee, trustee, sequestrator or other similar official of the Company or of any material part of its property, or ordering the winding up or liquidation of its affairs, and the continuance of any such decree or order for relief or any such other decree or order unstayed and in effect for a period of sixty (60) consecutive days ; or (5) make an assignment for the benefit of creditors or commence any proceeding under any bankruptcy, reorganization, arrangement, readjustment of debt, dissolution, or liquidation law of any jurisdiction.

(I)           Indenture Default.  An “Event of Default” (as defined in the Applicable Indenture) shall exist, or, prior to the effectiveness of the New Mortgage Indenture, 2011 CoBank Note shall cease to be an “Additional Obligation” under the Existing Indenture or, following the effectiveness of the New Mortgage Indenture, 2011 CoBank Note or any additional Promissory Note evidencing any Loan or portion thereof hereafter made hereunder shall cease to be secured under the New Mortgage Indenture.

ARTICLE 9

REMEDIES UPON DEFAULT

SECTION 9.01.           Remedies.  Upon the occurrence and during the continuance of a Default or Event of Default, CoBank shall have no obligation to make any Loan to the Company and may discontinue doing so at any time without prior notice.  In addition, upon the occurrence and during the continuance of an Event of Default, CoBank may, upon notice to the Company:

(A)           Termination and Acceleration.  Terminate any commitment and as and to the extent provided in the Indenture Documents, declare the unpaid principal balance of the Loans, all accrued interest thereon, and all other amounts payable under this Agreement, the Supplements, the Promissory Notes, and all other Loan Documents to be immediately due and payable; provided, however, that upon the occurrence of an Event of Default under Section 8.01(H)(6), any commitments shall automatically be terminated.  Upon such a declaration, the unpaid principal balance of the Loans and all such other amounts shall become immediately due and payable, without protest, presentment, demand, or further notice of any kind, all of which are hereby expressly waived by the Company.

(B)           Enforcement.  Proceed to protect, exercise, and enforce such rights and remedies as may be provided by this Agreement, any other Loan Document, the Indenture Documents or under Law.  Each and every one of such rights and remedies shall be cumulative and may be exercised from time to time, and no failure on the part of CoBank to exercise, and no delay in exercising, any right or remedy shall operate as a waiver thereof, and no single or partial exercise of any right or remedy shall preclude any future or other exercise thereof, or the exercise of any other right.  Without limiting the foregoing, CoBank may hold and/or set off and apply against the Company’s obligations to CoBank the proceeds of any equity in CoBank, any cash collateral held by CoBank, or any other balances held by CoBank for the Company’s account (whether or not such balances are then due).

(C)           Application of Funds.  Apply all payments received by it to the Company’s obligations to CoBank in such order and manner as CoBank may elect in its sole discretion.

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In addition to the rights and remedies set forth above and notwithstanding the terms of any Supplement or Promissory Note, if the Company fails to make any payment required to be made under the terms of this Agreement, any Supplement hereto or any Promissory Note when due, then at CoBank’s option in each instance (and automatically following an acceleration), such payment shall bear interest from the date due to the date such amount is paid in full at the Default Rate.  All such interest, together with all overdue amounts, shall be payable on demand.

ARTICLE 10

MISCELLANEOUS

SECTION 10.01.           Broken Funding Surcharge.  Notwithstanding any provision contained in any Supplement or any Promissory Note giving the Company the right to repay all or any portion of a Loan prior to the date it would otherwise be due and payable, or to convert any fixed rate balance to another fixed rate or to a variable rate prior to the last day of the fixed rate period applicable thereto, the Company agrees that (unless otherwise expressly provided in the applicable Supplement) in the event it converts any fixed rate balance prior to the last day of its fixed rate period or repays any fixed rate balance prior to the last day of its fixed rate period (whether such payment is made voluntarily, as a result of an acceleration, or otherwise), or fails to borrow any fixed rate balance on the date scheduled therefor, it will pay to CoBank a surcharge in an amount equal to the present value of the difference between: (A) the amount of interest which would have accrued on such portion during the reminder of the applicable fixed rate period; less (B) the amount of interest that CoBank would earn if such portion were reinvested for the remaining fixed rate period in U.S. Treasury obligations having a weighted average life approximately equal to the weighted average life of the balance being prepaid (or in the event no such obligation then exists, the rate estimate by CoBank in accordance with its then current methodology to be its all-in cost to fund a new loan having a weighted average life equal to the weighted average life of the balance being prepaid).  For purpose of calculating present value, the discount rate will be the rate of interest accruing on the U.S. Treasury obligations selected in (B) above (or CoBank’s estimated cost, as the case may be).

SECTION 10.02.           Complete Agreement, Amendments.  The Loan Documents are intended by the parties to be a complete and final expression of their agreement.  No amendment, modification, or waiver of any provision of the Loan Documents, and no consent to any departure by the Company herefrom or therefrom, shall be effective unless approved by CoBank and contained in a writing signed by or on behalf of CoBank, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.  In the event this Agreement is amended or restated, each such amendment or restatement shall be applicable to all Promissory Notes and Supplements hereto.  Each Promissory Note and each Supplement shall be deemed to incorporate all of the terms and conditions of this Agreement as if fully set forth therein.

SECTION 10.03.           Applicable Law, Jurisdiction.  Except to the extent governed by applicable federal Law, this Agreement and each Supplement shall be governed by the Laws of the State of Colorado, without reference to choice of law doctrine.  Except to the extent governed by applicable federal Law, each Promissory Note shall be governed by the Laws of the State of Alaska, without reference to choice of law doctrine.  The parties agree to submit to the non-exclusive jurisdiction of any federal or state court sitting in Colorado for any action or proceeding arising out of or relating to this Agreement or any other Loan Document.  The Company hereby waives any objection that it may have to any such action or proceeding on the basis of forum non-conveniens.

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SECTION 10.04.           Notices. All notices hereunder shall be in writing and shall be deemed to have been duly given upon delivery if personally delivered or sent by overnight mail or by facsimile or similar transmission, or three (3) days after mailing if sent by express, certified or registered mail, to the parties at the following addresses (or such other address as either party may specify by like notice):

If to CoBank, as follows:	If to the Company, as follows:
CoBank, ACB	Chugach Electric Association, Inc.
5500 South Quebec Street	5601 Minnesota Drive
Greenwood Village, Colorado 80111	Post Officer Box 196300
Facsimile: (303) 740-4002	Anchorage, AK 99510-6300
Attention: Energy Banking Group	Facsimile: (970) 257-7085
	Attention: Chief Executive Officer

SECTION 10.05.        Costs, Expenses, and Taxes.  To the extent allowed by Law, the Company agrees to pay all reasonable out-of-pocket costs and expenses (including the fees and expenses of counsel retained by CoBank) incurred by CoBank in connection with the origination, administration, interpretation, collection, and enforcement of this Agreement and the other Loan Documents and Indenture Documents, including, without limitation, all costs and expenses incurred in perfecting, maintaining, determining the priority of, and releasing any security for the Company’s obligations to CoBank, and any stamp, intangible, transfer or like tax incurred in connection with this Agreement or any other Loan Document or Indenture Document or the recording hereof or thereof.

SECTION 10.06.         Effectiveness and Severability.  This Agreement shall continue in effect until: (A) all indebtedness and obligations of the Company with respect to all Loans by CoBank under this Agreement and the other Loan Documents and Indenture Documents shall have been paid or satisfied; (B) CoBank has no commitment to extend credit to or for the account of the Company under any Promissory Note or any Supplement; (C) all Promissory Notes and all Supplements shall have been terminated; and (D) either party sends written notice to the other party terminating this Agreement.  Any provision of this Agreement or any other Loan Document which is prohibited or unenforceable shall be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof or thereof.

SECTION 10.07.         Successors and Assigns.  This Agreement and the other Loan Documents shall be binding upon and inure to the benefit of the Company and CoBank and their respective successors and assigns, except that the Company may not assign or transfer its rights or obligations under this Agreement or the other Loan Documents or Indenture Documents without the prior written consent of CoBank.

SECTION 10.08.         Headings. Captions and headings used in this Agreement are for reference and convenience of the parties only, and shall not constitute a part of this Agreement.

SECTION 10.09.         Limitations of Agreement.  Notwithstanding anything to the contrary contained herein, nothing in this Agreement requires the Company to cause any obligations of the Company to CoBank, other than 2011 CoBank Note and additional Promissory Notes evidencing Loans hereunder, to be secured as “Pre-Existing Obligations” (as defined in the New Mortgage Indenture) or “Additional Obligations” (as defined in the New Mortgage Indenture), as applicable, under the New Mortgage Indenture. Except as may be expressly provided for by the New Mortgage Indenture or by Section 6.09 hereof, CoBank’s consent shall not be required for the issuance of any “Additional Obligations” (as defined in the New Mortgage Indenture) under the New Mortgage Indenture.

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SECTION 10.10.         Approval of New Mortgage Indenture.  CoBank hereby approves of the terms of the New Mortgage Indenture, and consents to the Company entering into the New Mortgage Indenture, in each case in the form of the New Mortgage Indenture attached as an exhibit to the First Supplemental Indenture.

SECTION 10.11.        Relationship to Unsecured Credit Facility.  CoBank is also a participating lender under that Credit Agreement dated as of November 17, 2010, among the Company, the parties named as lenders therein (including CoBank) and the National Rural Utilities Cooperative Finance Corporation, as administrative agent for such lenders (the “CP Backstop Credit Agreement”), pursuant to which the lenders named in the CP Backstop Credit Agreement, including CoBank, may make certain loans to Chugach in the amounts and for the purposes described in the CP Backstop Credit Agreement (the “CP Backstop Loans”).  The Company’s obligation to repay advances, if any, made by CoBank under the CP Backstop Credit Agreement are evidenced by a Note dated November 17, 2010, from the Company to CoBank in the face amount of $20,000,000 (the “CoBank CP Backstop Note” and, together with the CP Backstop Credit Agreement and all other “Loan Documents” (as that term is defined in the CP Backstop Credit Agreement), collectively, the “CP Backstop Loan Documents”).  All terms and conditions relating to the CP Backstop Loans are set forth in, and shall be governed solely by, the provisions of the CP Backstop Loan Documents.  No CP Backstop Loans will be deemed to have been issued under, or to be subject to any terms or conditions set forth in, the Loan Documents or the Indenture Documents.

[Signatures appear on following page.]

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IN WITNESS WHEREOF, the parties have caused this Amended and Restated Master Loan Agreement to be executed by their duly authorized officers as of the date shown above.

CoBANK, ACB		CHUGACH ELECTRIC ASSOCIATION, INC.
By:	/s/ C. Brock Taylor	By:	/s/ Michael R. Cunningham
			Michael R. Cunningham
Title:	Vice President	Title:	Sr. Vice President and Chief Financial Officer

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EXHIBIT A

DEFINITIONS AND RULES OF INTERPRETATION

SECTION 1.01            Definitions.

(A)           Indenture Terms.  As used in this Agreement, the terms “Accounting Requirements”, “Credit Enhancement”, “Holders”, “Interest Charges”, “Margins For Interest”, “Obligations”, “Outstanding”, “Supplemental Indenture”, “System” and “Trust Estate” shall have the meanings set forth in the Applicable Indenture.

(B)           Other Defined Terms.  As used in this Agreement, any amendment thereto, or in any Supplement or any Promissory Note, the following terms shall have the following meanings:

Affiliate shall mean any Person, 5% or more of the voting stock or other voting rights in which is owned or controlled by the Company.

Agreement shall mean this Amended and Restated Master Loan Agreement, dated as of January 19, 2011, between the Company and CoBank, as it may be amended or modified from time to time.

Applicable Indenture shall mean, prior to the effectiveness of the New Mortgage Indenture, the Existing Indenture, as it may be amended or modified from time to time, and all Supplemental Indentures thereto, and, following the effectiveness of the New Mortgage Indenture, the New Mortgage Indenture, as it may be amended or modified from time to time, and all Supplemental Indentures thereto.

Business Day means any day other than a Saturday, Sunday, or other day on which CoBank or any Federal Reserve Bank is closed for business.

Capital Lease shall mean a lease which should be capitalized on the books of the lessee in accordance with GAAP.

CoBank shall mean CoBank, ACB and its successors and assigns.

CoBank CP Backstop Note shall have the meaning set forth in Section 10.11 of this Agreement.

Company shall mean Chugach Electric Association, Inc. and its permitted successors and assigns.

CP Backstop Credit Agreement, CP Backstop Loan Documents and CP Backstop Loans shall have the meanings set forth in Section 10.11 of this Agreement.

Credit Ratings shall mean a rating assigned by a Rating Agency to any Debt of the Company.

Debt means: (1) indebtedness or liability for borrowed money; (2) obligations evidenced by bonds, debentures, notes, or other similar instruments; (3) obligations for the deferred purchase price of property or services (excluding trade obligations); (4) obligations as lessee under Capital Leases; and (5) obligations secured by a Lien on any property of the Company, whether or not the obligations have been assumed.

Exhibit A - 1

Default shall mean the occurrence of any event which with the giving of notice or the passage of time or the occurrence of any other condition would become an Event of Default under this Agreement or under any other Loan Document.

Default Rate shall mean 4% per annum in excess of the rate or rates that would otherwise be in effect under the terms of the applicable Supplement, except that in the case of overdue interest, fees, and, prior to the final maturity of a Loan (whether as a result of acceleration or otherwise), principal, the term Default Rate shall mean 4% per annum in excess of any variable rate option provided in the applicable Supplement, or, in the event no such option is provided, 4% per annum in excess of the rate established by CoBank from time-to-time during that period as its National Variable Rate.

Dollars and the sign “$” shall mean lawful money of the United States of America.

Effective Date shall have the meaning set forth in Section 3.01 hereof.

ERISA shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time, and the regulations and published interpretations thereof.

Equity shall mean total assets minus total liabilities, as computed in accordance with GAAP consistently applied.

Event of Default shall mean any of the events specified in Section 8.01 of this Agreement and any event specified in any Supplement or any Promissory Note as an Event of Default.

Existing Indenture shall have the meaning set forth in the second Background clause of this Agreement.

Existing Loan shall have the meaning set forth in the first Background clause of this Agreement.

Existing Master Loan Agreement shall have the meaning set forth in the first Background clause of this Agreement.

Existing MLA Supplement shall have the meaning set forth in the first Background clause of this Agreement.

Funded Debt shall mean, as of the date being measured, all indebtedness for borrowed money or the deferred purchase price of property or services (other than trade payables incurred in the ordinary course of business), whether classified as long-term or short-term.

GAAP shall mean generally accepted accounting principles in the United States (as modified pursuant to any applicable regulatory order or policy).

Indenture Documents shall mean, with respect to the Existing Indenture, the Existing Indenture and all Supplemental Indentures and authentication documentation relating to Loans executed and delivered pursuant to the Existing Indenture, and, with respect to the New Mortgage Indenture, the New Mortgage Indenture and all Supplemental Indentures and authentication documentation relating to Loans executed and delivered pursuant to the New Mortgage Indenture.

Indenture Trustee shall mean, with respect to the Existing Indenture, the “Trustee” (as defined in the Existing Indenture), and its successors and assigns pursuant to the terms of the Existing Indenture, and, with respect to the New Mortgage Indenture, the “Trustee” (as defined in the New Mortgage Indenture), and its successors and assigns pursuant to the terms of the New Mortgage Indenture.

Exhibit A - 2

Initial Promissory Note shall have the meaning set forth in Section 2.01 of this Agreement.

Initial Supplement shall have the meaning set forth in Section 2.01 of this Agreement.

Laws shall mean all laws, rules, regulations, codes, orders and the like.

Lien shall mean any mortgage, deed of trust, pledge, security interest, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), or preference, priority or other security agreement or preferential arrangement, charge or encumbrance of any kind or nature whatsoever (including, without limitation, any conditional sale or other title retention agreement).

Loan and Loans shall have the meaning set forth in Section 2.01 of this Agreement.

Loan Documents shall mean this Agreement, all Promissory Notes, all Supplements hereto, and all instruments or documents relating to this Agreement, such Promissory Notes and such Supplements, including, without limitation, all applications, certificates, opinions of counsel, mortgages, deeds of trust, security agreements, guaranties, and pledge agreements; provided, however, that “Loan Documents” does not include the Indenture Documents or the CP Backstop Loan Documents.

Material Adverse Effect shall mean a material adverse effect on the condition, financial or otherwise, operations, properties, margins or business of the Company or on the ability of the Company to perform its obligations under the Loan Documents, the Indenture Documents, any loan or other credit agreement relating to any Obligation under the Applicable Indenture, or any other material credit agreement.

Moody’s shall mean Moody’s Investor Services, Inc. and any successor thereto.

New Mortgage Indenture shall have the meaning set forth in the second Background clause of this Agreement.

Person shall mean an individual, partnership, limited liability company, corporation, business trust, joint stock company, trust, unincorporated association, joint venture, governmental authority, or other entity of whatever nature.

Promissory Note and Promissory Notes shall have the meaning set forth in Section 2.01 of this Agreement.

Rating Agency shall mean S&P, Moody’s, or any other nationally recognized statistical rating organization (within the meaning of the rules of the United States Securities and Exchange Commission).

S&P shall mean Standard & Poor’s Rating Service, A Division of McGraw-Hill Companies, Inc., and any successor thereto.

Subsidiary shall mean, as to the Company, a corporation, partnership, limited liability company, joint venture, or other Person of which shares of stock or other equity interests having ordinary voting power (other than stock having such power only by reason of the happening of a contingency) to elect a majority of the board of directors or other managers of such corporation, partnership, limited liability company, joint venture, or other Person are at the time owned, or the management of which is otherwise controlled, directly or indirectly, through one or more intermediaries, or both, by the Company.

Exhibit A - 3

Supplement and Supplements shall have the meaning set forth in Section 2.01 of this Agreement.

Total Capitalization shall mean Equity plus all Debt which, in accordance with GAAP, should be classified as long-term debt (including Capital Leases).

SECTION 1.02            Rules of Interpretation.  The following rules of interpretation shall apply to this Agreement, all Promissory Notes and all Supplements, and all amendments to any of the foregoing:

Accounting Terms.  All accounting terms not specifically defined herein shall be construed in accordance with GAAP consistent with those applied in the preparation of the financial statements referred to in Section 5.07 of this Agreement, and all financial date submitted pursuant to this Agreement shall be prepared in accordance with such principles.

Number.  All terms stated in the singular shall include the plural, and all terms stated in the plural shall include the singular.

Including.  The term “including” shall mean including, but not limited to.

Default.  The expression “while any Default or Event of Default shall have occurred and be continuing” (or like expression) shall be deemed to include the period following any acceleration of the Obligations (unless such acceleration is rescinded).

Exhibit A - 4

EX-10.45.9

Exhibit 10.45.9

Loan No. ML0976T1B

SECOND AMENDED AND RESTATED SUPPLEMENT

THIS SECOND AMENDED AND RESTATED SUPPLEMENT (this “Second Supplement”) to the Amended and Restated Master Loan Agreement (the “MLA”), dated as of January 19, 2011, is entered into as of January 19, 2011, between CHUGACH ELECTRIC ASSOCIATION, INC., Anchorage, Alaska, an Alaska electric cooperative (the “Company”) and CoBANK, ACB, a federally chartered instrumentality of the United States (“CoBank”).

BACKGROUND

The Company and CoBank are parties to an Amended and Restated Promissory Note and Multiple Advance Term Loan Supplement No. 000976T1A, dated as of December 27, 2002, in the original principal amount of $45,445,116.00 (the “Existing Promissory Note and Supplement”).  Capitalized terms used and not otherwise defined in this Second Supplement shall have the meanings assigned to them in the MLA.  The Company and CoBank now desire to amend and restate the Existing Promissory Note and Supplement.  The execution of this Second Supplement shall not constitute a novation of the indebtedness outstanding under the Existing Promissory Note and Supplement.  For valuable consideration (the receipt and sufficiency of which are hereby acknowledged), the Company and CoBank hereby agree that the Existing Promissory Note and Supplement shall be amended and restated in its entirety to read as follows:

SECTION 1.           The Term Loan Commitment.  As of the date hereof, CoBank’s obligation to make advances under the Loan has expired and the unpaid principal balance of the Loan is $37,301,818.50.

SECTION 2.           Purpose.  INTENTIONALLY OMITTED.

SECTION 3.           Term.  INTENTIONALLY OMITTED.

SECTION 4.           Availability.  INTENTIONALLY OMITTED.

SECTION 5.           Interest.  The Company agrees to pay interest on the unpaid balance of the Loan in accordance with one or more of the following interest rate options, as selected by the Company:

(A)           Weekly Quoted Variable Rate.  At a rate per annum equal at all times to the rate of interest established by CoBank on the first Business Day of each week.  The rate established by CoBank may not exceed the CoBank Base Rate (as hereinafter defined) on that day plus 1/4 of 1% and shall be effective until the first Business Day of the next week.  Each change in the rate shall be applicable to all balances subject to this option and information about the then current rate shall be made available upon telephonic request.  For purposes hereof, the CoBank Base Rate shall mean the rate of interest established by CoBank from time to time as its CoBank Base Rate, which Rate is intended by CoBank to be a reference rate and not its lowest rate.  The CoBank Base Rate will change on the date established by CoBank as the effective date of any change therein.

Second Amended and Restated Supplement

ML0976T1B

CHUGACH ELECTRIC ASSOCIATION, INC.

Anchorage, Alaska

(B)           Quoted Rate Option.  At a fixed rate per annum to be quoted by CoBank in its sole discretion in each instance.  Under this option, balances of $100,000.00 or more may be fixed for such periods, as may be agreeable to CoBank in its sole discretion in each instance.  Notwithstanding the foregoing, amounts subject to the Fixed Rate Option on the date hereof (a list of which is attached hereto as Exhibit A and hereby incorporated by reference) shall continue to be subject to such rates for the remaining fixed rate period(s) specified in Exhibit A, but shall otherwise be subject to the terms hereof.

The Company may, on any Business Day, elect to convert any portion of the Loans bearing interest at the Weekly Quoted Variable Rate to the Quoted Rate Option.  In addition, on the last day of each fixed rate period, the Company may, subject to the terms hereof, elect to fix the rate for an additional period or convert the balance to the Weekly Quoted Variable Rate Option.  In the absence of any such election, interest shall automatically accrue on such balance at (and the Company shall be deemed to have elected to convert such balance to) the Weekly Quoted Variable Rate Option.  All elections provided for herein shall be made telephonically or in writing and must be received by 12:00 noon Company’s local time on the applicable Business Day.  Until the principal is completely repaid, interest on the unpaid principal balance of the Loan shall be payable monthly in arrears by the 20th day of the following month.  Interest shall be calculated on the actual number of days the Loan is outstanding on the basis of a year consisting of 360 days.  In calculating interest, the date each installment of principal is paid shall, if received before 3:00 p.m. Mountain time, be excluded.

SECTION 6.           Fees.  INTENTIONALLY OMITTED.

SECTION 7.           Repayment of the Loan.  The Company promises to repay the unpaid principal balance of the Loan in accordance with the repayment schedule shown on Exhibit A.  If any installment due date is not a Business Day, then such installment shall be due and payable on the next Business Day.  In addition to the above, the Company promises to pay interest on the unpaid principal balance of the Loan at the times and in accordance with the provisions set forth above.

SECTION 8.           Prepayment.  Subject to the broken funding surcharge provision of the MLA, the Company may (identifying each tranche to be prepaid, and where more than one tranche is to be prepaid, the amount of prepayment with respect to each such tranche) prepay all or any portion of the Loan.  Unless otherwise agreed, all prepayments will be applied to principal installments on the Loan in the inverse order of their maturity.

SECTION 9.           Promissory Note.  The Company’s obligation to repay the Loan, together with interest thereon, is evidenced by that certain 2011 CoBank Note (ML0976-T1B), dated the date of its authentication, in the face principal amount of $37,301,818.50, by the Company in favor of CoBank (the “2011 CoBank Note”).

Second Amended and Restated Supplement

ML0976T1B

CHUGACH ELECTRIC ASSOCIATION, INC.

Anchorage, Alaska

SECTION 10.        Security.  The 2011 CoBank Note evidencing the Loan under this Second Supplement constitutes an “Additional Obligation” (as defined in the Existing Indenture).  Upon the effectiveness of the New Mortgage Indenture, the 2011 CoBank Note will be authenticated as a “Pre-Existing Obligation” (as defined in the New Mortgage Indenture) under the New Mortgage Indenture, and the Company’s obligations under the 2011 CoBank Note will be secured under the New Mortgage Indenture.

IN WITNESS WHEREOF, the parties have caused this Second Supplement to the MLA to be executed by their duly authorized officers as of the date first shown above.

CoBANK, ACB		CHUGACH ELECTRIC ASSOCIATION, INC.
By:	/s/ C. Brock Taylor	By:	/s/ Michael R. Cunningham
			Michael R. Cunningham
Title:	Vice President	Title:	Sr. Vice President and
			Chief Financial Officer

Second Amended and Restated Supplement

ML0976T1B

CHUGACH ELECTRIC ASSOCIATION, INC.

Anchorage, Alaska

EXHIBIT A

REPAYMENT SCHEDULE

COBANK	P3A  Z$CL048
PRINICIPAL PAYMENT REPORT	Run Date:  1/14/11
As of Date: 1/14/11	Run Time: 12:26:00
	Page:        1

Prepaid Prin...      .00

Total Payments Displayed....  16,914,427.00

Customer #	Customer Name	Obligation #	Due Date	Payment Amount
22020105	CHUGACH ELECTRIC ASSOCIATION, INC.	010554002
			03/15/2011		832,838.00
			03/15/2012		908,908.00
			03/15/2013		992,036.00
			03/15/2014		1,082,714.00
			03/15/2015		1,181,597.00
			03/15/2016		1,289,672.00
			03/15/2017		1,407,511.00
			03/15/2018		1,536,183.00
			03/15/2019		1,676,590.00
			03/15/2020		1,829,798.00
			03/15/2021		1,997,038.00
			03/15/2022		2,179,542.00

COBANK	P3A  Z$CL048
PRINICIPAL PAYMENT REPORT	Run Date:  1/14/11
As of Date: 1/14/11	Run Time: 12:25:48
	Page:        1

Prepaid Prin...      .00

Total Payments Displayed....  18,487,863.00

Customer #	Customer Name	Obligation #	Due Date	Payment Amount
22020105	CHUGACH ELECTRIC ASSOCIATION, INC.	200000324
			06/15/2011		910,311.00
			06/15/2012		993,458.00
			06/15/2013		1,084,319.00
			06/15/2014		1,183,431.00
			06/15/2015		1,291,513.00
			06/15/2016		1,409,641.00
			06/15/2017		1,538,443.00
			06/15/2018		1,679,084.00
			06/15/2019		1,832,552.00
			06/15/2020		2,000,011.00
			06/15/2021		2,182,809.00
			06/15/2022		2,382,291.00

COBANK	P3A  Z$CL048
PRINICIPAL PAYMENT REPORT	Run Date:  1/14/11
As of Date: 1/14/11	Run Time: 12:26:11
	Page:        1

Prepaid Prin...      .00

Total Payments Displayed....  1,899,528.50

Customer #	Customer Name	Obligation #	Due Date	Payment Amount
22020105	CHUGACH ELECTRIC ASSOCIATION, INC.	000239974
			01/15/2011		88,922.01
			02/15/2011		89,533.35
			03/15/2011		90,148.89
			04/15/2011		90,768.66
			05/15/2011		91,392.70
			06/15/2011		92,021.02
			07/15/2011		92,653.66
			08/15/2011		93,290.66
			09/15/2011		93,932.03
			10/15/2011		94,577.81
			11/15/2011		95,228.04
			12/15/2011		95,882.73
			01/20/2012		96,541.93
			02/20/2012		97,205.65
			03/20/2012		97,873.94
			04/20/2012		98,546.82
			05/20/2012		99,224.33
			06/20/2012		99,906.50
			07/20/2012		100,593.36
			08/20/2012		101,284.41

EX-10.45.10

Exhibit 10.45.10

Chugach Electric Association, Inc. (the “Company”) is personally obligated and fully liable for the amount due under this note and, subject to the provisions of the Indenture (as hereinafter defined), each Holder (as defined in the hereinafter described Indenture) has the right to sue on this note and obtain a personal judgment against the Company for satisfaction of the amount due under this note either before or after a foreclosure of the Indenture (as hereinafter defined) under Alaska Statutes 09.45.170-09.45.220.

Loan No. ML0976-T1B

2011 COBANK NOTE

CHUGACH ELECTRIC ASSOCIATION, INC.

$37,301,818.50 January 19, 2011

FOR VALUE RECEIVED, the undersigned promises to pay to COBANK, ACB  (the “Payee”), or its order, at the times and in the manner set forth in that certain Amended and Restated Master Loan Agreement, dated as of even date herewith, among the undersigned and Payee, as it may be amended, modified, supplemented, extended or restated from time to time (the “MLA”) and in that certain Second Amended and Restated Supplement, dated as of even date herewith, among the undersigned and Payee, as it may be amended, modified, supplemented, extended or restated from time to time (the “Second Supplement”), the principal sum of THIRTY SEVEN MILLION THREE HUNDRED ONE THOUSAND EIGHT HUNDRED EIGHTEEN AND 50/100 UNITED STATES DOLLARS ($37,301,818.50), together with interest on the unpaid principal balance hereof at the rate or rates set forth in the Second Supplement.

This note is given for the loan Payee has made to the undersigned pursuant to the MLA and the Second Supplement, all of the terms and provisions of which (including, without limitation, provisions regarding acceleration of the maturity hereof and application of default interest and of a surcharge to payments hereunder) are hereby incorporated by reference. Advances, accrued interest, and payments shall be posted by the Payee upon an appropriate accounting record, which record (and all computer printouts thereof) shall constitute prima facie evidence of the outstanding principal and interest on the loan. Any amount of principal hereof which is not paid when due, whether at stated maturity, by acceleration or otherwise, shall bear interest from the date when due until said principal amount is paid in full, payable on demand, at a rate per annum set forth in the MLA.

The makers or endorsers hereof hereby waive presentment for payment, demand, protest, and notice of dishonor and nonpayment of this note, and all defenses on the ground of delay or of any extension of time for the payment hereof which may be hereafter given by the holder or holders hereof to them or either of them or to anyone who has assumed the payment of this note, and it is specifically agreed that the obligations of said makers or endorsers shall not be in anywise affected or altered to the prejudice of the holder or holders hereof by reason of the assumption of payment of the same by any other person or entity.

2011 CoBank Note/Chugach Electric Association, Inc.

Loan No. ML00976-T1B

Should this note be placed in the hands of an attorney for collection or the services of any attorney become necessary in connection with enforcing its provisions, the undersigned agrees to pay attorneys’ fees, together with all costs and expenses incident thereto, to the extent allowed by law.  Except to the extent governed by applicable federal law, this note shall be governed by and construed in accordance with the laws of the State of Alaska, without reference to choice of law doctrine.  Whenever possible, each provision of this note shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this note shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this note.  Whenever in this note reference is made to the Payee or the undersigned, such reference shall be deemed to include, as applicable, a reference to their respective successors and assigns.  The provisions of this note shall be binding upon and shall inure to the benefit of such successors and assigns.  The undersigned’s successors and assigns shall include, without limitation, a receiver, trustee or debtor in possession of or for the undersigned.

This note constitutes an “Additional Obligation” (as defined in that certain Amended and Restated Indenture of Trust, dated as of April 1, 2001,between the undersigned and U.S. Bank National Association, as Trustee, as supplemented, amended or restated (the “Indenture”)).

[Signature appears on following page.]

- 2 -

2011 CoBank Note/Chugach Electric Association, Inc.

Loan No. ML00976-T1B

IN WITNESS WHEREOF, the undersigned has caused this note to be executed and delivered by its duly authorized officer as of the date first written above.

	CHUGACH ELECTRIC ASSOCIATION, INC.
	By:	/s/ Michael R. Cunningham
	Name:	Michael R. Cunningham
	Title:	Sr. Vice President and
		Chief Financial Officer
This is one of the Obligations of the series designated therein referred to in the within-mentioned Indenture.
Date:  January 19, 2011	U.S. BANK NATIONAL ASSOCIATION, AS TRUSTEE
	By:	/s/ Thomas Zrust
		Authorized Signatory

- 3 -

2011 CoBank Note/Chugach Electric Association, Inc.

Loan No. ML00976-T1B

FORM OF ALLONGE

The 2011 CoBank Note (Loan No. ML0976-T1B) to which this allonge is affixed, dated January 19, 2011, made by Chugach Electric Association, Inc. to the order of CoBank, ACB, in the original principal amount of $37,301,818.50, is one of the “Pre-Existing Obligations” referred to in the Second Amended and Restated Indenture of Trust, dated as of January 20, 2011, between Chugach Electric Association, Inc. and U.S. Bank National Association, as Trustee, which supersedes in its entirety that certain Amended and Restated Indenture of Trust, dated as of April 1, 2001,between Chugach Electric Association, Inc. and U.S. Bank National Association, as Trustee, as supplemented.

Date:  January 20, 2011	U.S. BANK NATIONAL ASSOCIATION,
	as Trustee
	By:	/s/ Thomas Zrust
		Authorized Signatory

- 4 -

EX-10.49

Exhibit 10.49

CREDIT AGREEMENT

dated as of November 17, 2010

by and among

CHUGACH ELECTRIC ASSOCIATION, INC.

The LENDERS Party Hereto,

and

NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORPORATION,

as Administrative Agent

_____________

$300,000,000

_____________

NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORPORATION,

Lead Arranger

TABLE OF CONTENTS

		Page
ARTICLE I	DEFINITIONS	1
Section 1.01	Defined Terms	1
Section 1.02	Terms Generally	21
Section 1.03	Accounting Terms; GAAP	21
Section 1.04	Classification of Loans and Borrowings	21
ARTICLE II	THE CREDITS	21
Section 2.01	The Commitments	21
Section 2.02	Loans and Borrowings	22
Section 2.03	Requests for Borrowings	22
Section 2.04	[Reserved]	23
Section 2.05	Funding of Borrowings	23
Section 2.06	Interest Elections	24
Section 2.07	Termination and Reduction of the Commitments	25
Section 2.08	Repayment of Loans; Evidence of Debt	26
Section 2.09	Prepayment of Loans	27
Section 2.10	Fees	27
Section 2.11	Interest	28
Section 2.12	Alternate Rate of Interest	29
Section 2.13	Increased Costs; Illegality	29
Section 2.14	Break Funding Payments	30
Section 2.15	Taxes	31
Section 2.16	Payments Generally; Pro Rata Treatment; Sharing of Set-offs	32
Section 2.17	Mitigation Obligations; Replacement of Lenders	34
ARTICLE III	REPRESENTATIONS AND WARRANTIES	34
Section 3.01	Organization; Powers	34
Section 3.02	Authorization; Enforceability; Ranking	35
Section 3.03	Governmental Approvals; No Conflicts	35
Section 3.04	Financial Condition	35
Section 3.05	Properties; Insurance	35
Section 3.06	Litigation, Actions, Suits and Proceedings	36
Section 3.07	Environmental Matters	36
Section 3.08	Compliance with Laws and Agreements	36
Section 3.09	Investment and Holding Company Status; Etc	36
Section 3.10	Taxes	37
Section 3.11	ERISA	37
Section 3.12	Disclosure	37
Section 3.13	Margin Stock	37
Section 3.14	Indebtedness and Liens	37
Section 3.15	Subsidiaries	38
Section 3.16	Solvency	38
Section 3.17	Wholesale Power Contracts	38
Section 3.18	Indenture Compliance	38

i

Section 3.19	Labor Disputes; Natural Disasters	38
ARTICLE IV	CONDITIONS	38
Section 4.01	Effective Date	38
Section 4.02	Each Credit Event	41
ARTICLE V	AFFIRMATIVE COVENANTS	42
Section 5.01	Financial Statements and Other Information	42
Section 5.02	Notices of Material Events	44
Section 5.03	Existence; Conduct of Business	44
Section 5.04	Payment of Obligations (Including Taxes)	45
Section 5.05	Maintenance of Properties; Insurance	45
Section 5.06	Books and Records; Inspection Rights	45
Section 5.07	Compliance with Laws and Agreements	45
Section 5.08	Use of Proceeds	46
Section 5.09	Identification of Parties	46
Section 5.10	Ranking	46
Section 5.11	Maintenance of Credit Ratings	46
ARTICLE VI	NEGATIVE COVENANTS; FINANCIAL COVENANTS	46
Section 6.01	Indebtedness	46
Section 6.02	Security Interests	47
Section 6.03	Fundamental Changes; No Subsidiaries	47
Section 6.04	Lines of Business	48
Section 6.05	Investments	48
Section 6.06	Transactions with Affiliates	48
Section 6.07	Restrictive Agreements	49
Section 6.08	Certain Financial Covenants	49
Section 6.09	Certain Documents; Accounting Changes	49
ARTICLE VII	EVENTS OF DEFAULT; REMEDIES	50
Section 7.01	Events of Default	50
Section 7.02	Remedies	53
ARTICLE VIII	THE ADMINISTRATIVE AGENT	53
Section 8.01	Appointment	53
Section 8.02	Administrative Agent in its Individual Capacity	53
Section 8.03	Exculpatory Provisions	54
Section 8.04	Notice of Default	54
Section 8.05	Reliance by the Administrative Agent	54
Section 8.06	Delegation of Duties	54
Section 8.07	Successor Administrative Agent	55
Section 8.08	Non-Reliance on Administrative Agent and other Lenders	55
Section 8.09	Loan Document Amendments	55
Section 8.10	Indemnification	55

ii

ARTICLE IX	MISCELLANEOUS	56
Section 9.01	Notices	56
Section 9.02	Waivers; Amendments	57
Section 9.03	Expenses; Indemnity; Damage Waiver	59
Section 9.04	Successors and Assigns	60
Section 9.05	Survival	63
Section 9.06	Counterparts; Integration; Effectiveness	63
Section 9.07	Severability	64
Section 9.08	Right of Setoff	64
Section 9.09	Governing Law; Jurisdiction; Etc	64
Section 9.10	WAIVER OF JURY TRIAL	65
Section 9.11	Headings	65
Section 9.12	Treatment of Certain Information; Confidentiality	65
Section 9.13	USA PATRIOT Act	66
Section 9.14	Transaction Titles	66
Section 9.15	No Fiduciary Duty	66

Schedules:
Schedule I	Lenders' Commitments
Schedule 3.14(a)	Existing Indebtedness
Schedule 3.14(b)	Existing Liens
Schedule 3.15	Jointly-Owned Assets
Schedule 3.17	Wholesale Power Contracts
Schedule 6.05(a)	Investments
Schedule 6.07	Restrictive Agreements
Exhibits:
Exhibit A	Form of Assignment and Assumption Agreement
Exhibit B-1	Form of Initial Borrowing Request
Exhibit B-2	Form of Borrowing Request
Exhibit C	Form of Interest Election Request
Exhibit D	Form of Note
Exhibit E	Form of Solvency Certificate
Exhibit F-1	Form of Legal Opinion of Borrower’s Special Counsel
Exhibit F-2	Form of Legal Opinion of Borrower’s In House Counsel
Exhibit G	Form of Compliance Certificate
Exhibit H	Form of New Indenture

iii

CREDIT AGREEMENT dated as of November 17, 2010 (this “Agreement”), by and among CHUGACH ELECTRIC ASSOCIATION, INC., a corporation organized and existing under the laws of the State of Alaska (the “Borrower”), the LENDERS party hereto, and NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORPORATION, a cooperative association existing under the laws of the District of Columbia (“CFC”), as administrative agent for the Lenders (in such capacity, the “Administrative Agent”).

The Borrower has requested that the Lenders (as hereinafter defined) make loans and extend credit to it in an aggregate principal or face amount not exceeding $300,000,000 at any one time outstanding. The Lenders are prepared to extend such credit upon the terms and conditions hereof, and, accordingly, the parties hereto agree as follows:

ARTICLE I

DEFINITIONS

Section 1.01            Defined Terms. As used in this Agreement, the following terms have the meanings specified below:

“ABR”, when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans constituting such Borrowing, are bearing interest at a rate determined by reference to the Alternate Base Rate.

“Accounting Requirements” means the requirements of the Uniform System of Accounts as prescribed by FERC; provided, however, that if the Borrower is not specifically required by FERC to employ such system of accounts prescribed by FERC or FERC does not prescribe a system of accounts applicable to the Borrower, then “Accounting Requirements” means the requirements of the systems of accounts prescribed by any regulatory authority having jurisdiction over the Borrower or, in the absence thereof, the requirements of generally accepted accounting principles applicable to similar entities conducting business similar to that of the Borrower. Generally accepted accounting principles refers to a common set of accounting standards and procedures that are either promulgated by an authoritative accounting rulemaking body or accepted as appropriate due to wide-spread application in the United States.

 “Adjusted LIBO Rate” means, for the Interest Period for any LIBO Borrowing, an interest rate per annum (rounded upwards, if necessary, to the next 1/100 of 1%) equal to (a) the LIBO Rate for such Interest Period multiplied by (b) the Statutory Reserve Rate for such Interest Period.

“Administrative Agent” has the meaning assigned to such term in the introductory paragraph hereof.

“Administrative Agent Fee” has the meaning assigned to such term in Section 2.10(b).

“Administrative Questionnaire” means an Administrative Questionnaire in a form supplied by the Administrative Agent.

“Affiliate” of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For purposes of this definition, “control” of any specified Person means the power to direct the management and policies of such specified Person, directly or indirectly, whether through the ownership of voting securities or membership interests, by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing.

“Agreement” has the meaning assigned to such term in the introductory paragraph hereto.

“Alternate Base Rate” means, for any day, a rate per annum equal to the greatest of (a) the Prime Rate in effect on such day, (b) the Federal Funds Effective Rate for such day plus 2.00%, or (c) the Adjusted LIBO Rate for a one month Interest Period on such day plus 2.00%. Any change in the Alternate Base Rate due to a change in the Prime Rate, the Federal Funds Effective Rate or the Adjusted LIBO Rate shall be effective from and including the effective date of such change in the Prime Rate, the Federal Funds Effective Rate or the Adjusted LIBO Rate, as the case may be.

“Applicable Percentage” means, with respect to any Lender, the percentage of the aggregate Commitments of all Lenders represented by such Lender's Commitment. If the Commitments have terminated or expired, the Applicable Percentages shall be determined based upon the Commitments most recently in effect, giving effect to any assignments pursuant to Section 9.04.

“Approved Fund” means, with respect to any Lender that is a fund that invests in commercial loans, any other fund that invests in commercial loans and is managed or advised by the same investment advisor as such Lender or by an Affiliate of such investment advisor.

“Assignment and Assumption” means an assignment and assumption entered into by a Lender and an assignee (with the consent of any party whose consent is required by Section 9.04), and accepted by the Administrative Agent, in the form of Exhibit A or any other form approved by the Administrative Agent.

“Authorizations” means the governmental and third party consents, approvals, authorizations, actions, notices and filings necessary in connection with the conduct of the Borrower’s business and the consummation of the Transactions.

“Availability Period” means the period from and including the Effective Date to, but excluding, the earlier of the Commitment Termination Date and the date of termination of the Commitments prior to the Commitment Termination Date pursuant to Section 2.07(b), ARTICLE VII or otherwise.

“Board” means the Board of Governors of the Federal Reserve System of the United States of America.

“Board of Directors” means the board of directors of the Borrower or any duly authorized committee of such board.

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“Borrower” has the meaning assigned to such term in the introductory paragraph hereto.

“Borrowing” means (a) all ABR Loans made, converted or continued on the same date or (b) all LIBO Loans that have the same Interest Period.

“Borrowing Request” means a request by the Borrower for a Borrowing in accordance with Section 2.03, substantially in the form of Exhibit B-1 or Exhibit B-2 hereto, as applicable.

“Bps” means basis points, with each basis point being one-hundredth of a percentage point or 0.01%.

“Business Day” means any day (a) that is not a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law to remain closed and (b) if such day relates to a borrowing of, a payment or prepayment of principal of or interest on, a continuation or conversion of or into, or the Interest Period for, a LIBO Borrowing, or to a notice by the Borrower with respect to any such borrowing, payment, prepayment, continuation, conversion, or Interest Period, that is also a day on which dealings in Dollar deposits are carried out in the London interbank market.

“Capital Lease Obligations” of any Person means the obligations of such Person to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as capital leases on a balance sheet of such Person under GAAP, and the amount of such obligations shall be the capitalized amount thereof determined in accordance with GAAP.

“Casualty Event” means, with respect to any property of any Person, any loss of or damage to, or any condemnation or other taking (whether by eminent domain or otherwise) of, such property for which such Person or any of its Subsidiaries receives insurance proceeds, or proceeds of a condemnation award or other compensation.

“CERCLA” means the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. §§ 9601 et seq.

“CFC” has the meaning assigned to such term in the introductory paragraph hereof.

“CFC Capital Term Certificates” means capital term certificates, or book entry form of account, evidencing the Borrower's required purchase of equity in CFC in connection with any existing or future credit facilities provided or to be provided by CFC.

“Change in Control” means, with respect to the Borrower, failure to be a member-owned cooperative corporation.

“Change in Law” means (a) the adoption of any law, rule or regulation after the date of this Agreement, (b) any change in any law, rule or regulation or in the interpretation or application thereof by any Governmental Authority or any other Person or accord relating to bank supervision (including the Basel Committee on Banking Supervision) after the date of this Agreement or (c) compliance by any Lender (or, for purposes of Section 2.13(b), by any lending office of such Lender or by such Lender’s holding company, if any) with any request, guideline or directive (whether or not having the force of law) of any Governmental Authority made or issued after the date of this Agreement.

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“CIM” means the Borrower’s Confidential Information Memorandum, dated October 14, 2010 relating to the Transactions.

“CoBank Equity Interests” means Investments in voting stock of CoBank, ACB acquired by the Borrower pursuant to 12 U.S.C. §2130 (2003) in connection with the Loans by CoBank, ACB hereunder.

“Code” means the Internal Revenue Code of 1986, as amended from time to time.

“Commitment” means with respect to each Lender, the commitment of such Lender to make or otherwise fund any Loan, expressed as a Revolving Credit Exposure hereunder. The initial amount of each Lender’s Commitment shall be the sum of such Lender's Commitment that is set forth on Schedule I or in the applicable Assignment and Assumption pursuant to which such Lender shall have assumed its Commitment, as such commitment may be (a) reduced from time to time pursuant to Section 2.07 or ARTICLE VII, and (b) reduced or increased from time to time pursuant to assignments by or to such Lender pursuant to Section 9.04. The aggregate amount of all the Lenders’ Commitments as of the Effective Date is $300,000,000 (i.e., Three Hundred Million Dollars).

“Commitment Termination Date” means the third anniversary of the Effective Date; provided that if such date is not a Business Day, the Commitment Termination Date shall be the immediately preceding Business Day.

“ConocoPhillips” has the meaning assigned to such term in the definition of the term “Fuel Supply Agreements”.

“Consolidated Margins and Equities” means an amount constituting the total margins and equities of the Borrower determined in accordance with Accounting Requirements.

“Credit Enhancement” means, with respect to any Obligation, the provision of an insurance policy, letter of credit, surety bond or any other undertaking, whereby the provider thereof becomes unconditionally obligated to pay when due, to the extent not paid by the Borrower or otherwise, the principal of an interest on such Obligation or on another obligation the payment on which is (i) secured by such Obligation or (ii) credited against the principal and interest due on such Obligation.

“Credit Enhancer” means any Person that, pursuant to the Indenture or a Supplemental Indenture, is designated as a Credit Enhancer and which provides Credit Enhancement.

“Credit Extension” has the meaning set forth in Section 4.02.

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“Default” means any event or condition which constitutes an Event of Default or which upon notice, lapse of time or both would, unless cured or waived, become an Event of Default.

“Defeasance Securities” means and includes

(a) on any date before the New Indenture shall be in full force in effect, any of the following securities, if and to the extent the same are not subject to redemption or call prior to maturity by anyone other than the holder thereof and are at the time legal for investment of the Borrower's funds:

(i)            any bonds or other obligations which as to principal and interest constitute direct obligations of, or are unconditionally guaranteed by, the United States of America;

(ii)           any bonds or other obligations of any state of the United States of America or of any agency, instrumentality or local governmental unit of any such state (A) which are not callable prior to maturity, or which have been duly called for redemption by the obligor on a date or dates specified and as to which irrevocable instructions have been given to a trustee in respect of such bonds or other obligations by the obligor to give due notice of such redemption on such date or dates, which date or dates shall be also specified in such instructions, (B) which are secured as to principal and interest and redemption premium, if any, by a fund consisting only of cash or bonds or other obligations of the character described in clause (i) above which fund may be applied only to the payment of such principal of and interest and redemption premium, if any, on such bonds or other obligations on the maturity date or dates thereof or the redemption date or dates specified in the irrevocable instructions referred to in subclause (A) of this clause (ii), as appropriate, (C) as to which the principal of and interest on the bonds and obligations of the character described in clause (i) above on deposit in such fund along with any cash on deposit in such fund are sufficient to pay principal of and interest and redemption premium, if any, on the bonds or other obligations described in this clause (ii) on the maturity date or dates thereof or on the redemption date or dates specified in the irrevocable instructions referred to in subclause (A) of this clause (ii), as appropriate, and (D) which at the time of their purchase hereunder are rated “AAA” by S&P and, if rated by Moody's, are rated “Aaa” by such agency; and

(iii)          any certificates or any other evidences of an ownership interest in obligations or in specified portions thereof (which may consist of specified portions of the interest thereon) of the character described in paragraph (i) or (ii) above; and

(b)            on any date after and including the first day that the New Indenture shall be in full force in effect, any of the following securities, if and to the extent the same are not subject to redemption or call prior to maturity by anyone other than the holder thereof and are at the time legal for investment of the Borrower's funds:

(i)            any bonds or other obligations which as to principal and interest constitute direct obligations of, or are unconditionally guaranteed by, the United States of America;

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(ii)           any bonds or other obligations of any state of the United States of America or of any agency, instrumentality or local governmental unit of any such state (A) which are not callable prior to maturity, or which have been duly called for redemption by the obligor on a date or dates specified and as to which irrevocable instructions have been given to a trustee in respect of such bonds or other obligations by the obligor to give due notice of such redemption on such date or dates, which date or dates shall be also specified in such instructions, (B) which are secured as to principal and interest and redemption premium, if any, by a fund consisting only of cash or bonds or other obligations of the character described in clause (i) above which fund may be applied only to the payment of such principal of and interest and redemption premium, if any, on such bonds or other obligations on the maturity date or dates thereof or the redemption date or dates specified in the irrevocable instructions referred to in subclause (A) of this clause (ii), as appropriate, (C) as to which the principal of and interest on the bonds and obligations of the character described in clause (i) above on deposit in such fund along with any cash on deposit in such fund are sufficient to pay principal of and interest and redemption premium, if any, on the bonds or other obligations described in this clause (ii) on the maturity date or dates thereof or on the redemption date or dates specified in the irrevocable instructions referred to in subclause (A) of this clause (ii), as appropriate, and (D) which at the time of their purchase hereunder are assigned the highest rating by all nationally recognized statistical rating organizations (as designated by the SEC) then rating such Defeasance Securities; PROVIDED that at least one such organization is then rating such Defeasance Securities; and

(iii)          any certificates or any other evidences of an ownership interest in obligations or in specified portions thereof (which may consist of specified portions of the interest thereon) of the character described in paragraph (i) or (ii) above.

“Dollars” or “$” refers to lawful money of the United States of America.

“Effective Date” means the date on which the conditions specified in Section 4.01 are satisfied (or waived in accordance with Section 9.02).

“Eligible Assignee” means (a) any Affiliate or Approved Fund of a Lender, (b) a commercial bank organized under the laws of the United States, or any State thereof, and having total assets in excess of $500,000,000, (c) a savings bank organized under the laws of the United States, or any State thereof, and having total assets in excess of $500,000,000, (d) a commercial bank organized under the laws of any other country which is a member of the Organization for Economic Co-operation and Development or a political subdivision of any such country, and having total assets in excess of $500,000,000, (e) a finance company, insurance company or other financial institution or fund (whether a corporation, partnership or other entity) which is engaged in making, purchasing or otherwise investing in commercial loans in the ordinary course of its business, and having total assets in excess of $100,000,000, and (f) any other Person (other than the Borrower or an Affiliate of the Borrower) approved by the Borrower, such approval not to be unreasonably withheld or delayed (provided that no such approval by the Borrower shall be required while a Default or an Event of Default has occurred and is continuing) and the Administrative Agent.

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“Environmental Claim” means any written or oral notice, claim, demand, actions or causes of action, assessments, complaints, directives, citations, information requests issued by government authority, legal proceedings, orders, notices of potential responsibility, losses, damages (including, without limitation, diminution in value), liabilities, sanctions, costs and expenses (including, without limitation, interest, penalties and attorneys’ and experts’ fees and disbursements) (collectively, a “Claim”) pursuant to Environmental Laws, including but not limited to, Claims based on, arising out of or otherwise relating to: (i) the Remediation, presence or Release of, or exposure to, Hazardous Materials or other environmental conditions at, on, under, above, from, or about any Real Property or any real properties formerly owned, leased or operated by the Borrower or any of its predecessors or Affiliates; (ii) the off-site Release, treatment, transportation, storage or disposal of Hazardous Materials originating from the Borrower’s assets, properties or business; (iii) any violations of Environmental Laws by the Borrower prior to the Effective Date, including reasonable expenditures necessary to cause the Borrower to be in compliance with or resolve violations of Environmental Laws.

“Environmental Laws” means all laws, rules, regulations, codes, ordinances, orders, decrees, judgments, injunctions, judicial rulings, notices or binding agreements issued, promulgated or entered into by any Governmental Authority, now or thereafter in effect, relating in any way to the environment, preservation or reclamation of natural resources, the management, or Release of any Hazardous Material or noise control, or the protection of human health, safety, natural resources, animal health or welfare, or the environment, including but not limited to, CERCLA.

“Environmental Liability” shall mean any liability, contingent or otherwise (including any liability for damages, costs of environmental investigation and remediation, costs of administrative oversight, fines, natural resource damages, penalties or indemnities), of the Borrower directly or indirectly resulting from or based upon (a) any actual or alleged violation of any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials, (c) any actual or alleged exposure to any Hazardous Materials, (d) the Release or threatened Release of any Hazardous Materials or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time.

“ERISA Affiliate” means any trade or business (whether or not incorporated) that, together with the Borrower, is treated as a single employer under Section 414(b) or (c) of the Code, or, solely for purposes of Section 302 of ERISA and Section 412 of the Code, is treated as a single employer under Section 414 of the Code.

“ERISA Event” means (a) any “reportable event”, as defined in Section 4043 of ERISA or the regulations issued thereunder with respect to a Plan (other than an event for which the 30-day notice period is waived); (b) the existence with respect to any Plan of an “accumulated funding deficiency” (as defined in Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an application for a waiver of the minimum funding standard with respect to any Plan; (d) the incurrence by the Borrower or any of its ERISA Affiliates of any liability under Title IV of ERISA with respect to the termination of any Plan; (e) the receipt by the Borrower or any ERISA Affiliate from the PBGC or a plan administrator of any notice relating to an intention to terminate any Plan or Plans or to appoint a trustee to administer any Plan; (f) the incurrence by the Borrower or any of its ERISA Affiliates of any liability with respect to the withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or (g) the receipt by the Borrower or any ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan from the Borrower or any ERISA Affiliate of any notice, concerning the imposition of Withdrawal Liability or a determination that a Multiemployer Plan is, or is expected to be, insolvent or in reorganization, within the meaning of Title IV of ERISA.

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“Event of Default” has the meaning set forth in Section 7.01.

“Excluded Taxes” means, with respect to the Administrative Agent, any Lender or any other recipient of any payment to be made by or on account of any obligation of the Borrower hereunder, (a) income or franchise taxes imposed on (or measured by) its net income by the United States of America, or by the jurisdiction under the laws of which such recipient is organized or in which its principal office is located or, in the case of any Lender, in which its applicable lending office is located, and (b) in the case of a Foreign Lender (other than an assignee pursuant to a request by the Borrower under Section 2.17(b)), any withholding tax that is imposed on amounts payable to such Foreign Lender at the time such Foreign Lender becomes a party to this Agreement or is attributable to such Foreign Lender’s failure or inability (other than as a result of a Change in Law) to comply with Section 2.15(e), except to the extent that such Foreign Lender’s assignor (if any) was entitled, at the time of assignment, to receive additional amounts from the Borrower with respect to such withholding tax pursuant to Section 2.15(a).

“Existing Credit Agreement” means the Credit Agreement, dated as of October 10, 2008, by and among Borrower, the lenders party thereto, and Administrative Agent.

“Existing Indebtedness” has the meaning assigned to such term in Section 3.14(a).

“Existing Liens” has the meaning assigned to such term in Section 3.14(b).

“Facility Fees” has the meaning set forth in Section 2.10(a).

“Federal Funds Effective Rate” means, for any day, the weighted average (rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average (rounded upwards, if necessary, to the next 1/100 of 1%) of the quotations for such day for such transactions received by the Administrative Agent from three Federal funds brokers of recognized standing selected by it.

“FERC” means the Federal Energy Regulatory Commission, or any agency or other governmental body succeeding to the functions thereof.

“Fitch” means Fitch Ratings, Ltd.

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“Foreign Lender” means any Lender that is organized under the laws of a jurisdiction other than that in which the Borrower is located. For purposes of this definition, the United States of America, each State thereof and the District of Columbia shall be deemed to constitute a single jurisdiction.

“Fuel Supply Agreements” means (a) the Agreement for the Sale and Purchase of Natural Gas, dated September 26, 1988, between the Borrower and Marathon Oil Company, as amended; (b) the Agreement for the Sale and Purchase of Natural Gas, dated April 27, 1989, between the Borrower and Chevron U.S.A. Inc., as amended and supplemented; (c) the Agreement for the Sale and Purchase of Natural Gas, dated April 21, 1989, between the Borrower and Arco Alaska, Inc. (ConocoPhillips), as amended and supplemented; (d) the Agreement for the Sale and Purchase of Natural Gas, dated April 25, 1989, between the Borrower and ML&P (as successor in interest to Shell Western E&P Inc.), as amended and supplemented; (e) the Agreement for the Sale and Purchase of Natural Gas between the Borrower, and ConocoPhillips Alaska, Inc. and ConocoPhillips, Inc. (collectively, “ConocoPhillips”), effective August 21, 2009; (f) the Agreement for the Sale and Purchase of Natural Gas between the Borrower and Marathon Alaska Production, LLC, effective May 17, 2010; and (g) any material agreements relating to the supply of fuel entered into by the Borrower after the date hereof.

“GAAP” means generally accepted accounting principles in the United States of America.

“Governmental Authority” means the federal government of the United States of America, or of any other nation, or any political subdivision thereof, whether state or local or otherwise, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.

“Guarantee” of or by any Person (the “guarantor”) means any obligation, contingent or otherwise, of the guarantor guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation of any other Person (the “primary obligor”) in any manner, whether directly or indirectly, and including any obligation of the guarantor, direct or indirect, (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation or to purchase (or to advance or supply funds for the purchase of) any security for the payment thereof, (b) to purchase or lease property, securities or services for the purpose of assuring the owner of such Indebtedness or other obligation of the payment thereof, (c) to maintain working capital, equity capital or any other financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation or (d) as an account party in respect of any letter of credit or letter of guaranty issued to support such Indebtedness or obligation; provided, that the term Guarantee shall not include endorsements for collection or deposit in the ordinary course of business.

“Hazardous Materials” means all explosive or radioactive substances or wastes; all hazardous or toxic substances, wastes or other pollutants; petroleum or petroleum distillates; asbestos or asbestos containing materials; polychlorinated biphenyls; radon gas; infectious or medical wastes; mold; and all other substances, materials or wastes of any nature that are listed, subject to regulation under or listed pursuant to any Environmental Law.

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“Hedging Agreement” means any interest rate protection agreement, foreign currency exchange agreement, commodity price protection agreement or other interest or currency exchange rate or commodity price hedging arrangement.

“Holder” when used with respect to any Obligation means the Person in whose name such Obligation is registered in the Obligation Register.

“Indebtedness” of any Person means, without duplication, (a) all obligations of such Person for borrowed money or with respect to deposits or advances of any kind, (b) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments, (c) all obligations of such Person upon which interest charges are customarily paid, (d) all obligations of such Person under conditional sale or other title retention agreements relating to property acquired by such Person, (e) all obligations of such Person in respect of the deferred purchase price of property or services (excluding current accounts payable incurred in the ordinary course of business), (f) all Indebtedness of others secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on property owned or acquired by such Person, whether or not the Indebtedness secured thereby has been assumed, (g) all Guarantees by such Person of Indebtedness of others, (h) all Capital Lease Obligations of such Person, (i) all obligations, contingent or otherwise, of such Person as an account party in respect of letters of credit and letters of guaranty and (j) all obligations, contingent or otherwise, of such Person in respect of bankers’ acceptances. The Indebtedness of any Person shall include the Indebtedness of any other entity (including any partnership in which such Person is a general partner) to the extent such Person is liable therefor as a result of such Person’s ownership interest in or other relationship with such entity, except to the extent the terms of such Indebtedness provide that such Person is not liable therefor.

“Indemnified Costs” has the meaning assigned to such term in Section 8.10(a).

“Indemnified Taxes” means Taxes other than Excluded Taxes.

“Indemnitee” has the meaning assigned to such term in Section 9.03(b).

“Indenture” means the Amended and Restated Indenture of Trust dated as of April 1, 2001, between Chugach Electric Association, Inc., and U.S. Bank Trust National Association, as Trustee, as the same has been amended and supplemented prior to the date hereof, and as the same may hereafter be amended and supplemented (including by the New Indenture upon the effective date thereof).

“Information” has the meaning set forth in Section 9.12(b).

“Interest Charges” for any period means

(a)            on any date before the New Indenture shall be in full force in effect, the total interest charges (whether capitalized or expensed) of the Borrower for such period on (i) all Outstanding Debt Obligations and (ii) all other obligations of the Borrower (other than Subordinated Debt) to repay borrowed money (including the Borrower’s obligations under the Loan Documents and the Loans) or to pay the deferred purchase price for property or services, in all cases including amortization of debt discount and premium on issuance but excluding the interest component attributable to any capitalized lease or similar agreement; and

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(b)            on any date after and including the first day that the New Indenture shall be in full force in effect, the total interest charges (other than capitalized interest charges) of the Borrower for such period on (i) all Outstanding Debt Obligations and (ii) all other obligations of the Borrower (other than Subordinated Debt) to repay borrowed money (including the Borrower’s obligations under the Loan Documents and the Loans) or to pay the deferred purchase price for property or services, in all cases including amortization of debt discount and premium on issuance but excluding the interest component attributable to any capitalized lease or similar agreement.

“Interest Election Request” means a request by the Borrower to convert or continue a Borrowing in accordance with Section 2.06, substantially in the form of Exhibit C hereto.

“Interest Payment Date” means (a) with respect to any ABR Loan, each Quarterly Date and (b) with respect to any LIBO Loan, the last day of each Interest Period therefor and, in the case of any Interest Period of more than three months’ duration, each day prior to the last day of such Interest Period that occurs at three-month intervals after the first day of such Interest Period.

“Interest Period” means, for any LIBO Loan or Borrowing, the period commencing on the date of such Loan or Borrowing and ending on the numerically corresponding day in the calendar month that is one, two, three or six months thereafter (in each case, subject to availability), as specified in the applicable Borrowing Request or Interest Election Request; provided, that (i) if any Interest Period would end on a day other than a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless such next succeeding Business Day would fall in the next calendar month, in which case such Interest Period shall end on the next preceding Business Day, and (ii) any Interest Period that commences on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the last calendar month of such Interest Period) shall end on the last Business Day of the last calendar month of such Interest Period. For purposes hereof, the date of a Loan initially shall be the date on which such Loan is made and thereafter shall be the effective date of the most recent conversion or continuation of such Loan, and the date of a Borrowing comprising Loans that have been converted or continued shall be the effective date of the most recent conversion or continuation of such Loans.

“Investment” means, for any Person: (a) the acquisition (whether for cash, property, services or securities or otherwise) of capital stock, bonds, notes, debentures, partnership, limited liability company or other ownership interests or other securities of any other Person or any agreement to make any such acquisition (including any “short sale” or any sale of any securities at a time when such securities are not owned by the Person entering into such sale); (b) the making of any deposit with, or advance, loan or other extension of credit to, any other Person (including the purchase of property from another Person subject to an understanding or agreement, contingent or otherwise, to resell such property to such Person), but excluding any such advance, loan or extension of credit having a term not exceeding 90 days arising in connection with sales by such Person in the ordinary course of business; (c) the entering into of any Guarantee of, or other contingent obligation with respect to, Indebtedness or other liability of any other Person and (without duplication) any amount committed to be advanced, lent or extended to such Person; or (d) the entering into of any Hedging Agreement.

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“Lead Arranger” means CFC.

“Lenders” means the Persons listed on Schedule I and any other Person that shall have become a party hereto pursuant to an Assignment and Assumption, other than any such Person that ceases to be a party hereto pursuant to an Assignment and Assumption.

“LIBO”, when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans constituting such Borrowing, are bearing interest at a rate determined by reference to the Adjusted LIBO Rate.

“LIBO Margin” shall mean the Bps per annum set forth below opposite the Borrower's applicable issuer credit rating from S&P, senior unsecured long-term debt rating from Moody's and long-term senior debt rating from Fitch in the column labeled “LIBO Margin”; provided that the LIBO Margin shall be equal to the respective Bps so determined plus twenty (20) Bps per annum for any day on which Utilization exceeds 50% (it being understood that if any Loans remain outstanding following the Commitment Termination Date, Utilization shall be deemed to be 100%); provided, further, that if the Borrower's issuer credit rating from S&P, senior unsecured long-term debt rating from Moody's or long-term senior debt rating from Fitch are different, the following rules shall apply: (a) if two of the credit ratings fall within the same category, that rating shall apply, (b) if all of the ratings fall within different categories, the midpoint rating between the highest and the lowest ratings shall apply, and (c) if the Borrower is rated by only two of the rating agencies specified below, the lower of the two ratings shall apply; provided, however, that if the Borrower is not rated by any of the rating agencies specified below, or is rated by only one of the rating agencies specified below (without prejudice to the requirements of Section 5.11), LIBO Margin shall be determined by the lowest senior unsecured debt credit rating category specified below.

S&P	Moody's	Fitch	LIBO Margin	Facility Fee
≥A+	≥A1	≥ A+	100.0 Bps	20.0 Bps
A	A2	A	125.0 Bps	22.5 Bps
A-	A3	A-	150.0 Bps	25.0 Bps
BBB+	Baa1	BBB+	175.0 Bps	27.5 Bps
BBB	Baa2	BBB	200.0 Bps	35.0 Bps
<BBB	<Baa2	<BBB	250.0 Bps	50.0 Bps

“LIBO Rate” means, for the Interest Period for any LIBO Borrowing, the rate appearing on Reuters Screen LIBOR01 Page (or on any successor or substitute page of the Reuters Service, or if such Service ceases to be available, any successor to or substitute for such Service, providing rate quotations comparable to those currently provided on such page of such Service, as determined by the Administrative Agent from time to time for purposes of providing quotations of interest rates applicable to Dollar deposits in the London interbank market) at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period, as the rate for the offering of Dollar deposits with a maturity comparable to such Interest Period.

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“Lien” means, with respect to any asset, (a) any mortgage, deed of trust, lien, pledge, hypothecation, encumbrance, charge or security interest in, on or of such asset, (b) the interest of a vendor or a lessor under any conditional sale agreement, capital lease or title retention agreement (or any financing lease having substantially the same economic effect as any of the foregoing) relating to such asset and (c) in the case of securities, any purchase option, call or similar right of a third party with respect to such securities.

“Loan” means any loan made by a Lender to the Borrower pursuant to this Agreement, and “Loans” means all such loans.

“Loan Documents” means, collectively, this Agreement and any other agreements, instruments and documents prepared in connection herewith (including any Note issued pursuant to this Agreement).

“Margin Regulations” means Regulations T, U and X of the Board.

“Margin Stock” means “margin stock” within the meaning of Regulations T, U and X of the Board.

“Margins for Interest” means

(c)            on any date before the New Indenture shall be in full force in effect, for any period, the assignable margins of the Borrower for such period, which shall include revenues of the Borrower, if any, subject to possible refund at a later date; provided, however, no deductions shall be made as a result of refunds ordered in a subsequent period; adjusted by:

(i)            Adding: (A) Interest Charges; (B) accruals of Federal income and other taxes imposed on income after deduction of Interest Charges for such period; (C) the amount, if any, deducted in arriving at assignable margins on account of any losses incurred by any Subsidiary or Affiliate of the Borrower other than amounts deducted pursuant to clause (ii)(B) below; (D) the amount, if any, the Borrower actually receives in such period as a dividend or other distribution of earnings of any Subsidiary or Affiliate (whether or not such earnings were for such period or any earlier period or periods) which amount has not otherwise been reflected as an increase in assignable margins in such period or any earlier period or periods; and (E) the amount of any expenses or provisions for any non-recurring charge to income or margins or retained earnings of whatever kind or nature (including, without limitation, (x) the recognition of expense due to the non-recoverability of assets or expenses and (y) the accelerated portion of the amortization of any deferred charges or regulatory assets carried on the books of the Borrower) that may have been deducted or otherwise taken into account in arriving at assignable margins whether or not recorded as a non-recurring charge in the Borrower’s books of account; and

(ii)           subtracting: (A) the amount, if any, added in arriving at assignable margins on account of any income, gain, earnings or profits of any Subsidiary or Affiliate of the Borrower other than amounts added pursuant to clause (i)(D) above; and (B) the amount, if any, the Borrower actually contributes to the capital of, or actually pays under a guarantee or like agreement by the Borrower of an obligation of, any Subsidiary or Affiliate in such period, to the extent of any accumulated losses incurred by such Subsidiary or Affiliate (whether or not such losses were for such period or any earlier periods), but only to the extent (x) such losses have not otherwise caused other contributions or payments to be subtracted from assignable margins for purposes of computing Margins for Interest for a prior period and (y) such amount has not otherwise been subtracted from assignable margins; and

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(d)            on any date after and including the first day that the New Indenture shall be in full force in effect, for any period, the assignable margins of the Borrower for such period, which shall include revenues of the Borrower, if any, subject to possible refund at a later date; provided, however, no deductions shall be made as a result of refunds ordered in a subsequent period; adjusted by:

(i)            Adding: (A) Interest Charges; (B) the amount, if any, deducted in arriving at net margins on account of accruals of Federal income and other taxes imposed on income after deduction of Interest Charges for such period; (C) the amount, if any, deducted in arriving at assignable margins on account of any losses incurred by any Subsidiary or Affiliate of the Borrower other than amounts deducted pursuant to clause (ii)(B) below; (D) the amount, if any, the Borrower actually receives in such period as a dividend or other distribution of earnings of any Subsidiary or Affiliate (whether or not such earnings were for such period or any earlier period or periods) which amount has not otherwise been reflected as an increase in assignable margins in such period or any earlier period or periods; and (E) the amount of any expenses or provisions for any non-recurring charge to income or margins or retained earnings of whatever kind or nature (including, without limitation, (x) the recognition of expense due to the non-recoverability of assets or expenses and (y) the accelerated portion of the amortization of any deferred charges or regulatory assets carried on the books of the Borrower) that may have been deducted or otherwise taken into account in arriving at assignable margins whether or not recorded as a non-recurring charge in the Borrower’s books of account; and

(ii)           subtracting: (A) the amount, if any, added in arriving at assignable margins on account of any income, gain, earnings or profits of any Subsidiary or Affiliate of the Borrower other than amounts added pursuant to clause (i)(D) above; and (B) the amount, if any, the Borrower actually contributes to the capital of, or actually pays under a guarantee or like agreement by the Borrower of an obligation of, any Subsidiary or Affiliate in such period, to the extent of any accumulated losses incurred by such Subsidiary or Affiliate (whether or not such losses were for such period or any earlier periods), but only to the extent (x) such losses have not otherwise caused other contributions or payments to be subtracted from assignable margins for purposes of computing Margins for Interest for a prior period and (y) such amount has not otherwise been subtracted from assignable margins.

Margins for Interest, as calculated pursuant to clause (a) and clause (b) above, shall be determined in accordance with Accounting Requirements; provided, however, that such determination shall be made on a Borrower only and not on a consolidated basis.

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“Material Adverse Effect” means, with respect to any event, act, condition or occurrence of whatever nature (including any adverse determination in any litigation, arbitration, or governmental investigation or proceeding), whether singularly or in conjunction with any other event or events, act or acts, condition or conditions, occurrence or occurrences whether or not related, a material adverse change or a material adverse effect on (a) the ability of the Borrower to pay any amounts due, or to otherwise perform any of its obligations, under this Agreement or any of the other Loan Documents, or (b) the rights of or benefits available to any Lender or the Administrative Agent under this Agreement or any of the other Loan Documents; provided, however, that subject to Section 6.09(c), the execution, delivery and recordation of the New Indenture, the creation of the liens and security interests contemplated thereby, and the performance by the Borrower of the covenants created thereunder, shall not be deemed to constitute or result in a Material Adverse Effect.

“Material Indebtedness” means, collectively (i) any Indebtedness incurred under the Indenture (and any related credit documents) and (ii) any other Indebtedness (other than the Loans), or obligations in respect of one or more Hedging Agreements, of the Borrower in an aggregate principal amount exceeding $15,000,000. For purposes of determining Material Indebtedness with respect to Hedging Agreements, the “principal amount” of the obligations of any Person in respect of any Hedging Agreement at any time shall be the maximum aggregate amount (giving effect to any netting agreements) that such Person would be required to pay if such Hedging Agreement were terminated at such time.

“Member” means each holder of a membership or other equity interest in the Borrower.

“Moody's” means Moody's Investors Services, Inc.

“Multiemployer Plan” means a multiemployer plan as defined in Section 4001(a)(3) of ERISA.

“New Indenture” means the Second Amended and Restated Indenture, in a form substantially identical to the form attached as Exhibit H hereto, that will, upon its effective date and recordation thereof, constitute a mortgage, deed of trust, security agreement and financing statement for the benefit of the holders of the Obligations, as the same may be amended and supplemented.

“Note” means a promissory note of the Borrower payable to the order of any Lender, substantially in the form of Exhibit D hereto.

“Obligations” has the meaning stated in the recitals of the Indenture and includes any Obligation authenticated and delivered thereunder after the date thereof.

“Obligation Register” means the register the Borrower keeps at one of the offices or agencies maintained by the Borrower as provided in the Indenture in which, subject to such reasonable regulations as it may prescribe, the Trustee shall provide for the registration of Obligations and registration of transfers of Obligations.

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“Other Taxes” means any and all present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies arising from any payment made under any Loan Document or from the execution, delivery or enforcement of, or otherwise with respect to, any Loan Document.

“Outstanding” when used with respect to Obligations means, as of the date of determination, all Obligations authenticated and delivered under the Indenture, except:

(e)            Obligations, or any portion thereof, theretofore cancelled by the Trustee or delivered to the Trustee for cancellation or delivered to the Trustee marked cancelled, satisfied or otherwise evidenced to the Trustee's satisfaction as paid (and which amount may not be re-advanced);

(f)             Obligations for whose payment or redemption money or Defeasance Securities in the necessary amount has been theretofore deposited with the Trustee or any Paying Agent (other than the Borrower) in trust, for the Holders of such Obligations, provided, that, if such Obligations are to be redeemed, or prepaid, irrevocable notice of such redemption or prepayment has been duly given or other provision therefor satisfactory to the Trustee has been made;

(g)            Obligations which have been paid pursuant to Section 3.8 of the Indenture or in exchange for or in lieu of which other Obligations have been authenticated and delivered pursuant to the Indenture, other than any such Obligations in respect of which there shall have been presented to the Trustee proof satisfactory to it that such Obligations are held by a bona fide purchaser in whose hands such Obligations are valid obligations of the Borrower; and

(h)            Obligations which have not been sold, pledged or subjected to a security interest and have been surrendered to the Trustee, or which a portion thereof has not been advanced and with respect to such portion either (i) any commitment to advance thereunder has terminated, or (ii) no commitment to advance exists;

provided, however, that in determining whether the Holders of the requisite principal amount of Obligations Outstanding or the Obligations Outstanding of a series, as the case may be, have given any request, demand, authorization, direction, notice, consent or waiver hereunder, Obligations owned by the Borrower or any other obligor upon the Obligations or any Affiliate of the Borrower or of such other obligor (unless the Borrower, such obligor and such Affiliate or Affiliates own all Obligations Outstanding under the Indenture, or as to matters relating solely to a particular series all Obligations Outstanding of such series, as the case may be, determined without regard to this proviso) shall be disregarded and deemed not to be Outstanding, except that, in determining whether the Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Obligations which are registered in the name of the Borrower, an Affiliate of the Borrower, another obligor on such Obligations (other than a Credit Enhancer) or an Affiliate of such obligor of which the Trustee has been given written notice shall be so disregarded. Obligations so owned which have been pledged in good faith may be regarded as Outstanding for such purposes if the pledge establishes to the satisfaction of the Trustee the pledgee's right so to act with respect to such Obligations and that the pledgee is not the Borrower or any other obligor upon the Obligations or any Affiliate of the Borrower or of such other obligor. For purposes of the definition of “Outstanding,” no Credit Enhancer shall be an obligor upon the Obligations.

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“Outstanding Debt Obligations” means, as of the date of determination, (i) all Obligations then Outstanding other than Obligations then owned by the Borrower or any wholly-owned Subsidiary and held in its treasury and (ii) all Obligations if any, alleged to have been destroyed, lost or stolen which have been replaced or paid as provided in Section 3.8 of the Indenture but whose ownership and enforceability by the Holder thereof have been established by a court of competent jurisdiction or other competent tribunal or otherwise established to the satisfaction of the Borrower and the Trustee.

“Participant” has the meaning set forth in Section 9.04(e).

“Patriot Act” means the USA PATRIOT Act (Title III of Pub. L. 107-56 signed into law October 26, 2001).

“Paying Agent” means the Borrower and any bank or trust company organized under the laws of the United States or any state of the United States and having a combined capital and surplus of not less than $100 million which is authorized by the Borrower to pay the principal of (and premium, if any) or interest on any Obligations on behalf of the Borrower.

“PBGC” means the Pension Benefit Guaranty Corporation referred to and defined in ERISA and any successor entity performing similar functions.

“Permitted Investments” means:

(a)            direct obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by, the United States of America (or by any agency thereof to the extent such obligations are backed by the full faith and credit of the United States of America), in each case maturing within two years from the date of acquisition thereof;

(b)            investments in commercial paper maturing within 364 days from the date of acquisition thereof and having, at such date of acquisition, a credit rating of at least “A1” from S&P, “P1” from Moody’s, or “F1” by Fitch;

(c)            investments in certificates of deposit, banker’s acceptances and time deposits maturing within one year from the date of acquisition thereof issued or guaranteed by or placed with, and money market deposit accounts issued or offered by, any domestic office of any commercial bank organized under the laws of the United States of America or any State thereof which has a combined capital and surplus and undivided profits of not less than $500,000,000;

(d)            fully collateralized repurchase agreements with a term of not more than 180 days for securities described in clause (a) of this definition and entered into with a financial institution satisfying the criteria described in clause (c) of this definition; and

(e)            purchase or other acquisition of CFC Capital Term Certificates and of CoBank Equity Interests.

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“Person” means any individual, corporation, cooperative, partnership, limited partnership, joint venture, association, joint-stock company, limited liability company, limited liability partnership, trust, unincorporated organization or government or any agency or political subdivision thereof.

“Plan” means any employee pension benefit plan (other than a Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA, and in respect of which the Borrower or any ERISA Affiliate is (or, if such plan were terminated, would under Section 4069 of ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA.

“Prime Rate” means the rate of interest per annum published from time to time as the “Prime Rate” in the printed version of The Wall Street Journal, or, if The Wall Street Journal ceases publishing a “Prime Rate”, any successor publication selected by the Administrative Agent in its reasonable discretion; each change in the Prime Rate shall be effective from and including the date such change is publicly announced as being effective and published in the printed version of the Wall Street Journal or any successor publication. The “Prime Rate” published by the Wall Street Journal or any such successor publication is a reference rate and does not necessarily represent the lowest or best rate charged by financial institutions to their customers. The Lenders may make commercial loans or other loans at rates of interest at, above or below the “Prime Rate” published by the Wall Street Journal or any such successor publication.

“Quarterly Date” means the last Business Day of each March, June, September and December in each year, the first of which shall be the first such day after the date hereof.

“RCA” means the Regulatory Commission of Alaska.

“Real Property” means any real property owned, operated, occupied or leased, directly or indirectly by the Borrower.

“Register” has the meaning set forth in Section 9.04(c).

“Related Parties” means, with respect to any specified Person, such Person’s Affiliates and the respective directors, officers, employees, agents and advisors of such Person and such Person’s Affiliates.

“Release” means any presence, release, threatened release, spill, seepage, escape, emission, leaking, pumping, pouring, emptying, injection, deposit, disposal, discharge, dispersal, leaching or migration into the indoor or outdoor environment, including the movement of Hazardous Materials through ambient air, soil, surface water, ground water, wetlands, land, subsurface strata sewer, septic system, storm drain, publicly owned treatment works, or waste treatment, storage, or disposal systems.

“Remediation” means any investigation, clean-up, removal action, remedial action, restoration, repair, response action, corrective action, monitoring, sampling and analysis, installation, reclamation, closure, or post-closure in connection with the suspected, threatened or actual Release of Hazardous Materials.

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“Required Lenders” means, at any time, the Lenders having Revolving Credit Exposures and unused Commitments representing more than 50% of the sum of the total Revolving Credit Exposures and unused Commitments at such time.

“Responsible Officer” means the Borrower's Chief Executive Officer or the Borrower’s Chief Financial Officer (or persons that hold the equivalent titles).

“Revolving Credit Exposure” means, with respect to any Lender at any time, the sum of the outstanding principal amount of such Lender’s Loans at such time.

“S&P” means Standard & Poor's Ratings Services, a division of The McGraw-Hill Companies, Inc.

“SEC” means the Securities and Exchange Commission, or any agency or other governmental body succeeding to the functions thereof.

“Solvent” means, with respect to any Person on a particular date, that (i) the fair value of the total assets of such Person is greater than the total amount of the liabilities, including contingent liabilities, of such Person, (ii) the present fair saleable value of the assets of such Person is not less than the amount that will be required to pay the probable liability of such Person on its debts as they become absolute and matured, (iii) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond such Person’s ability to pay such debts and liabilities as they mature, and (iv) such Person is not engaged in business, and is not about to engage in business, for which such Person’s property would constitute unreasonably small capital for a generation and transmission cooperative with similar power supply obligations.

“Southcentral Power Project” means a combined cycle natural gas-fired generation plant with an expected capacity of approximately 183 MW, including related facilities, to be constructed on land currently owned by the Borrower near its Anchorage headquarters, which plant will be owned by the Borrower and Anchorage Municipal Light & Power as tenants in common.

“Statutory Reserve Rate” means, for the Interest Period for any LIBO Borrowing, a fraction (expressed as a decimal), the numerator of which is the number one and the denominator of which is the number one minus the arithmetic mean, taken over each day in such Interest Period, of the aggregate of the maximum reserve percentages (including any marginal, special, emergency or supplemental reserves) expressed as a decimal established by the Board to which any Lender is subject for eurocurrency funding (currently referred to as “Eurocurrency liabilities” in Regulation D of the Board). Such reserve percentages shall include those imposed pursuant to such Regulation D. LIBO Loans shall be deemed to constitute eurocurrency funding and to be subject to such reserve requirements without benefit of or credit for proration, exemptions or offsets that may be available from time to time to any Lender under such Regulation D or any comparable regulation. The Statutory Reserve Rate shall be adjusted automatically on and as of the effective date of any change in any reserve percentage.

“Subsidiary” means, with respect to any Person (the “parent”) at any date, any corporation, limited liability company, partnership, association or other entity the accounts of which would be consolidated with those of the parent in the parent’s consolidated financial statements if such financial statements were prepared in accordance with GAAP as of such date, as well as any other corporation, limited liability company, partnership, association or other entity (a) of which securities or other ownership interests representing more than 50% of the equity or more than 50% of the ordinary voting power or, in the case of a partnership, more than 50% of the general partnership interests are, as of such date, owned, Controlled or held, or (b) that is, as of such date, otherwise Controlled, by the parent or one or more subsidiaries of the parent or by the parent and one or more subsidiaries of the parent.

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“Subordinated Debt” means any obligation of the Borrower to repay borrowed money, or to pay the deferred purchase price for property or services, with respect to which (i) any payment by or for the account of the Borrower would, in the event of a bankruptcy, reorganization or liquidation of the Borrower, be subordinated to payment of the principal of, and interest and premium (if any) on, all Obligations then Outstanding, and (ii) the creditor is required not to accept payment from the Borrower, or to pay to the Trustee any amounts received by the creditor from or for the account of the Borrower, during any period following the creditor’s receipt of notice of an “Event of Default” under the Indenture and prior to the curing of such “Event of Default”.

“Supplemental Indenture” means any indenture supplemental to the Indenture and duly authorized in the manner provided therein.

“Taxes” means any and all present or future taxes, levies, imposts, duties, deductions, charges or withholdings imposed by any Governmental Authority.

“Transactions” means the execution, delivery and performance by the Borrower of this Agreement and the other Loan Documents, the borrowing and repayment of Loans and the use of the proceeds thereof.

“Trustee” means the Person named as the “Trustee” in the first paragraph of the Indenture until a successor Trustee shall have become such pursuant to the applicable provisions of the Indenture, and thereafter “Trustee” means such successor Trustee.

“Type”, when used in reference to any Loan or Borrowing, refers to whether the rate of interest on such Loan, or on the Loans constituting such Borrowing, is determined by reference to the Adjusted LIBO Rate or the Alternate Base Rate.

“Utilization” means, at any date, the percentage equivalent of a fraction (i) the numerator of which is the aggregate outstanding principal amount of Loans at such date, and (ii) the denominator of which is the aggregate amount of the Commitments at such date; provided that if any Loans remain outstanding following the termination of the Commitments, Utilization shall be 100%.

“Wholesale Power Contracts” means, collectively, (a) the contracts and agreements (together with the amendments and supplements thereto) identified in Schedule 3.17 and (b) each other contract and agreement from time to time entered into between the Borrower and a Member providing for the sale of electric power and energy by the Borrower to such Member for resale by such Member.

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“Withdrawal Liability” means liability to a Multiemployer Plan as a result of a complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in Part I of Subtitle E of Title IV of ERISA.

Section 1.02           Terms Generally. The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”. The word “will” shall be construed to have the same meaning and effect as the word “shall”. Unless the context requires otherwise or unless noted elsewhere herein that an agreement, instrument or other document (or any defined term therein) is to be construed only as the same is in effect on or as of the date of this Agreement or some other specified date (a) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (b) any reference herein to any Person shall be construed to include such Person’s successors and assigns, (c) the words “herein”, “hereof’ and “hereunder”, and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (d) all references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement and (e) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights.

Section 1.03           Accounting Terms; GAAP. Except as otherwise expressly provided herein, all terms of an accounting or financial nature shall be construed in accordance with GAAP, as in effect from time to time; provided that, if the Borrower notifies the Administrative Agent that the Borrower requests an amendment to any provision hereof to eliminate the effect of any change occurring after the date hereof in GAAP or in the application thereof on the operation of such provision (or if the Administrative Agent notifies the Borrower that the Required Lenders request an amendment to any provision hereof for such purpose), regardless of whether any such notice is given before or after such change in GAAP or in the application thereof, then such provision shall be interpreted on the basis of GAAP as in effect and applied immediately before such change shall have become effective until such notice shall have been withdrawn or such provision amended in accordance herewith.

Section 1.04           Classification of Loans and Borrowings. For purposes of this Agreement, Loans may be classified and referred to by Type (e.g., an “ABR Loan” or a “LIBO Loan”). Borrowings also may be classified and referred to by Type (e.g., an “ABR Borrowing” or a “LIBO Borrowing”).

ARTICLE II

THE CREDITS

Section 2.01           The Commitments. Subject to the terms and conditions set forth herein, each Lender agrees to make Loans to the Borrower from time to time during the Availability Period in an aggregate principal amount that will not result in (a) such Lender’s Revolving Credit Exposure exceeding such Lender’s Commitment or (b) the total Revolving Credit Exposures exceeding the total Commitments. Within the foregoing limits and subject to the terms and conditions set forth herein, the Borrower may borrow, pay or prepay and re-borrow Loans.

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Section 2.02           Loans and Borrowings.

(a)            Obligations of Lenders. Each Loan shall be made as part of a Borrowing consisting of Loans of the same Type made by the Lenders ratably in accordance with their respective Commitments. The failure of any Lender to make any Loan required to be made by it shall not relieve any other Lender of its obligations hereunder; provided that the Commitments of the Lenders are several and no Lender shall be responsible for any other Lender’s failure to make Loans as required.

(b)            Type of Loans. Subject to Section 2.12, each Borrowing shall be constituted entirely of ABR Loans or of LIBO Loans as the Borrower may request in accordance herewith. Each Lender at its option may make any LIBO Loan by causing any domestic or foreign branch or Affiliate of such Lender to make such Loan; provided that any exercise of such option shall not affect the obligation of the Borrower to repay such Loan in accordance with the terms of this Agreement.

(c)            Minimum Amounts; Limitation on Number of Borrowings. Each Borrowing shall be in an aggregate amount of $5,000,000 or a larger multiple thereof of $1,000,000; provided that an ABR Borrowing may be in an aggregate amount that is equal to the entire unused balance of the total Commitments. Borrowings of more than one Type may be outstanding at the same time; provided that there shall not at any time be more than a total of fifteen (15) LIBO Borrowings outstanding.

(d)            Limitations on Interest Periods. Notwithstanding any other provision of this Agreement, the Borrower shall not be entitled to request (or to elect to convert to or continue as a LIBO Borrowing) any Borrowing if the Interest Period requested therefor would end after the Commitment Termination Date.

Section 2.03           Requests for Borrowings.

(a)            Notice by the Borrower. To request a Borrowing, the Borrower shall notify the Administrative Agent of such request by telephone of a Borrowing Request (i) in the case of a LIBO Borrowing, not later than 11:00 a.m., New York City time, three (3) Business Days before the date of the proposed Borrowing or (ii) in the case of an ABR Borrowing, not later than Noon, New York City time, on the Business Day of the proposed Borrowing. Each such telephonic Borrowing Request shall be irrevocable and shall be confirmed promptly by hand delivery or facsimile to the Administrative Agent of a written Borrowing Request as set forth in either Exhibit B-1 or Exhibit B-2 and signed by the Borrower.

(b)            Content of Borrowing Requests. Each telephonic and written Borrowing Request shall specify the following information in compliance with Section 2.02:

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(i)            the aggregate amount of the requested Borrowing;

(ii)           the date of such Borrowing, which shall be a Business Day;

(iii)          whether such Borrowing is to be an ABR Borrowing or a LIBO Borrowing;

(iv)         in the case of a LIBO Borrowing, the Interest Period therefor, which shall be a period contemplated by the definition of the term “Interest Period” and permitted under Section 2.02(d); and

(v)          the location and number of the Borrower’s account to which funds are to be disbursed, which shall comply with the requirements of Section 2.05.

(c)            Notice by the Administrative Agent to the Lenders. Promptly following receipt of a Borrowing Request in accordance with this Section, the Administrative Agent shall advise each Lender of the details thereof and of the amount of such Lender’s Loan to be made as part of the requested Borrowing.

(d)            Failure to Elect. If no election as to the Type of a Borrowing is specified, then the requested Borrowing shall be an ABR Borrowing. If no Interest Period is specified with respect to any requested LIBO Borrowing, then the requested Borrowing shall be made instead as an ABR Borrowing.

Section 2.04           [Reserved]

Section 2.05           Funding of Borrowings.

(a)            Funding by Lenders. Each Lender shall make each Loan to be made by it hereunder on the proposed date thereof by wire transfer of immediately available funds by 12:00 noon, New York City time, to the account of the Administrative Agent most recently designated by it for such purpose by notice to the Lenders. The Administrative Agent will make such Loans available to the Borrower by promptly crediting the amounts so received, in like funds, to an account of the Borrower designated by the Borrower in the applicable Borrowing Request.

(b)            Presumption by the Administrative Agent. Unless the Administrative Agent shall have received notice from a Lender prior to the proposed date of any Borrowing that such Lender will not make available to the Administrative Agent such Lender’s share of such Borrowing, the Administrative Agent may assume that such Lender has made such share available on such date in accordance with paragraph (a) of this Section and may, in reliance upon such assumption, make available to the Borrower a corresponding amount. In such event, if a Lender has not in fact made its share of the applicable Borrowing available to the Administrative Agent, then the applicable Lender and the Borrower severally agree to pay to the Administrative Agent forthwith on demand such corresponding amount with interest thereon, for each day from and including the date such amount is made available to the Borrower to but excluding the date of payment to the Administrative Agent, at (i) in the case of such Lender, the Federal Funds Effective Rate or (ii) in the case of the Borrower, the interest rate applicable to the applicable Borrowing. If such Lender pays such amount to the Administrative Agent, then such amount shall constitute such Lender’s Loan included in such Borrowing. Notwithstanding the foregoing, the Administrative Agent has no obligation to make any Loan funds available to the Borrower unless the Administrative Agent has received such funds from the Lenders in accordance with the terms hereof.

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Section 2.06           Interest Elections.

(a)            Elections by the Borrower for Borrowings. The Loans constituting each Borrowing initially shall be of the Type specified in the applicable Borrowing Request and, in the case of a LIBO Borrowing, shall have the Interest Period specified in such Borrowing Request. Thereafter, the Borrower may elect to convert such Borrowing to a Borrowing of a different Type or to continue such Borrowing as a Borrowing of the same Type and, in the case of a LIBO Borrowing, may elect the Interest Period therefor, all as provided in this Section. The Borrower may elect different options with respect to different portions of the affected Borrowing, in which case each such portion shall be allocated ratably among the Lenders holding the Loans constituting such Borrowing, and the Loans constituting each such portion shall be considered a separate Borrowing.

(b)            Notice of Elections. To make an election pursuant to this Section, the Borrower shall notify the Administrative Agent of such election by telephone by the time that a Borrowing Request would be required under Section 2.03 if the Borrower were requesting a Borrowing of the Type resulting from such election to be made on the effective date of such election. Each such telephonic Interest Election Request shall be irrevocable and shall be confirmed promptly by hand delivery or facsimile to the Administrative Agent of a written Interest Election Request and signed by the Borrower.

(c)            Content of Interest Election Requests. Each telephonic and written Interest Election Request shall specify the following information in compliance with Section 2.02:

(i)            the Borrowing to which such Interest Election Request applies and, if different options are being elected with respect to different portions thereof, the portions thereof to be allocated to each resulting Borrowing (in which case the information to be specified pursuant to clauses (iii) and (iv) of this paragraph shall be specified for each resulting Borrowing);

(ii)           the effective date of the election made pursuant to such Interest Election Request, which shall be a Business Day;

(iii)          whether the resulting Borrowing is to be an ABR Borrowing or a LIBO Borrowing; and

(iv)         if the resulting Borrowing is a LIBO Borrowing, the Interest Period therefor after giving effect to such election, which shall be a period contemplated by the definition of the term “Interest Period” and permitted under Section 2.02(d).

(d)            Notice by the Administrative Agent to the Lenders. Promptly following receipt of an Interest Election Request, the Administrative Agent shall advise each Lender of the details thereof and of such Lender’s portion of each resulting Borrowing.

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(e)            Failure to Elect; Events of Default. If the Borrower fails to deliver a timely and complete Interest Election Request with respect to a LIBO Borrowing prior to the end of the Interest Period therefor, then, unless such Borrowing is repaid as provided herein, at the end of such Interest Period such Borrowing shall be converted to a LIBO Borrowing with an Interest Period of one (1) month; provided, however, if the Commitment Termination Date shall occur within one (1) month after the end of any such Interest Period, such Borrowing shall be converted to an ABR Borrowing. Notwithstanding any contrary provision hereof, if an Event of Default has occurred and is continuing and the Administrative Agent, at the request of the Required Lenders, so notifies the Borrower, then, so long as an Event of Default is continuing (i) no outstanding Borrowing may be converted to or continued as a LIBO Borrowing and (ii) unless repaid, each LIBO Borrowing shall be converted to an ABR Borrowing at the end of the Interest Period therefor.

Section 2.07           Termination and Reduction of the Commitments.

(a)            Scheduled Termination. Unless previously terminated, the Commitments shall terminate on the Commitment Termination Date.

(b)            Voluntary Termination or Reduction. The Borrower may at any time terminate, or from time to time reduce, the Commitments; provided that (i) each reduction of the Commitments pursuant to this Section shall be in an amount that is $10,000,000 or a larger multiple thereof of $1,000,000 and (ii) the Borrower shall not terminate or reduce the Commitments if, after giving effect to any concurrent prepayment of the Loans in accordance with Section 2.09 or otherwise, the total Revolving Credit Exposures of all Lenders would exceed the total Commitments of all Lenders in effect after giving effect to such termination or reduction.

(c)            Notice of Voluntary Termination or Reduction. The Borrower shall notify the Administrative Agent of any election to terminate or reduce the Commitments under paragraph (b) of this Section at least thirty (30) calendar days prior to the effective date of such termination or reduction, specifying such election and the effective date thereof. Promptly following receipt of any notice, the Administrative Agent shall advise the Lenders of the contents thereof. Each notice delivered by the Borrower pursuant to this Section shall be irrevocable; provided that a notice of termination of the Commitments delivered by the Borrower may state that such notice is conditioned upon the effectiveness of other credit facilities, in which case such notice may be revoked by the Borrower (by notice to the Administrative Agent on or prior to the specified effective date) if such condition is not satisfied.

(d)            Effect of Termination or Reduction. Any termination or reduction of the Commitments shall be permanent. Each reduction of the Commitments shall be made ratably among the Lenders in accordance with their respective Commitments.

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Section 2.08           Repayment of Loans; Evidence of Debt.

(a)            Repayment. The Borrower hereby unconditionally promises to pay to the Administrative Agent for account of the Lenders the outstanding principal amount of the Loans on the Commitment Termination Date.

(b)            Manner of Payment. Upon repayment of any Borrowings hereunder, unless the Borrower shall select the Borrowing or Borrowings to be paid and shall notify the Administrative Agent by telephone (confirmed by facsimile) of such selection not later than 11:00 a.m., New York City time, three (3) Business Days before the scheduled date of such repayment (it being agreed by the parties hereto that each repayment of Borrowings, irrespective of which Borrowing(s) the Borrower so selects to repay, shall be applied to repay any outstanding ABR Borrowings before any other Borrowings), such repayment shall be applied, first, to pay any outstanding ABR Borrowings and, second, to other Borrowings in the order of the remaining duration of their respective Interest Periods (the Borrowing with the shortest remaining Interest Period to be repaid first). Each payment of a Borrowing shall be applied ratably to the Loans included in such Borrowing.

(c)            Maintenance of Records by Lenders. Each Lender shall maintain in accordance with its usual practice records evidencing the indebtedness of the Borrower to such Lender resulting from each Loan made by such Lender, including the amounts of principal and interest payable and paid to such Lender from time to time hereunder.

(d)            Maintenance of Records by the Administrative Agent. The Administrative Agent shall maintain records in which it shall record (i) the amount of each Loan made hereunder, the Type thereof and each Interest Period therefor, (ii) the amount of any principal or interest due and payable or to become due and payable from the Borrower to each Lender hereunder and (iii) the amount of any sum received by the Administrative Agent hereunder for account of the Lenders and each Lender’s share thereof.

(e)            Effect of Entries. The entries made in the records maintained pursuant to paragraph (c) or (d) of this Section shall, absent manifest error, be prima facie evidence of the existence and amounts of the obligations recorded therein; provided that the failure of any Lender or the Administrative Agent to maintain such records or any error therein shall not in any manner affect the obligation of the Borrower to repay the Loans in accordance with the terms of this Agreement.

(f)            Promissory Notes. Any Lender may request that Loans made by it be evidenced by a Note. In such event, the Borrower shall execute and deliver to such Lender a Note payable to such Lender (or, if requested by such Lender, to such Lender and its registered assigns). Thereafter, the Loans evidenced by such Note and interest thereon shall at all times (including after assignment pursuant to Section 9.04) be represented by one or more Notes in such form payable to the payee named therein (or, if such Note is a registered note, to such payee and its registered assigns).

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Section 2.09           Prepayment of Loans.

(a)            Optional Prepayments. The Borrower shall have the right at any time and from time to time to prepay any Borrowing in whole or in part, subject to the requirements of this Agreement including Section 2.14.

(b)            Mandatory Prepayment; Revolving Credit Exposures in Excess of Commitments. The Borrower shall prepay the Loans as follows: if on any Business Day for any reason the aggregate Revolving Credit Exposures of the Lenders exceed the total Commitments of all the Lenders, the Borrower shall immediately prepay an aggregate principal amount of the Loans in an amount equal to the amount by which (A) the Revolving Credit Exposures exceed (B) the Commitments on such Business Day.

(c)            Notices, Etc. The Borrower shall notify the Administrative Agent by telephone (confirmed by facsimile) of any prepayment hereunder (i) in the case of prepayment of a LIBO Borrowing, not later than 11:00 a.m., New York City time, three (3) Business Days before the date of prepayment or (ii) in the case of prepayment of an ABR Borrowing, not later than 11:00 a.m., New York City time, one (1) Business Day before the date of such prepayment. Each such notice shall be irrevocable and shall specify the prepayment date, the principal amount of each Borrowing or portion thereof to be prepaid and, in the case of a mandatory prepayment, a reasonably detailed calculation of the amount of such prepayment; provided that, if a notice of prepayment is given in connection with a conditional notice of termination of the Commitments as contemplated by Section 2.07(c), then such notice of prepayment may be revoked if such notice of termination is revoked in accordance with Section 2.07(c). Promptly following receipt of any such notice relating to a Borrowing, the Administrative Agent shall advise the Lenders of the contents thereof. Each partial prepayment of any Borrowing shall be in an amount that would be permitted in the case of a Borrowing of the same Type as provided in Section 2.02, except as necessary to apply fully the required amount of a mandatory prepayment. Each prepayment of a Borrowing shall be applied ratably to the Loans included in the prepaid Borrowing. Prepayments shall be accompanied by accrued interest to the extent required by Section 2.11 and shall be made in the manner specified in Section 2.08(b).

Section 2.10           Fees.

(a)            Facility Fee. The Borrower agrees to pay to the Administrative Agent for the ratable account of each Lender a facility fee (the “Facility Fee”), which shall accrue at a rate per annum equal to the “Facility Fee” for the pricing level in effect pursuant to the definition of “LIBO Margin” on the average daily amount of the Commitment (whether used or unused) of such Lender during the period from and including the date hereof to but excluding the earlier of the date such Commitment terminates and the Commitment Termination Date. Accrued Facility Fees shall be payable in arrears on each Quarterly Date and on the earlier of the date such Commitments terminate and the Commitment Termination Date, commencing upon the first such date to occur after the date hereof. All Facility Fees shall be computed on the basis of a year of 360 days and shall be payable for the actual number of days elapsed (including the first day but excluding the last day).

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(b)            Administrative Agent Fees. As separately agreed upon by the Borrower and the Administrative Agent, the Borrower agrees to pay to the Administrative Agent, solely for its own account, a certain fee per annum through the Commitment Termination Date (the “Administrative Agent Fee”). The Administrative Agent Fee shall be payable in advance to the Administrative Agent on the Effective Date and on each anniversary date thereof. The Administrative Agent Fee is nonrefundable and shall not be prorated for part of a year and shall be deemed to be earned in full as of the first day of each annual pay period therefor. The Administrative Agent Fee shall not be reduced in the event that Loans are prepaid or the amount of the Commitment is reduced.

(c)            Payment of Fees. All fees payable hereunder shall be paid on the dates due, in immediately available funds, to the Administrative Agent for distribution, in the case of Facility Fees, to the Lenders entitled thereto. Fees paid shall not be refundable under any circumstances.

Section 2.11           Interest.

(a)            ABR Loans. The Loans constituting each ABR Borrowing shall bear interest at a rate per annum equal to the Alternate Base Rate.

(b)            LIBO Loans. The Loans constituting each LIBO Borrowing shall bear interest at a rate per annum equal to the Adjusted LIBO Rate for the Interest Period for such Borrowing plus the LIBO Margin.

(c)            Default Interest. Notwithstanding the foregoing, (i) if any principal of or interest on any Loan or any fee or other amount payable by the Borrower hereunder is not paid when due, whether at stated maturity, upon acceleration, by mandatory prepayment or otherwise, such overdue amount shall bear interest, after as well as before judgment, and (ii) upon the occurrence and during the continuance of any other Event of Default all principal of or interest on any Loan or any fee or other amount payable by the Borrower hereunder shall bear interest, in each case, at a rate per annum equal to (i) in the case of overdue principal of any Loan, 2% plus the rate otherwise applicable to such Loan as provided above or (ii) in the case of any other amount, 2% plus the rate applicable to ABR Loans as provided in paragraph (a) of this Section.

(d)            Payment of Interest. Accrued interest on each Loan shall be payable in arrears on each Interest Payment Date for such Loan and upon termination of the Commitments; provided that (i) interest accrued pursuant to paragraph (c) of this Section shall be payable on demand, (ii) in the event of any repayment or prepayment of any Loan (other than a prepayment of an ABR Loan prior to the Commitment Termination Date), accrued interest on the principal amount repaid or prepaid shall be payable on the date of such repayment or prepayment and (iii) in the event of any conversion of any LIBO Borrowing prior to the end of the Interest Period therefor, accrued interest on such Borrowing shall be payable on the effective date of such conversion.

(e)            Computation. All interest hereunder shall be computed on the basis of a year of 360 days, except that interest computed by reference to the Alternate Base Rate at times when the Alternate Base Rate is based on the Prime Rate shall be computed on the basis of a year of 365 days (or 366 days in a leap year), and in each case shall be payable for the actual number of days elapsed (including the first day but excluding the last day). The applicable Alternate Base Rate or Adjusted LIBO Rate shall be determined by the Administrative Agent, and such determination shall be conclusive absent manifest error.

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Section 2.12           Alternate Rate of Interest. If prior to the commencement of the Interest Period for any LIBO Borrowing:

(a)            the Administrative Agent determines (which determination shall be conclusive absent manifest error) that adequate and reasonable means do not exist for ascertaining the Adjusted LIBO Rate for such Interest Period; or

(b)            the Administrative Agent is advised by the Required Lenders that the Adjusted LIBO Rate for such Interest Period will not adequately and fairly reflect the cost to such Lenders of making or maintaining their respective Loans included in such Borrowing for such Interest Period;

then the Administrative Agent shall give notice thereof to the Borrower and the Lenders by telephone or facsimile as promptly as practicable thereafter and, until the Administrative Agent notifies the Borrower and the Lenders that the circumstances giving rise to such notice no longer exist, (i) any Interest Election Request that requests the conversion of any Borrowing to, or the continuation of any Borrowing as, a LIBO Borrowing shall be ineffective and such Borrowing (unless prepaid) shall be continued as, or converted to, an ABR Borrowing and (ii) if any Borrowing Request requests a LIBO Borrowing, such Borrowing shall be made as an ABR Borrowing.

Section 2.13           Increased Costs; Illegality.

(a)            Increased Costs Generally. If any Change in Law shall:

(i)            impose, modify or deem applicable any reserve, special deposit or similar requirement against assets of, deposits with or for account of, or credit extended by, any Lender (except any such reserve requirement reflected in the Adjusted LIBO Rate); or

(ii)           impose on any Lender or the London interbank market any other condition affecting this Agreement or LIBO Loans made by such Lender;

and the result of any of the foregoing shall be to increase the cost to such Lenders of making or maintaining any LIBO Loan (or of maintaining its obligation to make any such Loan) or to reduce the amount of any sum received or receivable by such Lender hereunder (whether of principal, interest or otherwise), then the Borrower will pay to such Lender in accordance with paragraph (c) of this Section such additional amount or amounts as will compensate such Lender for such additional costs incurred or reduction suffered.

(b)            Capital Requirements. If any Lender determines that any Change in Law regarding capital requirements has or would have the effect of reducing the rate of return on such Lender’s capital or on the capital of such Lender’s holding company, if any, as a consequence of this Agreement or the Loans made by such Lender to a level below that which such Lender or such Lender’s holding company could have achieved but for such Change in Law (taking into consideration such Lender’s policies and the policies of such Lender’s holding company with respect to capital adequacy), then from time to time the Borrower will pay to such Lender in accordance with paragraph (c) of this Section such additional amount or amounts as will compensate such Lender or such Lender’s holding company for any such reduction suffered.

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(c)            Certificates from Lenders. A certificate of a Lender setting forth in reasonable detail the amount or amounts necessary to compensate such Lender or its holding company, as the case may be, as specified in paragraph (a) or (b) of this Section shall be delivered to the Borrower and shall be conclusive and binding absent manifest error. The Borrower shall pay such Lender the amount shown as due on any such certificate within ten (10) days after receipt thereof.

(d)            Delay in Requests. Failure or delay on the part of any Lender to demand compensation pursuant to this Section shall not constitute a waiver of such Lender’s right to demand such compensation; provided that the Borrower shall not be required to compensate a Lender pursuant to this Section for any increased costs or reductions incurred more than six months prior to the date that such Lender notifies the Borrower of the Change in Law giving rise to such increased costs or reductions and of such Lender’s intention to claim compensation therefor; provided further that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the six-month period referred to above shall be extended to include the period of retroactive effect thereof.

(e)            Illegality. Notwithstanding any other provision of this Agreement, if a Change in Law shall make it unlawful, or any central bank or other Governmental Authority shall assert that it is unlawful, for any Lender to perform its obligations hereunder to make LIBO Loans or to continue to fund or maintain LIBO Loans hereunder, then, on notice thereof and demand therefor by such Lender to the Borrower through the Administrative Agent, (i) each LIBO Loan will automatically, upon such demand, convert into an ABR Loan and (ii) the obligation of the Lenders to make, or to convert Loans into, LIBO Loans shall be suspended until the Administrative Agent shall notify the Borrower that such Lender has determined that the circumstances causing such suspension no longer exist.

(f)             For purposes of this Section 2.13, the Dodd-Frank Wall Street Reform and Consumer Protection Act and all rules, regulations, orders, requests, guidelines or directives in connection therewith are deemed to have been adopted and gone into effect after the date of this Agreement.

Section 2.14           Break Funding Payments. In the event of (a) the payment of any principal of any LIBO Loan other than on the last day of an Interest Period therefor (including as a result of an Event of Default), (b) the conversion of any LIBO Loan other than on the last day of an Interest Period therefor (including pursuant to Section 2.13(e)(i)), (c) the failure to borrow, convert, continue or prepay any LIBO Loan on the date specified in any notice delivered pursuant hereto (regardless of whether such notice is permitted to be revocable under Section 2.09(c) and is revoked in accordance herewith), or (d) the assignment as a result of a request by the Borrower pursuant to Section 2.17(b) of any LIBO Loan other than on the last day of an Interest Period therefor, then, in any such event, the Borrower shall compensate each Lender for the loss, cost and expense attributable to such event.

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In the case of a LIBO Loan, the loss to any Lender attributable to any such event shall be deemed to include an amount determined by such Lender to be equal to the excess, if any, of (i) the amount of interest that such Lender would pay for a deposit equal to the principal amount of such Loan for the period from the date of such payment, conversion, failure or assignment to the last day of the then current Interest Period for such Loan (or, in the case of a failure to borrow, convert or continue, the duration of the Interest Period that would have resulted from such borrowing, conversion or continuation) if the interest rate payable on such deposit were equal to the Adjusted LIBO Rate for such Interest Period, over (ii) the amount of interest that such Lender would earn on such principal amount for such period if such Lender were to invest such principal amount for such period at the interest rate that would be bid by such Lender (or an affiliate of such Lender) for Dollar deposits from other banks in the eurodollar market at the commencement of such period.

A certificate of any Lender setting forth in reasonable detail any amount or amounts that such Lender is entitled to receive pursuant to this Section shall be delivered to the Borrower and shall be conclusive and binding absent manifest error. The Borrower shall pay such Lender the amount shown as due on any such certificate within ten (10) days after receipt thereof.

Section 2.15           Taxes.

(a)            Payments Free of Taxes. Any and all payments by or on account of any obligation of the Borrower hereunder or under any other Loan Document shall be made free and clear of and without deduction for any Indemnified Taxes or Other Taxes; provided that if the Borrower shall be required to deduct any Indemnified Taxes or Other Taxes from such payments, then (i) the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section) the Administrative Agent or the Lenders (as the case may be) receive an amount equal to the sum they would have received had no such deductions been made, (ii) the Borrower shall make such deductions and (iii) the Borrower shall pay the full amount deducted to the relevant Governmental Authority in accordance with applicable law.

(b)            Payment of Taxes by the Borrower. In addition, the Borrower shall pay any Indemnified Taxes and any Other Taxes to the relevant Governmental Authority in accordance with applicable law.

(c)            Indemnification by the Borrower. The Borrower shall indemnify the Administrative Agent and each Lender, within thirty (30) days after written demand therefor, for the full amount of any Indemnified Taxes or Other Taxes (including Indemnified Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under this Section) paid by the Administrative Agent or such Lender, as the case may be, and any penalties, interest and reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to the Borrower by a Lender, or by the Administrative Agent on its own behalf or on behalf of a Lender, shall be conclusive absent manifest error.

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(d)            Evidence of Payments. As soon as practicable after any payment of Indemnified Taxes or Other Taxes by the Borrower to a Governmental Authority, the Borrower shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent.

(e)            Foreign Lenders. Any Foreign Lender that is entitled to an exemption from or reduction of withholding tax under the law of the jurisdiction in which the Borrower is located, or any treaty to which such jurisdiction is a party, with respect to payments under this Agreement shall deliver to the Borrower (with a copy to the Administrative Agent), at the time or times prescribed by applicable law or reasonably requested by the Borrower, such properly completed and executed documentation prescribed by applicable law as will permit such payments to be made without withholding or at a reduced rate.

Section 2.16           Payments Generally; Pro Rata Treatment; Sharing of Set-offs.

(a)            Payments by the Borrower. The Borrower shall make each payment required to be made by it hereunder (whether of principal, interest or fees, or under Section 2.13, 2.14, 2.15 and 9.03 and ARTICLE VIII or otherwise) or under any other Loan Document (except to the extent otherwise provided therein) prior to 12:00 noon, New York City time, on the date when due, in immediately available funds, without set-off or counterclaim. Any amounts received after such time on any date may, in the discretion of the Administrative Agent, be deemed to have been received on the next succeeding Business Day for purposes of calculating interest thereon. All such payments shall be made to the Administrative Agent in such manner and place as shall from time to time be specified by the Administrative Agent, except as otherwise expressly provided in the relevant Loan Document and payments pursuant to Sections 2.13, 2.14, 2.15 and 9.03 and ARTICLE VIII, which shall be made directly to the Persons entitled thereto. The Administrative Agent shall distribute any such payments received by it for account of any other Person to the appropriate recipient promptly following receipt thereof. If any payment hereunder shall be due on a day that is not a Business Day, the date for payment shall be extended to the next succeeding Business Day and, in the case of any payment accruing interest, interest thereon shall be payable for the period of such extension. All payments hereunder or under any other Loan Document (except to the extent otherwise provided therein) shall be made in Dollars.

(b)            Application of Insufficient Payments. If at any time insufficient funds are received by and available to the Administrative Agent to pay fully all amounts of principal, interest, fees and other amounts then due hereunder, such funds shall be applied (i) first, to pay interest, fees and other amounts then due hereunder (except those covered by clause (ii) below of this Section 2.16(b)), ratably among the parties entitled thereto in accordance with the amounts of interest and fees then due to such parties, and (ii) second, to pay principal then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of principal then due to such parties.

(c)            Pro Rata Treatment. Except to the extent otherwise provided herein: (i) each Borrowing shall be made from the Lenders, each payment of Facility Fees under Section 2.10 shall be made for account of the Lenders, and each termination or reduction of the amount of the Commitments under Section 2.07 shall be applied to the respective Commitments of the Lenders, pro rata according to the amounts of their respective Commitments; (ii) each Borrowing shall be allocated pro rata among the Lenders according to the amounts of their respective Commitments (in the case of the making of Loans) or their respective Loans that are to be included in such Borrowing (in the case of conversions and continuations of Loans); (iii) each payment or prepayment of principal of Loans by the Borrower shall be made for account of the Lenders pro rata in accordance with the respective unpaid principal amounts of the Loans held by them; and (iv) each payment of interest on Loans by the Borrower shall be made for account of the Lenders pro rata in accordance with the amounts of interest on such Loans then due and payable to the respective Lenders.

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(d)            Sharing of Payments by Lenders. If any Lender shall, by exercising any right of set-off or counterclaim or otherwise, obtain payment in respect of any principal of or interest on any of its Loans or any fee payable pursuant to Section 2.10(a) resulting in such Lender receiving payment of a greater proportion of the aggregate amount of its Loans and accrued interest thereon and any fee payable pursuant to Section 2.10(a) then due than the proportion received by any other Lender, then the Lender receiving such greater proportion shall purchase (for cash at face value) participations in the Loans of other Lenders to the extent necessary so that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on their respective Loans; provided that (i) if any such participations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations shall be rescinded and the purchase price restored to the extent of such recovery, without interest, and (ii) the provisions of this paragraph shall not be construed to apply to any payment made by the Borrower pursuant to and in accordance with the express terms of this Agreement or any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans to any assignee or participant, other than to the Borrower or any Affiliate thereof (as to which the provisions of this paragraph shall apply). The Borrower consents to the foregoing and agrees, to the extent it may effectively do so under applicable law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against the Borrower rights of set-off and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of the Borrower in the amount of such participation.

(e)            Presumptions of Payment. Unless the Administrative Agent shall have received notice from the Borrower prior to the date on which any payment is due to the Administrative Agent for account of the Lenders hereunder that the Borrower will not make such payment, the Administrative Agent may assume that the Borrower has made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to the Lenders the amount due. In such event, if the Borrower has not in fact made such payment, then each of the Lenders severally agrees to repay to the Administrative Agent forthwith on demand the amount so distributed to such Lender with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to the Administrative Agent, at the Federal Funds Effective Rate.

(f)            Certain Deductions by the Administrative Agent. If any Lender shall fail to make any payment required to be made by it pursuant to Section 2.05 or 2.16(e), then the Administrative Agent may, in its discretion (notwithstanding any contrary provision hereof), apply any amounts thereafter received by the Administrative Agent for account of such Lender to satisfy such Lender’s obligations under such Sections until all such unsatisfied obligations are fully paid.

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Section 2.17           Mitigation Obligations; Replacement of Lenders.

(a)            Designation of a Different Lending Office. If any Lender requests compensation under Section 2.13, or if the Borrower is required to pay any additional amount to any Lender or any Governmental Authority for account of any Lender pursuant to Section 2.15, then such Lender shall use reasonable efforts to designate a different lending office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or Affiliates, if, in the judgment of such Lender, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section 2.13 or 2.15, as the case may be, in the future and (ii) would not subject such Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender. The Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment.

(b)            Replacement of Lenders. If any Lender requests compensation under Section 2.13, or if the Borrower is required to pay any additional amount to any Lender or any Governmental Authority for account of any Lender pursuant to Section 2.15, or if any Lender defaults in its obligation to fund Loans hereunder, then the Borrower may, at its sole expense and effort, upon notice to such Lender and the Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in Section 9.04), all its interests, rights and obligations under this Agreement to a consenting assignee that shall assume such obligations (which assignee may be an Eligible Assignee or another Lender, if a Lender accepts such assignment); provided that (i) the Borrower shall have received the prior written consent of the Administrative Agent, which consent shall not unreasonably be withheld, (ii) such Lender shall have received payment of an amount equal to the outstanding principal of its Loans, accrued interest thereon, accrued fees and all other amounts payable to it hereunder, from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrower (in the case of all other amounts) on or prior to the date of such replacement, and (iii) in the case of any such assignment resulting from a claim for compensation under Section 2.13 or payments required to be made pursuant to Section 2.15, such assignment will result in a reduction in such compensation or payments. A Lender shall not be required to make any such assignment and delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the Borrower to require such assignment and delegation cease to apply.

ARTICLE III

REPRESENTATIONS AND WARRANTIES

The Borrower represents and warrants to each of the Lenders and the Administrative Agent that:

Section 3.01           Organization; Powers. The Borrower is duly organized, validly existing and in good standing under the laws of the State of Alaska, has all requisite power and authority under applicable law and organizational documents to carry on its business as now conducted and, except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect, is qualified to do business in, and is in good standing in, every jurisdiction where such qualification is required.

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Section 3.02           Authorization; Enforceability; Ranking.

(a)            The Transactions are within the Borrower’s powers (corporate and other) and have been duly authorized by all necessary corporate and, if required, by all necessary Member action. This Agreement has been duly executed and delivered by the Borrower and constitutes, and each of the other Loan Documents when executed and delivered will constitute, a legal, valid and binding obligation of the Borrower, enforceable against the Borrower in accordance with its terms, except as such enforceability may be limited by (i) bankruptcy, insolvency, reorganization, moratorium or similar laws of general applicability affecting the enforcement of creditors’ rights and (ii) the application of general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).

(b)            The Loans and all other obligations of the Borrower under the Loan Documents rank pari passu with all other unsecured and unsubordinated Indebtedness of the Borrower.

Section 3.03           Governmental Approvals; No Conflicts. The Transactions (a) do not require any consent or approval of, registration or filing with, or any other action by, the RCA or any Governmental Authority or third party, (b) will not violate or, in any material respect, conflict with any law, rule, regulation (including, without limitation, Regulation T, U or X of the Board), writ, judgment, injunction, decree or award, will not violate or conflict with the Borrower’s Certificate of Incorporation or By-laws or any other organizational documents of the Borrower or any order of any Governmental Authority, (c) will not violate, conflict with or result in a default under the Indenture, any of the Wholesale Power Contracts or Fuel Supply Agreements, or any other material indenture, contract, lease, loan agreement, deed of trust, agreement or other instrument binding upon the Borrower or its assets, or give rise to a right thereunder to require any payment to be made by the Borrower, and (d) will not result in the creation or imposition of any Lien on any asset of the Borrower.

Section 3.04           Financial Condition. The Borrower has heretofore furnished to the Lenders its (i) consolidated balance sheet and statements of income, Members’ equity and cash flows as of and for the fiscal years ended December 31, 2007, 2008 and 2009, respectively, reported on by KPMG LLP, independent public accountants, and (ii) consolidated balance sheet and statements of income and Members’ equity as of and for the fiscal quarter ended June 30, 2010, certified by the Chief Executive Officer and Chief Financial Officer of the Borrower. Such financial statements present fairly, in all material respects, the financial position and results of operations and cash flows of the Borrower as of such dates and for such periods in accordance with GAAP, subject to year-end audit adjustments and the absence of footnotes in the case of the statements referred to in clause (ii) of the first sentence of this paragraph.

Section 3.05           Properties; Insurance.

(a)            Property Generally. The Borrower has good title to, or valid leasehold interests in, all its real and personal property, including all rights, licenses, permits, privileges and franchises, subject only to Liens permitted by Section 6.02.

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(b)            Intellectual Property. The Borrower owns, or is licensed to use, all trademarks, tradenames, copyrights, patents and other intellectual property material to its business, and the use thereof by the Borrower does not infringe upon the rights of any other Person, except for any such infringements that, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.

(c)            Insurance. The Borrower maintains, or is covered by, insurance with responsible and reputable insurance companies, in such amounts and covering such risks as is usually and customarily carried by companies engaged in the same or similar businesses and owning or operating similar properties in the same general areas or similar locations in which the Borrower operates. In any event, Borrower maintains insurance in accordance with the requirements of the Indenture.

Section 3.06           Litigation, Actions, Suits and Proceedings. There are no actions, suits or proceedings by or before any arbitrator or Governmental Authority now pending against or, to the knowledge of the Borrower, threatened against or affecting the Borrower that (i) involve any of the Loan Documents or the Transactions, or (ii), if adversely determined, could reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect.

Section 3.07           Environmental Matters. The Borrower (i) has not failed to comply with any Environmental Law or to obtain, maintain or comply with any permit, license or other approval required under any Environmental Law, (ii) has not become subject to any Environmental Liability, (iii) has not received notice of any Environmental Claim or (iv) knows of no basis for any Environmental Liability, which in any of the foregoing instances described in the preceding clauses (i) through (iv) could reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect.

Section 3.08           Compliance with Laws and Agreements. The Borrower is in compliance with the Indenture and is in compliance, with all laws, rules, regulations, writs, judgments, decrees, awards and orders of any Governmental Authority applicable to it or its property and with the Indenture (and there has been no default or event of default thereunder), the Wholesale Power Contracts, the Fuel Supply Agreements and all other materialindentures, leases, loan agreements, deeds of trust, agreements and other instruments binding upon it or its property, where the failure to comply could reasonably be expected to have a Material Adverse Effect. The Borrower is in compliance with all applicable rules, regulations and orders of the RCA, including any Authorizations. No Default has occurred and is continuing.

Section 3.09           Investment and Holding Company Status; Etc. The Borrower is not (a) an “investment company” as defined in, or subject to regulation under, the Investment Company Act of 1940, as amended, (b) a “natural gas company” as defined in, or subject to regulation under, the Natural Gas Act of 1938, as amended or (c) a “public utility” under and as defined in the Federal Power Act of 1935, as amended, or (d) a “holding company” or a “subsidiary company” of a “holding company” or an “affiliate” of a “holding company” or of a “subsidiary company” of a “holding company” as such terms are defined in (and under) the Public Utility Holding Company Act of 2005, as amended, or otherwise subject to regulation under the Public Utility Holding Company Act of 2005, as amended. No approval of the RCA or any other Governmental Authority is required for the use of any Credit Extension (including the first Credit Extension).

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Section 3.10           Taxes. The Borrower has timely filed or caused to be filed all Tax returns and reports required to have been filed, and each of such Tax returns and reports has been accurate and complete in all respects. The Borrower has timely paid or caused to be paid all Taxes (including any interest penalties or other additions to such Taxes) required to have been paid by it, except Taxes that are being contested in good faith by appropriate proceedings and for which the Borrower has set aside on its books adequate reserves in accordance with GAAP.

Section 3.11           ERISA. No ERISA Event has occurred or is reasonably expected to occur. No Plan of the Borrower is underfunded.

Section 3.12           Disclosure. The Borrower has disclosed to the Lenders all agreements, instruments and corporate or other restrictions to which it is subject, and all other matters known to it, that, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect; provided, that for so long as the Borrower is an SEC reporting company, all agreements, instruments and corporate or other restrictions included in exhibits to annual reports, quarterly reports and other reports timely filed or required to be filed by the Borrower with the SEC shall constitute disclosure to the Lenders for purposes of the first clause of this sentence. None of the reports, financial statements, certificates or other information furnished by or on behalf of the Borrower to the Lenders (including, without limitation, the CIM) in connection with the negotiation of this Agreement and the other Loan Documents or delivered hereunder or thereunder (as modified or supplemented by other information so furnished) contains any material misstatement of fact or omits to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided that, with respect to projected financial information, the Borrower represents only that such information was prepared in good faith based upon assumptions believed to be reasonable at the time.

Section 3.13           Margin Stock. The Borrower is not engaged, directly or indirectly, in the business of extending credit to others or arranging for the extension or maintenance by others of credit for the purpose, whether immediate, incidental or ultimate, of buying or carrying Margin Stock, and no part of the proceeds of any extension of credit hereunder will be used to purchase or carry any Margin Stock.

Section 3.14           Indebtedness and Liens.

(a)            Indebtedness. Schedule 3.14(a) is a complete and correct list of each agreement, lease, deed of trust, mortgage, credit agreement, loan agreement, indenture, purchase agreement, Guarantee, letter of credit or other arrangement (other than, for so long as the Borrower is an SEC reporting company, those that have been filed as exhibits to annual reports, quarterly reports and other reports filed by the Borrower with the SEC) providing for or otherwise relating to any Indebtedness or any extension of credit (or commitment for any extension of credit) to, or Guarantee by, the Borrower outstanding on the date hereof the aggregate principal or face amount of which equals or exceeds (or may equal or exceed) $1,000,000 and the aggregate principal or face amount outstanding or that may become outstanding under each such agreement, lease, deed of trust, mortgage, credit agreement, loan agreement, indenture, purchase agreement, Guarantee, letter of credit or other arrangement is correctly described in Schedule 3.14(a) or such exhibits and reports (the “Existing Indebtedness”). The Borrower is in compliance with all covenants and agreements set forth in each of such agreements, leases, deeds of trust, mortgage, credit agreements, loan agreements, indentures, purchase agreements, Guarantees, letters of credit or other arrangements.

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(b)            Liens. Schedule 3.14(b) is a complete and correct list of each Lien securing Indebtedness of any Person outstanding on the date hereof the aggregate principal or face amount of which equals or exceeds (or may equal or exceed) $1,000,000 and covering any property of the Borrower, and the aggregate Indebtedness secured (or that may be secured) by each such Lien and the property covered by each such Lien is correctly described in Schedule 3.14(b) (the “Existing Liens”). Upon the effective date and recordation of the New Indenture, the New Indenture will constitute a Lien securing each of the Obligations and covering property of the Borrower.

Section 3.15           Subsidiaries. The Borrower has no Subsidiaries. Attached, as Schedule 3.15, is a list of Persons or jointly-owned assets in which the Borrower has an ownership interest and the percentage of such ownership interest.

Section 3.16           Solvency. The Borrower is, and after giving effect to each Borrowing hereunder will be, Solvent.

Section 3.17           Wholesale Power Contracts. The Borrower has heretofore delivered to the Administrative Agent complete and correct copies of forms of the Wholesale Power Contract and each amendment and supplement agreement thereto, and each of the Wholesale Power Contracts in effect on the date hereof (which are listed in Schedule 3.17) are substantially similar in all respects to such forms. To the best of the Borrower’s knowledge, after due inquiry, there is no condition or circumstance that would impair any Member’s ability to perform its obligations under any Wholesale Power Contract to which it is a party.

Section 3.18           Indenture Compliance. No Event of Default (as defined in the Indenture) has occurred and is continuing.

Section 3.19           Labor Disputes; Natural Disasters. Neither the business nor the properties of the Borrower are currently affected by any fire, explosion, accident, strike, lockout or other labor dispute, drought, storm, hail, earthquake, terrorism, embargo, act of God or of the public enemy or other casualty (whether or not covered by insurance) that could be reasonably expected to have a Material Adverse Effect.

ARTICLE IV

CONDITIONS

Section 4.01           Effective Date.

(a)            This Agreement shall, despite its date, not be effective until the date on which the last of the following conditions precedent have been satisfied (or such conditions shall have been waived in accordance with Section 9.02).

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(b)            Closing Deliverables. The Administrative Agent shall have received on the date hereof the following, each dated as of the date hereof (unless otherwise specified), in form and substance satisfactory to the Administrative Agent (unless otherwise specified):

(i)            From each party hereto either (A) a counterpart of this Agreement signed on behalf of such party or (B) written evidence satisfactory to the Administrative Agent (which may include facsimile or electronic transmission of a signed signature page to this Agreement, so long as such transmission is promptly followed by hard copy originals of the same) that such party has signed a counterpart of this Agreement.

(ii)           Originally executed copies of such Notes as any Lender shall have requested.

(iii)          Certified copies of the resolutions of the Board of Directors of the Borrower approving this Agreement and the Transactions, and of all other material third party approvals and consents, if any, with respect to this Agreement and Transactions.

(iv)         A copy of a certificate or certificates of the Commissioner of Commerce and Economic Development of the State of Alaska, dated as of a recent date satisfactory to the Administrative Agent, certifying (A) as to a true and correct copy of the organizational documents of the Borrower and each amendment thereto on file in such Secretary’s office and (B) that the Borrower is duly organized and in good standing under the laws of the State of Alaska.

(v)          A certificate of the Borrower, signed by two of its Responsible Officers, certifying to the best of their knowledge after due inquiry (A) the truth of the representations and warranties contained in the Loan Documents as of the date hereof, (B) the absence of any event occurring and continuing, or resulting from the execution of this Agreement or the other Loan Documents or the initial Borrowing (deeming an initial Borrowing of at least $1.00 to occur on the date hereof), that constitutes a Default and (3) the absence of any condition or circumstance occurring and continuing that would impair any Member’s ability to perform its payment obligations under any Wholesale Power Contract to which it is a party.

(vi)         A certificate of the Secretary or an Assistant Secretary of the Borrower certifying as to (A) the absence of any amendments to the Certificate of Incorporation of the Borrower since the date of the Secretary of State’s certificate referred to in Section 4.01(b)(iv), (B) a true and correct copy of the bylaws of the Borrower as in effect on the date on which the resolutions referred to in Section 4.01(b)(iii) were adopted and on the date hereof, (C) the due organization and good standing or valid existence of the Borrower as a company organized under the laws of the State of Alaska, and the absence of any proceeding for the dissolution or liquidation of the Borrower, and (D) the names and true signatures of the officers of the Borrower authorized to sign each Loan Document to which it is or is to be a party and the other documents to be delivered hereunder and thereunder.

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(vii)        A certificate in substantially the form of Exhibit E hereto attesting to the Solvency of the Borrower before and after giving effect to the closing of the Transactions, from the Borrower’s Chief Executive Officer and Chief Financial Officer.

(viii)       Such financial, business and other information regarding the Borrower as the Administrative Agentor the Lenders shall have requested, which information shall be satisfactory to the Administrative Agent and the Lenders, including, without limitation, information as to possible contingent liabilities, tax matters, environmental matters, obligations under Plans and Multiemployer Plans, collective bargaining agreements and other arrangements with employees, and forecasts prepared by management of the Borrower of balance sheets, income statements and cash flow statements on an annual basis for each year thereafter until the Commitment Termination Date.

(ix)          Evidence of insurance satisfying the requirements of Section 5.05.

(x)           Favorable written opinions (addressed to the Administrative Agent and the Lenders and dated the Effective Date) of (A) Davis Wright Tremaine LLP, special counsel for the Borrower, substantially in the form of Exhibit F-1, and covering such other matters relating to the Borrower, the Loan Documents or the Transactions as the Administrative Agent shall reasonably request (and the Borrower hereby instructs such counsel to deliver such opinion to the Lenders and the Administrative Agent) and (B) in house counsel for the Borrower, substantially in the form of Exhibit F-2, and covering such other matters relating to the Borrower, the Loan Documents or the Transactions as the Administrative Agent shall reasonably request.

(xi)          Each other Loan Document not mentioned above in this Section 4.01 and any other documents, in each case, as reasonably requested by the Administrative Agent or any Lender or counsel to the Administrative Agent.

(c)            Material Adverse Effect. Since December 31, 2009 and through the date on which the last of the conditions precedent set forth in this Section 4.01 is satisfied, with respect to any event, act, condition or occurrence of whatever nature (including any adverse determination in any litigation, arbitration or governmental investigation or proceeding), whether singularly or in conjunction with any other event or events, act or acts, condition or conditions, occurrence or occurrences whether or not related, there shall have been no material adverse change in, or a material adverse effect on (a) the business, assets, liabilities (actual or contingent), operations or condition (financial or otherwise) of the Borrower , (b) the ability of the Borrower to pay any amounts due, or otherwise perform its obligations, under this Agreement or any of the other Loan Documents or (c) the rights of or benefits available to any Lender or the Administrative Agent under this Agreement or any of the other Loan Documents.

(d)            Authorizations. All Authorizations shall have been obtained and been provided to the Administrative Agent (without the imposition of any conditions that are not acceptable to the Lenders) and shall remain in effect; all applicable waiting periods in connection with the Transactions shall have expired without any action being taken by any competent authority, and no law or regulation shall be applicable in the reasonable judgment of the Lenders that restrains, prevents or imposes materially adverse conditions upon the Transactions.

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(e)            Wholesale Power Contracts. The Administrative Agent shall have received certified copies of each of the Wholesale Power Contracts listed on Schedule 3.17.

(f)             Compliance with Material Contracts. The Borrower shall be in compliance with all existing material contractual obligations.

(g)            Indenture. The Administrative Agent shall have received certified copies of (A) the Indenture and any supplements and amendments thereto as in effect on the date the last of the conditions precedent set forth in this Section 4.01 is satisfied and (B) the most recent draft of the New Indenture in the form attached hereto as Exhibit H.

(h)            Payment of Fees and Expenses. The Borrower shall pay all fees on or prior to the date of execution of this Agreement as the Borrower shall have agreed to pay to any Lender or the Administrative Agent or the Lead Arranger in connection herewith, including the reasonable fees and expenses of counsel to the Administrative Agent and the Lead Arranger, in connection with the negotiation, preparation, execution and delivery of this Agreement and the other Loan Documents.

(i)             Termination of Existing Credit Agreement. The Administrative Agent shall have received evidence of the concurrent payment in full of the outstanding loans and other extensions of credit under the Existing Credit Agreement and the termination of the Existing Credit Agreement.

The Administrative Agent shall, immediately after all of the conditions under this Section have been met, notify the Borrower and the Lenders of the Effective Date, and such notice shall be conclusive and binding. Notwithstanding the foregoing, the obligations of the Lenders to make Loans hereunder shall not become effective unless each of the foregoing conditions is satisfied (or waived pursuant to Section 9.02) on or prior to 3:00 p.m., New York City time, on November 17, 2010 (and, in the event such conditions are not so satisfied or waived, the Commitments shall automatically terminate at such time).

Section 4.02           Each Credit Event. The obligation of each Lender to make any Loan (each, a “Credit Extension”) is subject to the satisfaction of the following conditions:

(a)            the representations and warranties of the Borrower set forth in this Agreement (except those set forth in Section 3.06 and Section 4.01(c)) and in the other Loan Documents shall be true and correct on and as of the date of the applicable Credit Extension, other than any such representations or warranties that, by their terms, refer to a specific date other than the date of such Credit Extension, in which case such representations and warranties shall be true and correct as of such specific date; and

(b)            no Default shall have occurred and be continuing, or would result from, or be caused by, such Credit Extension or from the application of the proceeds therefrom.

Each Borrowing shall be deemed to constitute a representation and warranty by the Borrower on the date thereof as to the matters specified in this Section.

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ARTICLE V

AFFIRMATIVE COVENANTS

Until the Commitments have expired or been terminated and the principal of and interest on each Loan and all fees payable hereunder shall have been paid in full, the Borrower covenants and agrees with the Lenders that:

Section 5.01           Financial Statements and Other Information. The Borrower will furnish to the Administrative Agent (who will furnish a copy thereof to each Lender):

(a)            within one hundred five (105) days after the end of each fiscal year of the Borrower beginning with the fiscal year ending on December 31, 2010, the audited balance sheet and related statements of operations, owners’ equity and cash flows of the Borrower as of the end of and such year, setting forth, in each case, in comparative form the figures for the previous fiscal year and, if applicable, the previous fiscal quarter, all reported on by KPMG LLP or other independent public accountants of recognized national standing (without a “going concern” or like qualification or exception and without any qualification or exception as to the scope of such audit) to the effect that such financial statements present fairly in all material respects the financial condition and results of operations of the Borrower in accordance with GAAP consistently applied;

(b)            within fifty (50) days after the end of each of the first three fiscal quarters of each fiscal year of the Borrower, the balance sheet and related statements of operations, owners’ equity and cash flows of the Borrower as of the end of and for such fiscal quarter and the then elapsed portion of the fiscal year, setting forth in each case in comparative form the figures for (or, in the case of the balance sheet, as of the end of) the corresponding period or periods of the previous fiscal year, all certified by the Chief Executive Officer and the Chief Financial Officer of the Borrower as presenting fairly in all material respects the financial condition and results of operations of the Borrower in accordance with GAAP consistently applied, subject to normal year-end audit adjustments and the absence of footnotes;

(c)            concurrently with any delivery of financial statements under clause (a) or (b) of this Section, a certificate of the Chief Executive Officer and the Chief Financial Officer, substantially in the form of Exhibit G, (i) certifying as to whether a Default has occurred and, if a Default has occurred, specifying the details thereof and any action taken or proposed to be taken with respect thereto (ii) setting forth reasonably detailed calculations demonstrating compliance with Section 6.08 and (iii) to the extent not otherwise stated in such financial statements or in financial statements previously delivered to the Administrative Agent, stating whether any change in GAAP or in the application thereof has occurred since the date of the first financial statements referred to in Section 5.01(a) and (b) above and, if any such change has occurred, specifying the effect of such change on the financial statements accompanying such certificate;

(d)            concurrently with any delivery of financial statements under clause (a) of this Section, (i) a statement of the accounting firm that reported on such financial statements stating whether they obtained knowledge during the course of their examination of such financial statements of any Default (which certificate may be limited to the extent required by accounting rules or guidelines) and (ii) to the extent any Wholesale Power Contracts then in effect have not been filed as exhibits to reports filed by the Borrower with the SEC, a certificate of a Responsible Officer setting forth a complete and correct list of such Wholesale Power Contracts then in effect;

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(e)            concurrently with the delivery of financial statements under clause (a) or (b) of this Section, a certificate of a Responsible Officer setting forth a complete and correct list of the following items to the extent not set forth in reports filed by the Borrower with the SEC: (i) each agreement, lease, deed of trust, mortgage, credit agreement, loan agreement, indenture, purchase agreement, Guarantee, letter of credit or other arrangement providing for or otherwise relating to any Indebtedness or any extension of credit (or commitment for any extension of credit) to, or Guarantee by, the Borrower outstanding on the date of any such financial statements the aggregate principal or face amount of which equals or exceeds (or may equal or exceed) $1,000,000, and the aggregate principal or face amount outstanding or that may become outstanding under each such agreement, lease, deed of trust, mortgage, credit agreement, loan agreement, indenture, purchase agreement, Guarantee, letter of credit or other arrangement and (ii) each Lien securing Indebtedness of any Person outstanding on the date of any such financial statement the aggregate principal or face amount of which equals or exceeds (or may equal or exceed) $1,000,000 and covering any property of the Borrower, and the aggregate Indebtedness secured (or that may be secured) by each such Lien and the property covered by each such Lien;

(f)             except for tax returns, promptly after the same become publicly available, copies of all material periodic and other reports and other material documents or materials filed by the Borrower with the SEC, FERC, the RCA or any other Governmental Authorities or distributed by the Borrower to its owners generally, as the case may be, and promptly following any request therefor by any Lender (through the Administrative Agent), copies of all periodic and other reports and other materials filed by the Borrower with any applicable Governmental Authority;

(g)            (i) concurrently with the delivery thereof to any holder of obligations under the Indenture, or to any trustee, agent or representative therefor, copies of all notices and reports delivered by Borrower pursuant to the terms of documentation governing the obligations under the Indenture, (ii) promptly upon receipt thereof, copies of any notices relating to the Indenture received from any holder of obligations under the Indenture, or any trustee, agent or representative therefor; and (iii) promptly upon the execution thereof, copies of any supplements, amendments or other modifications or agreements (including the New Indenture) with respect to the Indenture; and

(h)            promptly following any request therefor, such other information regarding the operations, business affairs and financial condition of the Borrower or compliance with the terms of this Agreement and the other Loan Documents, as the Administrative Agent or any Lender may reasonably request.

All information required to be delivered by the Borrower pursuant to clauses (a), (b) and (f) of this Section shall be deemed to have been furnished if the Borrower shall have timely made the same available on the its website at www.chugachelectric.com and, substantially concurrently therewith (except in the case of the delivery of forms 10-K and 10-Q and any financial statements or other information contained therein, as to which no separate notification shall be necessary if such information has been posted on the Borrower’s website within the deadlines specified in clauses (a) and (b) of this Section), shall have notified the Administrative Agent that such information has been posted on its website and such information is fully accessible, provided, that if the Administrative Agent is unable to access the Borrower’s website, the Borrower agrees to provide the Administrative Agent with paper or electronic copies of such information required to be furnished pursuant to clauses (a), (b) and (f) of this Section promptly following notice (and thereafter so long as such notice remains in effect) from the Administrative Agent.

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Section 5.02           Notices of Material Events. The Borrower will furnish to the Administrative Agent and each Lender prompt written notice of the following:

(a)            (i) the occurrence of any Default, (ii) the occurrence or existence of any event or circumstance that foreseeably will become a Default, and (iii) the occurrence or existence of any event or circumstance that would cause the condition to Borrowing set forth in subsection 4.02(a) not to be satisfied if a Borrowing were requested on or after the date of such event or circumstance;

(b)            the filing or commencement of any action, suit or proceeding by or before any arbitrator or Governmental Authority against or affecting the Borrower or any of its Affiliates that, (i) if adversely determined, could reasonably be expected to result in a Material Adverse Effect, or (ii) in which the relief sought is an injunction or other stay of the performance of this Agreement or any other Loan Document;

(c)            the occurrence of any ERISA Event that, alone or together with any other ERISA Events that have occurred, could reasonably be expected to result in liability of the Borrower in an aggregate amount exceeding $5,000,000;

(d)            the existence or assertion of any Environmental Claim by any Person against, or with respect to the activities of, the Borrower and any alleged violation of or liability under any Environmental Laws that, if adversely determined, could (either individually or in the aggregate) reasonably be expected to have a Material Adverse Effect;

(e)            any modification or supplement to a Wholesale Power Contract that will result in a change thereto that is or could reasonably be expected to be materially adverse to the Borrower or otherwise have a Material Adverse Effect;

(f)             the commencement of any proceeding by or before any Governmental Authority seeking the cancellation, termination (including by means of non-renewal), limitation, adverse modification or adverse conditioning of any Authorization; and

(g)            any other development that results in, or could reasonably be expected to result in, a Material Adverse Effect.

Each notice delivered under this Section shall be accompanied by a statement of a Responsible Officer setting forth the details of the event or development requiring such notice and any action taken or proposed to be taken with respect thereto.

Section 5.03           Existence; Conduct of Business. The Borrower will do or cause to be done all things necessary to preserve, renew and keep in full force and effect (a) its legal existence, (b) the Authorizations, and (c) all the rights, licenses, permits, privileges, franchises, patents, copyrights, trademarks and trade names material to the conduct of its business; provided that the foregoing shall not prohibit any merger, consolidation, liquidation or dissolution permitted under Section 6.03.

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Section 5.04           Payment of Obligations (Including Taxes). The Borrower will pay its material Indebtedness (including, without limitation, all Material Indebtedness), any federal income Tax and all other material Tax liabilities, and all other material obligations, before the same shall become delinquent or in default, except where (a) the validity or amount thereof is being contested in good faith by appropriate proceedings, (b) the Borrower has set aside on its books adequate reserves with respect thereto in accordance with GAAP, (c) such contest effectively suspends collection of the contested obligation and the enforcement of any Lien securing such obligation and (d) the failure to make payment pending such contest could not reasonably be expected to result in a Material Adverse Effect.

Section 5.05           Maintenance of Properties; Insurance.

(a)            The Borrower will cause all of its properties used or useful in the conduct of its business to be maintained and kept in good condition, repair and working order and supplied with all necessary equipment and will cause to be made all necessary repairs, renewals, replacements, betterments and improvements thereof, all as in the judgment of the Borrower may be necessary so that the business carried on in connection therewith may be properly and advantageously conducted at all times; provided, however, that nothing in this Section shall prevent the Borrower from discontinuing the operation and maintenance of any of its properties if such discontinuance is, in the judgment of the Borrower, desirable in the conduct of its business and not disadvantageous in any respect to the Lenders.

(b)            The Borrower will at all times keep all its property of an insurable nature and of the character usually insured by companies operating the same or similar properties, insured in amounts usually and customarily carried, and against loss or damage from such causes as are customarily insured against, by similar companies, but in any event, Borrower will maintain insurance in accordance with the requirements of the Indenture. All such insurance shall be effected with financially sound and reputable insurance carriers.

Section 5.06           Books and Records; Inspection Rights. The Borrower will keep proper books of record and account in which full, true and correct entries are made of all dealings and transactions in relation to its business and activities. The Borrower will permit any representatives designated by the Administrative Agent or any Lender, upon reasonable prior notice, to visit and inspect its properties, to examine and make extracts from its books and records, and to discuss its affairs, finances and condition with its officers and independent accountants, all at such reasonable times and as often as reasonably requested.

Section 5.07           Compliance with Laws and Agreements. The Borrower will comply with all laws, rules, regulations, writs, judgments, decrees, awards and orders, including Environmental Laws and ERISA, of any Governmental Authority applicable to it or its property, including the payment of any fees required by any Governmental Authority, with all reporting and accounting requirements and with all indentures, leases, loan agreements, deeds of trust, agreements and other instruments binding upon it or its property (for the avoidance of doubt, nothing in this Section 5.07 or elsewhere in this Agreement shall prohibit the Borrower from entering into any supplements or amendments to the Indenture), where the failure to comply could reasonably be expected to have a Material Adverse Effect.

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Section 5.08           Use of Proceeds. Extensions of credit hereunder shall be used solely as a liquidity facility to support the issuance by the Borrower of commercial paper only in the event of a disruption in the commercial paper market that prohibits the Borrower from rolling over or renewing its relevant outstanding commercial paper but not as a result of changes in prices or pricing of commercial paper generally or of the Borrower in particular; provided that neither the Administrative Agent nor any Lender shall have any responsibility as to the use of any such proceeds. No part of the proceeds of any Loan will be used, whether directly or indirectly, for any purpose that entails a violation of any of the Margin Regulations or other laws.

Section 5.09           Identification of Parties. The Borrower will comply with all requests by or on behalf of the Lenders, or any of them, for information concerning the identification of the Borrower, including, without limitation, its corporate organization, place or places of business, operations and registration or qualification to do business in any place, senior management, and principal ownership, for purposes of complying with the Bank Secrecy Act, P.L. 97 258 (September 13, 1982), as amended, and all regulations adopted thereunder and the Patriot Act, and for information concerning the use or destination of the proceeds of the Loans, for purposes of complying with the Trading With the Enemy Act of 1917, ch. 106, 40 Stat. 411 (October 6, 1917), as amended, and all regulations adopted and executive orders issued thereunder.

Section 5.10           Ranking. The Borrower will cause the Loans and all other obligations of the Borrower under the Loan Documents at all times to rank pari passu with all other unsecured and unsubordinated Indebtedness of the Borrower.

Section 5.11           Maintenance of Credit Ratings. The Borrower shall (i) prior to its initial issuance of any commercial paper obtain, and thereafter at all times maintain, a commercial paper rating from any two of S&P, Moody's and Fitch, and (ii) at all times maintain any two of (x) an issuer credit rating from S&P, (y) a senior unsecured long-term debt rating from Moody's and (z) a long-term senior debt rating from Fitch.

ARTICLE VI

NEGATIVE COVENANTS; FINANCIAL COVENANTS

Until the Commitments have expired or terminated and the principal of and interest on each Loan and all fees payable hereunder have been paid in full, the Borrower covenants and agrees with the Lenders that:

Section 6.01           Indebtedness. The Borrower will not create, incur, assume or permit to exist any Indebtedness, except:

(a)            Indebtedness of the Borrower created hereunder;

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(b)            any Indebtedness of the Borrower issued and incurred under the Indenture;

(c)            unsecured Indebtedness incurred pursuant to the Borrower's commercial paper program for which this Agreement acts as a liquidity facility, in an aggregate amount not to exceed $300,000,000 at any time outstanding provided, that the Borrower shall not create, incur, or assume any such Indebtedness or issue any commercial paper after the occurrence and during the continuance of any Event of Default;

(d)            unsecured Indebtedness of the Borrower incurred to finance the required purchase by the Borrower of CFC Capital Term Certificates;

(e)            other unsecured Indebtedness (other than the Indebtedness referred to in clauses (a), (b), (c), or (d) of this Section 6.01) in an aggregate amount not to exceed $100,000,000 at any time outstanding; provided, that in the event the Borrower enters into any additional commercial paper programs supported by any additional unsecured liquidity credit facilities (and not this Agreement), then in calculating unsecured Indebtedness permitted by this clause (e) of this Section 6.01, the Borrower may only count the aggregate amount outstanding under either such additional commercial paper programs or such additional unsecured liquidity credit facilities, but not both; or

(f)            Existing unsecured Indebtedness outstanding on the date of this Agreement and listed in Schedule 3.14(a) as of the date of this Agreement, including any extension, renewal or refinancing thereof; provided that such extended, renewed or refinanced Indebtedness is in a principal amount no greater than the Indebtedness being extended, renewed or repaid (excluding fees, including any consent fees, payable in connection with the issuance of any extension, renewal or repaid Indebtedness), and has a final maturity that is at least equal to or longer than and an average life that is at least equal to or greater than the Indebtedness being extended, renewed or repaid.

Section 6.02           Security Interests. The Borrower will not create, assume or suffer to exist any Security Interest (as defined below) on any property or assets now owned or hereafter acquired by the Borrower without equally and ratably securing all of the obligations of the Borrower to the Lenders under the Loan Documents (including the Loans), except Security Interests (i) arising under the New Indenture or (ii) securing amounts not to exceed in the aggregate $5,000,000 at any one time outstanding. As used in this Section 6.02, the term “Security Interest” with respect to any property as assets means any mortgage, lien, pledge, charge, security interest or other encumbrance of any kind in respect of such property or assets (other than a lien or security interest arising by operation of law) securing repayment of borrowed money or the obligation to pay the deferred purchase price for property or services (but excluding, in any case, any sale and leaseback agreement or other similar agreement).

Section 6.03           Fundamental Changes; No Subsidiaries.

(a)            The Borrower will not enter into any transaction of merger or consolidation or amalgamation, or liquidate, wind up or dissolve itself (or suffer any liquidation or dissolution). The Borrower will not acquire any business or property or assets from, or capital stock of, or be a party to any acquisition of, any Person or otherwise except for (i) purchases of inventory and other property to be sold or used in the ordinary course of business (including any use of the proceeds of any Indebtedness incurred by the Borrower pursuant to Section 6.01(b) or Section 6.01(c)) and (ii) Investments permitted under Section 6.05(f) and Section 6.05(g). The Borrower will not (except for the creation of liens or security interests permitted by Section 6.02) convey, sell, lease (as lessor), transfer or otherwise dispose of, in one transaction or a series of transactions, any part of its business, property or assets, whether now owned or hereafter acquired (including the receivables and leasehold interests, but excluding (v) Casualty Events, (w) unimproved parcels of real property not being used for the Borrower’s business, (x) obsolete or worn-out property, tools or equipment no longer used or useful in its business so long as the amount thereof sold in any single fiscal year by the Borrower shall not have a fair market value in excess of $5,000,000, (y) any inventory or other property sold or disposed of in the ordinary course of business and on usual and customary business terms and (z) other property sold or disposed of so long as the amount thereof sold or otherwise disposed of in any single fiscal year of the Borrower shall not have a fair market value in excess of $10,000,000.

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(b)            The Borrower shall not, and shall not cause to, establish, create or maintain any Subsidiary of the Borrower.

Section 6.04           Lines of Business. The Borrower will not engage to any material extent in any business other than the business of providing electric power and energy to its Members as described in the CIM.

Section 6.05           Investments. The Borrower will not make or permit to remain outstanding any Investments except:

(a)            Investments outstanding on the date hereof and set forth on Schedule 6.05(a);

(b)            operating deposit accounts with banks;

(c)            Permitted Investments (including the purchase or other acquisition by the Borrower of CFC Capital Term Certificates and of CoBank Equity Interests);

(d)            Hedging Agreements entered into in the ordinary course of the Borrower’s business and not for speculative purposes;

(e)            Investments consisting of security deposits or payment or performance bonds made in the ordinary course of business;

(f)             The acquisition by the Borrower of an undivided interest as a tenant in common in the assets comprising the Southcentral Power Project; and

(g)            additional Investments up to but not exceeding $10,000,000 in the aggregate.

Section 6.06           Transactions with Affiliates. The Borrower will not sell, lease or otherwise transfer any property or assets to, or purchase, lease or otherwise acquire any property or assets from, or otherwise engage in any other transactions with, any of its Affiliates, except transactions in the ordinary course of business at prices and on terms and conditions that are, in the aggregate, not less favorable to the Borrower than would reasonably be obtained on an arm’s-length basis from unrelated third parties.

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Section 6.07           Restrictive Agreements. The Borrower will not directly or indirectly, enter into, incur or permit to exist any agreement or other arrangement that prohibits, restricts or imposes any condition upon the ability of the Borrower to create, incur or permit to exist any Lien upon any of its property or assets; provided that this Section 6.07 shall not apply to:

(i)            restrictions and conditions imposed by law, by the Indenture or by the Loan Documents;

(ii)           restrictions and conditions existing on the date hereof identified on Schedule 6.07 (but shall apply to any extension or renewal of, or any amendment or modification expanding the scope of, any such restriction or condition);

(iii)          restrictions or conditions imposed by any agreement relating to secured Indebtedness permitted by this Agreement if such restrictions or conditions apply only to the property or assets securing such Indebtedness; and

(iv)         customary provisions in leases and other contracts restricting the assignment thereof.

Section 6.08           Certain Financial Covenants.

(a)            Margins for Interest. The Borrower shall maintain a minimum Margins for Interest of at least 1.10 times Interest Charges for each fiscal year, calculated using the Margins for Interest of the fiscal year then most recently ended (commencing with the Borrower's fiscal year ended December 31, 2010).

(b)            Margins and Equities. The Borrower shall maintain a minimum Consolidated Margins and Equities of $125,000,000, excluding any unrealized gain or loss on any Hedging Agreement, tested at the end of each fiscal quarter and at fiscal year end of the Borrower.

(c)            Most Favored Lenders. The Borrower shall not provide any Holder with financial covenants, of the same nature as the financial covenants set forth in paragraphs (a) and (b) of this Section, that are more favorable to such Holder than the financial covenants set forth in paragraphs (a) and (b) of this Section (“More Favorable Terms”), without providing the Lenders with such More Favorable Terms through, at the Borrower’s sole expense (including the fees and expenses of Lenders’ counsel incurred in connection therewith), an appropriate amendment or modification to this Agreement (it being agreed by the Borrower that prior to the effectiveness of any such More Favorable Terms herein, the Borrower shall provide Lenders’ counsel the reasonable opportunity to review and comment upon the same).

Section 6.09           Certain Documents; Accounting Changes.

(a)            Corporate Documents. The Borrower will not consent to any modification, supplement or waiver of any of the provisions of its charter, bylaws or any other constituent document of the Borrower that would have an adverse effect on the rights of the Administrative Agent or the Lenders under the Loan Documents without the prior consent of the Administrative Agent (with the approval of the Required Lenders).

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(b)            Wholesale Power Contracts. The Borrower will not terminate early, and will not consent to the early termination of, any one or more Wholesale Power Contracts that, individually or in the aggregate, represent 20% or more of the Borrower’s revenue base.

(c)            New Indenture. Each Lender hereby consents to the Borrower’s execution, delivery and recording of the New Indenture in the form substantially identical to the form of New Indenture attached hereto as Exhibit H. The Borrower will not without the consent of the Required Lenders modify the New Indenture in any manner that would constitute a Material Adverse Effect. For the avoidance of doubt, (i) the execution and delivery of one or more Supplemental Indentures authorizing a new series of Obligations whose issuance would not otherwise constitute a violation of this Agreement, and the issuance of such Obligations, shall not constitute a Material Adverse Effect; and (ii) the proviso in the definition of “Material Adverse Effect” shall not apply to any provisions in the New Indenture that (A) constitutes a material deviation from the form of New Indenture attached hereto as Exhibit H and (B) was created in violation of the provisions of the second sentence of this Section 6.09(c).

(d)            Accounting Changes. The Borrower shall not make or permit any change in (i) accounting policies or reporting practices, except as required by applicable law or as otherwise in compliance with generally accepted accounting principles, or (ii) the last day of its fiscal year from December 31, or the last days of the first three fiscal quarters in each of its fiscal years from March 31, June 30, and September 30, respectively.

ARTICLE VII

EVENTS OF DEFAULT; REMEDIES

Section 7.01           Events of Default.

Subject to the proviso at the end of this Section 7.01, any of the following shall constitute an event of default hereunder and under the other Loan Documents (each, an “Event of Default”):

(a)            the Borrower shall fail to pay any principal of any Loan when and as the same shall become due and payable, whether at the due date thereof or at a date fixed for prepayment thereof or otherwise;

(b)            the Borrower shall fail to pay any interest on any Loan or any fee or any other amount (other than an amount referred to in clause (a) or (d) of this Section 7.01) payable under this Agreement or under any other Loan Document, when and as the same shall become due and payable, and such failure shall continue unremedied for a period of three (3) or more Business Days;

(c)            any representation or warranty made or deemed made by or on behalf of the Borrower in or in connection with this Agreement or any other Loan Document or any amendment or modification hereof or thereof, or in any report, certificate, financial statement or other document prepared or furnished pursuant to or in connection with this Agreement or any other Loan Document or any amendment or modification hereof or thereof, shall prove to have been incorrect when made or deemed made;

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(d)            the Borrower shall fail to observe or perform any covenant, condition or agreement contained in Section 2.09(b), 5.01, 5.02, 5.03 (with respect to the Borrower’s existence) or 5.08, or in ARTICLE VI;

(e)            the Borrower shall fail to observe or perform any covenant, condition or agreement contained in this Agreement (other than those specified in clause (a), (b) or (d) of this Section 7.01) or any other Loan Document and such failure shall continue unremedied for a period of thirty (30) or more days after the earlier of (i) a Responsible Officer becoming aware thereof and (ii) receipt by Borrower of notice thereof from the Administrative Agent (given at the request of any Lender) to the Borrower;

(f)             the Borrower shall fail to make any payment (whether of principal or interest and regardless of amount) in respect of any Material Indebtedness, when and as the same shall become due and payable beyond any applicable grace period;

(g)            any event or condition occurs that results in any Material Indebtedness becoming due prior to its scheduled maturity or that enables or permits (with or without the giving of notice, the lapse of time or both) the holder or holders of any Material Indebtedness or any trustee or agent on its or their behalf to cause any Material Indebtedness to become due, or to require the prepayment, repurchase, redemption or defeasance thereof (other than by (x) a regularly scheduled prepayment or redemption or (y) mandatory prepayments or redemptions required by the terms of any such Material Indebtedness upon the disposition of assets, the issuance of equity or additional indebtedness or a Casualty Event) prior to its scheduled maturity; provided that this clause (g) shall not apply to secured Indebtedness that becomes due as a result of the voluntary sale or transfer of the property or assets securing such Indebtedness;

(h)            an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (i) liquidation, reorganization or other relief in respect of the Borrower or its debts, or of a substantial part of its assets, under any Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect or (ii) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Borrower or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for a period of sixty (60) or more days or an order or decree approving or ordering any of the foregoing shall be entered;

(i)             the Borrower shall (i) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect, (ii) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (h) of this Section 7.01, (iii) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Borrower for a substantial part of its assets, (iv) file an answer admitting the material allegations of a petition filed against it in any such proceeding, (v) make a general assignment for the benefit of creditors or (vi) take any action for the purpose of effecting any of the foregoing;

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(j)            the Borrower shall become unable to pay its debts as they become due, generally not pay its debts as such debts become due, or shall admit in writing its inability to pay its debts generally;

(k)            one or more judgments for the payment of money in an aggregate amount in excess of $10,000,000 shall be rendered against the Borrower or any combination thereof and the same shall remain undischarged for a period of thirty (30) consecutive days during which execution shall not be effectively stayed, or any action shall be legally taken by a judgment creditor to attach or levy upon any assets of the Borrower to enforce any such judgment;

(l)             any non-monetary judgment or order shall be rendered against the Borrower that could reasonably be expected to have a Material Adverse Effect, and there shall be a period of thirty (30) consecutive days during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be in effect;

(m)           an ERISA Event shall have occurred that, in the reasonable opinion of the Required Lenders, when taken together with all other ERISA Events that have occurred, could reasonably be expected to result in a Borrower incurring liability or an obligation in excess of $10,000,000;

(n)            any Loan Document shall at any time for any reason cease to be valid and binding or in full force and effect (other than upon expiration in accordance with the terms thereof), or performance of any material obligation thereunder shall become unlawful, or the Borrower shall so assert or contest the validity or enforceability thereof;

(o)            any one or more Members of the Borrower shall default in the performance of any payment obligations under its or their Wholesale Power Contracts where the aggregate principal amount of such default or defaults exceeds $10,000,000;

(p)            any one or more Members of the Borrower shall obtain any judgment, ruling or other order (whether or not such judgment, ruling or other order is final, appealable or subject to appeal) from any judicial, arbitral or regulatory authority providing as a remedy the declaration of the unenforceability or the material adverse modification of its or their Wholesale Power Contracts which, individually or in the aggregate, represent more than 20% of the Borrower's revenue base (unless the effectiveness of such judgment, ruling or other order is stayed or otherwise suspended to the satisfaction of the Required Lenders in their reasonable discretion); provided, that while any such judicial, arbitral or regulatory proceeding is pending but before any judgment, ruling or other order is rendered with respect thereto, if any such challenging Member or Members is in default of any payment obligation or any other material obligation meeting the condition described in Subsection 7.01(o), such default shall constitute an Event of Default under this Section 7.01(p) regardless of the outcome of the related proceeding;

(q)            a Change in Control shall occur;

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provided, however, that if no Loan is outstanding at the time any event or circumstance specified in paragraphs (c), (d), (e), (f), (g), (l), and (m) of this Section 7.01 shall occur or arise, then any such event or circumstance shall not be deemed an Event of Default, but the Administrative Agent shall, at the request of, or may, with the consent of, the Required Lenders, declare the Commitment of each Bank to make Loans to be terminated, whereupon such Commitments shall forthwith be terminated and the Borrower shall promptly pay to the Administrative Agent all accrued but unpaid amounts then outstanding under this Agreement or under any other Loan Document; provided further, however, that:

(i)            the Borrower shall promptly notify the Administrative Agent and each Lender of any such event or circumstance, and

(ii)           the obligation of each Lender to make any Loan hereunder shall be immediately suspended for so long as any such event or circumstance shall continue to exist.

Section 7.02           Remedies. If any Event of Default occurs (other than an Event of Default with respect to the Borrower described in clause (h) or (i) of Section 7.01), and at any time thereafter during the continuance of such Event of Default, the Administrative Agent may, and at the request of the Required Lenders shall, by notice to the Borrower, take any one or more of the following actions, at the same or different times: (i) terminate the Commitments, and thereupon the Commitments shall terminate immediately, (ii) declare the Loans then outstanding to be due and payable in whole (or in part, in which case any principal not so declared to be due and payable may thereafter be declared to be due and payable), and thereupon the principal of the Loans so declared to be due and payable, together with accrued interest thereon and all fees and other obligations of the Borrower accrued hereunder, shall become due and payable immediately, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrower; and (iii) exercise the rights and remedies contemplated by any one or more of the Loan Documents or by applicable law or equity; and in case of any event with respect to the Borrower described in clause (h) or (i) of Section 7.01, the Commitments shall automatically terminate and the principal of the Loans then outstanding, together with accrued interest thereon and all fees and other obligations of the Borrower accrued hereunder and under the other Loan Documents shall automatically become due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrower.

ARTICLE VIII

THE ADMINISTRATIVE AGENT

Section 8.01          Appointment. Each of the Lenders hereby irrevocably appoints the Administrative Agent as its agent hereunder and under the other Loan Documents and authorizes the Administrative Agent to take such actions on its behalf and to exercise such powers as are delegated to the Administrative Agent by the terms hereof or thereof, together with such actions and powers as are reasonably incidental thereto.

Section 8.02           Administrative Agent in its Individual Capacity. The Person serving as the Administrative Agent hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not the Administrative Agent, and such Person and its Affiliates may accept deposits from, lend money to and generally engage in any kind of business with the Borrower or any Affiliate thereof as if it were not the Administrative Agent hereunder.

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Section 8.03           Exculpatory Provisions. The Administrative Agent shall not have any duties or obligations except those expressly set forth herein and in the other Loan Documents. Without limiting the generality of the foregoing, (a) the Administrative Agent shall not be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing, (b) the Administrative Agent shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby or by the other Loan Documents that the Administrative Agent is required to exercise in writing by the Required Lenders, and (c) except as expressly set forth herein and in the other Loan Documents, the Administrative Agent shall not have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to the Borrower that is communicated to or obtained by the Person serving as Administrative Agent or any of its Affiliates in any capacity. The Administrative Agent shall not be liable for any action taken or not taken by it with the consent or at the request of the Required Lenders or all Lenders where unanimity is required or in the absence of its own gross negligence or willful misconduct as found in a final, non-appealable judgment by a court of competent jurisdiction.

Section 8.04           Notice of Default. The Administrative Agent shall be deemed not to have knowledge of any Default unless and until written notice thereof is given to the Administrative Agent by the Borrower or a Lender, and the Administrative Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with this Agreement or any other Loan Document, (ii) the contents of any certificate, report or other document delivered hereunder or thereunder or in connection herewith or therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein or therein, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement, any other Loan Document or any other agreement, instrument or document, or (v) the satisfaction of any condition set forth in ARTICLE IV or elsewhere herein or therein, other than to confirm receipt of items expressly required to be delivered to the Administrative Agent.

Section 8.05           Reliance by the Administrative Agent. The Administrative Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing believed by it to be genuine and to have been signed or sent by the proper Person. The Administrative Agent also may rely upon any statement made to it orally or by telephone and believed by it to be made by the proper Person, and shall not incur any liability for relying thereon. The Administrative Agent may consult with legal counsel (who may be counsel for the Borrower), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts.

Section 8.06           Delegation of Duties. The Administrative Agent may perform any and all of its duties and exercise its rights and powers by or through any one or more sub-agents appointed by the Administrative Agent. The Administrative Agent and any such sub-agent may perform any and all of its duties and exercise its rights and powers through their respective Related Parties. The exculpatory provisions of the preceding paragraphs shall apply to any such sub-agent and to the Related Parties of the Administrative Agent and any such sub-agent, and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as Administrative Agent.

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Section 8.07           Successor Administrative Agent. The Administrative Agent may resign at any time by notifying the Lenders and the Borrower. Upon any such resignation, the Required Lenders with the consent of the Borrower (which shall not be unreasonably withheld or delayed) shall have the right to appoint a successor. If no successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within thirty (30) days after the retiring Administrative Agent gives notice of its resignation, then the retiring Administrative Agent’s resignation shall nonetheless become effective and (1) the retiring Administrative Agent shall be discharged from its duties and obligations hereunder and (2) the Required Lenders shall perform the duties of the Administrative Agent (and all payments and communications provided to be made by, to or through the Administrative Agent shall instead be made by or to each Lender directly) until such time as the Required Lenders appoint a successor agent as provided for above in this paragraph. Upon the acceptance of its appointment as Administrative Agent hereunder by a successor, such successor shall succeed to and become vested with all the rights, powers, privileges and duties of the retiring (or retired) Administrative Agent and the retiring Administrative Agent shall be discharged from its duties and obligations hereunder (if not already discharged therefrom as provided above in this paragraph). The fees payable by the Borrower to a successor Administrative Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Borrower and such successor. After the Administrative Agent’s resignation hereunder, the provisions of this Article and Section 9.03 shall continue in effect for its benefit in respect of any actions taken or omitted to be taken by it while it was acting as Administrative Agent.

Section 8.08           Non-Reliance on Administrative Agent and other Lenders. Each Lender acknowledges that it has, independently and without reliance upon the Administrative Agent or any other Lender and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender also acknowledges that it will, independently and without reliance upon the Administrative Agent or any other Lender and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any other Loan Document or any related agreement or any document furnished hereunder or thereunder.

Section 8.09           Loan Document Amendments. Except as otherwise provided in Section 9.02(b) with respect to this Agreement, the Administrative Agent may, with the prior consent of the Required Lenders (but not otherwise), consent to any amendment modification or waiver under any of the Loan Documents.

Section 8.10           Indemnification.

(a)            Each Lender severally agrees to indemnify the Administrative Agent (to the extent not promptly reimbursed by the Borrower) from and against such Lender’s Applicable Percentage of any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever that may be imposed on, incurred by, or asserted against the Administrative Agent in any way relating to or arising out of the Loan Documents or any action taken or omitted by the Administrative Agent under the Loan Documents (collectively, the “Indemnified Costs”); provided, however, that no Lender shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from the Administrative Agent’s gross negligence or willful misconduct as found in a final, non-appealable judgment by a court of competent jurisdiction. Without limitation of the foregoing, each Lender agrees to reimburse the Administrative Agent promptly upon demand for its ratable share of any costs and expenses (including, without limitation, fees and expenses of counsel) payable by the Borrower under Section 9.03, to the extent that the Administrative Agent is not promptly reimbursed for such costs and expenses by the Borrower. In the case of any investigation, litigation or proceeding giving rise to any Indemnified Costs, this ARTICLE VIII applies whether any such investigation, litigation or proceeding is brought by any Lender or any other Person.

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(b)            The failure of any Lender to reimburse the Administrative Agent promptly upon demand for its ratable share of any amount required to be paid by the Lenders to the Administrative Agent as provided herein shall not relieve any other Lender of its obligation hereunder to reimburse the Administrative Agent for its ratable share of such amount, but no Lender shall be responsible for the failure of any other Lender to reimburse the Administrative Agent for such other Lender’s ratable share of such amount. Without prejudice to the survival of any other agreement of any Lender hereunder, the agreement and obligations of each Lender contained in this ARTICLE VIII shall survive the payment in full of principal, interest and all other amounts payable hereunder and under the other Loan Documents.

ARTICLE IX

MISCELLANEOUS

Section 9.01           Notices.

(a)            Except in the case of notices and other communications expressly permitted to be given by telephone, all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by facsimile, as follows:

(i)            if to the Borrower, to it at 5601 Electron Drive, Anchorage Alaska 99518 (P.O. Box 196300, Anchorage, AK 99519-6300), Attention: Chief Financial Officer, Facsimile No. (907) 762-4514; Telephone No. (907) 762-4778;

(ii)           if to the Administrative Agent, to National Rural Utilities Cooperative Finance Corporation, 2201 Cooperative Way, Herndon, VA 20171, Attention of Loan Syndications, (Facsimile No. (703) 707-5100; Telephone No. (703) 709-6812)];

(iii)          if to a Lender, to it at its address (or facsimile number) set forth in its Administrative Questionnaire.

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Notices sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received; notices sent by facsimile shall be deemed to have been given when sent (except that, if not given during normal business hours for the recipient, shall be deemed to have been given at the opening of business on the next Business Day for the recipient). Notices delivered through electronic communications to the extent provided in paragraph (b) below, shall be effective as provided in said paragraph (b).

(b)            Electronic Communications. Notices and other communications to the Lenders hereunder may be delivered or furnished by electronic communication (including e-mail and Internet or intranet websites) pursuant to procedures approved by the Administrative Agent, provided that the foregoing shall not apply to notices to any Lender pursuant to ARTICLE II if such Lender has notified the Administrative Agent that it is incapable of receiving or it is against its internal policies to receive notices under such Article by electronic communication. The Administrative Agent or the Borrower may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it, provided that approval of such procedures may be limited to particular notices or communications.

Unless the Administrative Agent otherwise prescribes, (i) notices and other communications sent to an e-mail address as permitted hereby shall be deemed received upon the sender’s receipt of an acknowledgement from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or other written acknowledgement), provided that if such notice or other communication is not sent during the normal business hours of the recipient, such notice or communication shall be deemed to have been sent at the opening of business on the next Business Day for the recipient, and (ii) notices or communications posted to an Internet or intranet website as permitted hereby shall be deemed received upon the deemed receipt by the intended recipient at its e-mail address as described in the foregoing clause (i) of notification that such notice or communication is available and identifying the website address therefor.

(c)            Changes to Notice Information. Any party hereto may change its address or facsimile number for notices and other communications hereunder by notice to the other parties hereto (or, in the case of any such change by a Lender, by notice to the Borrower and the Administrative Agent).

Section 9.02           Waivers; Amendments.

(a)            No Deemed Waivers; Remedies Cumulative. No failure or delay by the Administrative Agent or any Lender in exercising any right or power hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the Administrative Agent and the Lenders hereunder are cumulative and are not exclusive of any rights or remedies that they would otherwise have. No waiver of any provision of this Agreement or consent to any departure by the Borrower therefrom shall in any event be effective unless the same shall be permitted by paragraph (b) of this Section, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. Without limiting the generality of the foregoing, the making of a Loan shall not be construed as a waiver of any Default, regardless of whether the Administrative Agent or any Lender may have had notice or knowledge of such Default at the time.

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(b)            Amendments. No provision of this Agreement or any other Loan Document may be waived, amended or modified except pursuant to an agreement or agreements in writing entered into by the Borrower and the Required Lenders or by the Borrower and the Administrative Agent with the consent of the Required Lenders; provided that no such agreement shall:

(i)            increase the Commitment of any Lender without the written consent of such Lender;

(ii)           reduce the principal amount of any Loan or reduce the rate of interest thereon, or reduce any fees payable hereunder, without the written consent of each Lender affected thereby;

(iii)          postpone the scheduled date of payment of the principal amount of any Loan or any interest thereon, or any fees or other amounts payable hereunder, or reduce the amount of, waive or excuse any such payment or postpone the Commitment Termination Date without the written consent of each Lender affected thereby;

(iv)         change Section 2.16(d) without the consent of each Lender affected thereby; or

(v)          change any of the provisions of this Section or the percentage in the definition of the term “Required Lenders” or any other provision hereof specifying the number or percentage of Lenders required to waive, amend or modify any rights hereunder or make any determination or grant any consent hereunder, without the written consent of each Lender;

(vi)         release any guarantor from its obligations of any guarantee of the Indebtedness hereunder without the written consent of each Lender; and

provided further that no such agreement shall amend, modify or otherwise affect the rights or duties of the Administrative Agent hereunder without the prior written consent of the Administrative Agent. In addition, whenever a waiver, amendment or modification requires the consent of a Lender “adversely affected” thereby, such wavier, amendment or modification shall, upon consent of such Lender, be effective as to such Lender whether or not it becomes effective as to any other Lender, so long as the Required Lenders consent to such waiver, amendment or modification as provided above.

For purposes of this Section, the “scheduled date of payment” of any amount shall refer to the date of payment of such amount specified in this Agreement, and shall not refer to a date or other event specified for the mandatory or optional prepayment of such amount.

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Section 9.03           Expenses; Indemnity; Damage Waiver.

(a)            Costs and Expenses. The Borrower shall pay (i) all reasonable out-of-pocket expenses incurred by the Administrative Agent and its Affiliates, including the reasonable fees, charges and disbursements of counsel for CFC, in connection with the syndication of the credit facilities provided for herein, the preparation and administration of this Agreement and the other Loan Documents or any amendments, modifications or waivers of the provisions hereof or thereof (whether or not the transactions contemplated hereby or thereby shall be consummated), (ii) all out-of-pocket expenses incurred by the Administrative Agent or any Lender, including the fees, charges and disbursements of any counsel for the Administrative Agent, or any Lender (or, if no Default then exists or is continuing, one special counsel and one local counsel for all of the Lenders), in connection with the enforcement or protection of its rights in connection with this Agreement and the other Loan Documents, including its rights under this Section, or in connection with the Loans made, including in connection with any workout, restructuring or negotiations in respect thereof and (iii) all fees as the Borrower shall have agreed to pay to any Lender or the Administrative Agent or the Lead Arranger in connection herewith, which are, or are to become, due after the date of this Agreement, including the reasonable fees and expenses of counsel to the Administrative Agent and the Lead Arranger, in connection with the negotiation, preparation, execution and delivery of this Agreement and the other Loan Documents (including the preparation and distribution of “closing documents and binders”) and the extensions of credit hereunder.

(b)            Indemnification by the Borrower. The Borrower shall indemnify the Administrative Agent and each Lender, and each Related Party of any of the foregoing Persons (each such Person being called an “Indemnitee”) against, and hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses, including the reasonable fees, charges and disbursements of any counsel for such Indemnitee, incurred by or asserted against such Indemnitee arising out of, in connection with, or as a result of (i) the execution or delivery of this Agreement or any agreement or instrument contemplated hereby, the performance by the parties hereto of their respective obligations hereunder or the consummation of the Transactions or any other transactions contemplated hereby, (ii) any Loan or the use of the proceeds therefrom, or (iii) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing (whether brought by any third party or by the Borrower), whether based on contract, tort or any other theory and regardless of whether any Indemnitee is a party thereto; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnitee. No Indemnitee referred to in this Section 9.03(b) shall be liable for any damages arising from the use by unintended recipients of any information or other materials distributed by it through telecommunications, electronic or other information transmission systems in connection with this Agreement or the other Loan Documents or the transactions contemplated hereby or thereby.

(c)            Reimbursement by Lenders. To the extent that the Borrower fails to pay any amount required to be paid by it to the Administrative Agent under paragraph (a) or (b) of this Section, each Lender severally agrees to pay to the Administrative Agent such Lender’s Applicable Percentage (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought) of such unpaid amount; provided that the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against the Administrative Agent in its capacity as such.

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(d)            Waiver by the Borrower of Indirect or Consequential Damages. To the extent permitted by applicable law, the Borrower shall not assert, and hereby waives, any claim against any other party hereto, on any theory of liability, for indirect or consequential damages (as opposed to direct or actual damages) arising out of, or in connection with, or as a result of the Transactions.

(e)            Payments. All amounts due under this Section shall be payable promptly after written demand therefor.

Section 9.04           Successors and Assigns.

(a)            Assignments Generally. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that (i) the Borrower may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of each Lender (and any attempted assignment or transfer by the Borrower without such consent shall be null and void) and (ii) no Lender may assign or otherwise transfer its rights or obligations hereunder except in accordance with this Section. Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby and, to the extent expressly contemplated hereby, the Related Parties of each of the Administrative Agent and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.

(b)            Assignments by Lenders.

(i)            Assignments Generally. Subject to the conditions set forth in clause (ii) below, any Lender may assign to one or more other Lenders or Eligible Assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans at the time owing to it) with the prior written consent (such consent not to be unreasonably withheld or delayed) of:

(A)           the Borrower, provided that no consent of the Borrower shall be required for an assignment to a Lender, an Affiliate of a Lender, an Approved Fund, or, if a Default or Event of Default has occurred and is continuing, any other assignee; provided further that the Borrower shall be deemed to have consented to any assignment unless it shall object thereto by written notice to the Administrative Agent within ten (10) Business Days after having received notice thereof; and

(B)           the Administrative Agent; provided that no consent of the Administrative Agent shall be required for an assignment to a then existing Lender; and

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(ii)           Certain Conditions to Assignments. Assignments shall be subject to the following additional conditions:

(A)           except in the case of an assignment to a Lender or an Affiliate of a Lender or an assignment of the entire remaining amount of the assigning Lender’s Commitment or Loans the amount of the Commitment or Loans of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Assumption with respect to such assignment is delivered to the applicable Administrative Agent) shall not be less than $10,000,000 unless each of the Borrower and the Administrative Agent otherwise consent; provided that no such consent of the Borrower shall be required if a Default or Event of Default has occurred and is continuing;

(B)           each partial assignment of any Commitments and Loans shall be made as an assignment of a proportionate part of all the assigning Lender’s rights and obligations under this Agreement in respect of such Commitments and Loans;

(C)           the parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption in substantially the form of Exhibit A hereto, together with a processing and recordation fee of $3,500 (for which the Borrower shall not be obligated and provided that only one such fee shall be payable in the event of simultaneous assignments to or from one or more affiliated Approved Funds); and

(D)           the assignee, if it shall not already be a Lender, shall be an Eligible Assignee and shall deliver to the Administrative Agent an Administrative Questionnaire.

(iii)          Effectiveness of Assignments. Subject to acceptance and recording thereof pursuant to paragraph (c) of this Section, from and after the effective date specified in each Assignment and Assumption the assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of Sections 2.13, 2.14, 2.15 and 9.03 and ARTICLE VIII). Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this Section 9.04 shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with paragraph (e) of this Section.

(c)            Maintenance of Register by Administrative Agent. The Administrative Agent, acting for this purpose as an agent of the Borrower, shall maintain at one of its offices in Herndon, Virginia a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitments of, and principal amount of the Loans owing to, each Lender pursuant to the terms hereof from time to time (the “Register”). The entries in the Register shall be conclusive absent manifest error, and the Borrower, the Administrative Agent and the Lenders may treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. The Register shall be available for inspection by the Borrower and any Lender, at any reasonable time and from time to time upon reasonable prior notice.

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(d)            Acceptance of Assignments by Administrative Agent. Upon its receipt of a duly completed Assignment and Assumption executed by an assigning Lender and an assignee, the assignee’s completed Administrative Questionnaire (unless the assignee shall already be a Lender hereunder), the processing and recordation fee referred to in paragraph (b) of this Section, any written consent to such assignment required by paragraph (b) of this Section and any other document reasonably requested by the Administrative Agent, the Administrative Agent shall accept such Assignment and Assumption and record the information contained therein in the Register. No assignment shall be effective for purposes of this Agreement unless it has been recorded in the Register as provided in this paragraph.

(e)            Participations. Any Lender may, without the consent of the Borrower or the Administrative Agent, sell participations to one or more banks or other entities (a “Participant”) in all or a portion of such Lender’s rights and obligations under this Agreement and the other Loan Documents (including all or a portion of its Commitments and Loans owing to it); provided that (i) such Lender’s obligations under this Agreement and the other Loan Documents shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (iii) the Borrower, the Administrative Agent and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement and the other Loan Documents. Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and the other Loan Documents and to approve any amendment, modification or waiver of any provision of this Agreement or any other Loan Document; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, modification or waiver described in the first proviso to Section 9.02(b) that affects such Participant. Subject to paragraph (f) of this Section, the Borrower agrees that each Participant shall be entitled to the benefits of Sections 2.13, 2.14 and 2.15 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to paragraph (b) of this Section. To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 9.08 as though it were a Lender, provided such Participant agrees to be subject to Section 2.16(d) as though it were a Lender hereunder.

(f)             Limitations on Rights of Participants. A Participant shall not be entitled to receive any greater payment under Section 2.13, 2.14 or 2.15 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is made with the Borrower’s prior written consent. A Participant that would be a Foreign Lender if it were a Lender shall not be entitled to the benefits of Section 2.15 unless the Borrower is notified of the participation sold to such Participant and such Participant agrees, for the benefit of the Borrower, to comply with Section 2.15(e) as though it were a Lender and in the case of a Participant claiming exemption for portfolio interest under Section 871(h) or 881(c) of the Code, the applicable Lender shall provide the Borrower with satisfactory evidence that the participation is in registered form and shall permit the Borrower to review the Register as reasonably needed for the Borrower to comply with its obligations under applicable laws and regulations.

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(g)            Certain Pledges. Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender, including any such pledge or assignment to a Federal Reserve Bank, and this Section shall not apply to any such pledge or assignment of a security interest; provided that no such pledge or assignment of a security interest shall release a Lender from any of its obligations hereunder or substitute any such assignee for such Lender as a party hereto.

(h)            No Assignments to the Borrower or Affiliates. Anything in this Section to the contrary notwithstanding, no Lender may assign or participate any interest in any Loan held by it hereunder to the Borrower or any of its Affiliates without the prior consent of each Lender.

Section 9.05           Survival. All covenants, agreements, representations and warranties made by the Borrower herein and in the certificates or other instruments delivered in connection with or pursuant to this Agreement shall be considered to have been relied upon by the other parties hereto and shall survive the execution and delivery of this Agreement and the making of any Loans, regardless of any investigation made by any such other party or on its behalf and notwithstanding that the Administrative Agent or any Lender may have had notice or knowledge of any Default or incorrect representation or warranty at the time any credit is extended hereunder, and shall continue in full force and effect as long as the principal of or any accrued interest on any Loan or any fee or any other amount payable under this Agreement is outstanding and unpaid and so long as the Commitments have not expired or terminated. The provisions of Sections 2.13, 2.14, 2.15 and 9.03 and ARTICLE VIII shall survive and remain in full force and effect regardless of the consummation of the transactions contemplated hereby, the repayment of the Loans and the Commitments or the termination of this Agreement or any provision hereof

Section 9.06          Counterparts; Integration; Effectiveness. This Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Agreement, the other Loan Documents and any separate letter agreements with respect to fees payable to the Administrative Agent constitute the entire contract between and among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof. Except as provided in Section 4.01, this Agreement shall become effective when it shall have been executed by the Administrative Agent and when the Administrative Agent shall have received counterparts hereof which, when taken together, bear the signatures of each of the other parties hereto, and thereafter shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. Delivery of an executed counterpart of a signature page to this Agreement by facsimile shall be effective as delivery of a manually executed counterpart of this Agreement.

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Section 9.07           Severability. Any provision of this Agreement held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions hereof; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction.

Section 9.08           Right of Setoff. If an Event of Default shall have occurred and be continuing, each Lender is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by such Lender to or for the credit or the account of the Borrower against any of and all the obligations of the Borrower now or hereafter existing under this Agreement held by such Lender, irrespective of whether or not such Lender shall have made any demand under this Agreement and although such obligations may be unmatured. The rights of each Lender under this Section are in addition to other rights and remedies (including other rights of setoff) which such Lender may have.

Section 9.09           Governing Law; Jurisdiction; Etc.

(a)            Governing Law. This Agreement shall be construed in accordance with and governed by the law of the State of New York.

(b)            Submission to Jurisdiction. The Borrower hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of the Supreme Court of the State of New York sitting in New York County and of the United States District Court of the Southern District of New York, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York State or, to the extent permitted by law, in such Federal court. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement shall affect any right that the Administrative Agent or any Lender may otherwise have to bring any action or proceeding relating to this Agreement against the Borrower or its properties in the courts of any jurisdiction.

(c)            Waiver of Venue. The Borrower hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement in any court referred to in paragraph (b) of this Section. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

(d)            Service of Process. The Borrower hereby irrevocably appoints CT Corporation System, with offices as of the date of this Agreement at 111 8th Avenue, 13th Floor, New York, New York 10011, as its authorized agent for service of process in relation to any action, suit or proceeding before any courts located in the State of New York in connection with this Agreement and all other Loan Documents, and the Borrower agrees that service of process in respect of it to CT Corporation System shall be effective service of process upon it in such action, suit or proceeding. The Borrower further agrees that any failure of CT Corporation System to give notice to the Borrower of any such service shall not impair or affect the validity of such service of any judgment rendered in any such action, suit or proceeding. Each other party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 9.01. Nothing in this Agreement will affect the right of any party to this Agreement to serve process in any other manner permitted by law.

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Section 9.10           WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

Section 9.11           Headings. Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and shall not affect the construction of, or be taken into consideration in interpreting, this Agreement.

Section 9.12           Treatment of Certain Information; Confidentiality.

(a)            Treatment of Certain Information. The Borrower acknowledges that from time to time financial advisory, investment banking and other services may be offered or provided to the Borrower (in connection with this Agreement or otherwise) by any Lender or by one or more subsidiaries or affiliates of such Lender and the Borrower hereby authorizes each Lender to share any information delivered to such Lender by the Borrower pursuant to this Agreement, or in connection with the decision of such Lender to enter into this Agreement, to any such subsidiary or affiliate, it being understood that any such subsidiary or affiliate receiving such information shall be bound by the provisions of paragraph (b) of this Section as if it were a Lender hereunder. Such authorization shall survive the repayment of the Loans, the expiration or termination the Commitments or the termination of this Agreement or any provision hereof.

(b)            Confidentiality. Each of the Administrative Agent and the Lenders agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its Affiliates and to its and its Affiliates’ respective partners, directors, officers, employees, agents, advisors and other representatives (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (b) to the extent requested by any regulatory authority purporting to have jurisdiction over it (including any self-regulatory authority, such as the National Association of Insurance Commissioners), (c) to the extent required by applicable laws or regulations or by any subpoena or similar legal process, (d) to any other party hereto, (e) in connection with the exercise of any remedies hereunder or under any other Loan Document or any action or proceeding relating to this Agreement or any other Loan Document or the enforcement of rights hereunder or thereunder, (f) subject to an agreement containing provisions substantially the same as those of this paragraph, to (i) any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights or obligations under this Agreement or (ii) any actual or prospective counterparty (or its advisors) to any swap or derivative transaction relating to the Borrower and its obligations, (g) with the consent of the Borrower or (h) to the extent such Information (x) becomes publicly available other than as a result of a breach of this paragraph or (y) becomes available to the Administrative Agent, any Lender or any of their respective Affiliates on a nonconfidential basis from a source other than the Borrower.

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For purposes of this paragraph, “Information” means all information received from the Borrower relating to the Borrower or any of its businesses, other than any such information that is available to the Administrative Agent or any Lender on a nonconfidential basis prior to disclosure by the Borrower, provided that, in the case of information received from the Borrower after the date hereof, such information is clearly identified at the time of delivery as confidential. Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information.

Section 9.13           USA PATRIOT Act. Each Lender subject to the Patriot Act hereby notifies the Borrower that pursuant to the requirements of the Patriot Act, it is required to obtain, verify and record information that identifies the Borrower, which information includes the name and address of the Borrower and other information that will allow such Lender to identify the Borrower in accordance with the Patriot Act.

Section 9.14           Transaction Titles. Notwithstanding anything herein to the contrary, the party identified on the cover page hereof as the Lead Arranger shall not have any duties or liabilities under this Agreement, except in its capacity as a Lender.

Section 9.15           No Fiduciary Duty

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The Administrative Agent, each Lender and their Affiliates (collectively, solely for purposes of this paragraph, the “Lender Parties”), may have economic interests that conflict with those of the Borrower, its stockholders and/or its Affiliates. The Borrower agrees that nothing in the Loan Documents or otherwise will be deemed to create an advisory, fiduciary or agency relationship or fiduciary or other implied duty between any Lender Party, on the one hand, and the Borrower, its stockholders or its Affiliates, on the other. The Borrower acknowledges and agrees that (i) the transactions contemplated by the Loan Documents (including the exercise of rights and remedies hereunder and thereunder) are arm’s-length commercial transactions between the Lender Parties, on the one hand, and the Borrower, on the other, and (ii) in connection therewith and with the process leading thereto, (x) no Lender Party has assumed an advisory or fiduciary responsibility in favor of the Borrower, its stockholders or its Affiliates with respect to the transactions contemplated hereby (or the exercise of rights or remedies with respect thereto) or the process leading thereto (irrespective of whether any Lender Party has advised, is currently advising or will advise the Borrower, its stockholders or its Affiliates on other matters) or any other obligation to the Borrower except the obligations expressly set forth in the Loan Documents and (y) each Lender Party is acting solely as principal and not as the agent or fiduciary of the Borrower, its management, stockholders, creditors or any other Person. The Borrower acknowledges and agrees that it has consulted its own legal and financial advisors to the extent it deemed appropriate and that it is responsible for making its own independent judgment with respect to such transactions and the process leading thereto. The Borrower agrees that it will not claim that any Lender Party has rendered advisory services of any nature or respect, or owes a fiduciary or similar duty to the Borrower, in connection with such transactions or the process leading thereto.

[Remainder of this page intentionally left blank.]

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written.

CHUGACH ELECTRIC ASSOCIATION, INC.
By:	/s/ Bradley W. Evans
	Name: Bradley W. Evans
	Title: Chief Executive Officer
By:	/s/ Michael R. Cunningham
	Name: Michael R. Cunningham
	Title: Chief Financial Officer

Signature Page to Credit Agreement

LENDERS:
NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORPORATION, individually, as Lender and as Administrative Agent
By:	/s/ Marianne L. Dusold
	Name: Marianne L. Dusold
	Title: Assistant Secretary Treasurer

Signature Page to Credit Agreement

KEYBANK NATAIONAL ASSOCIATION, as Lender
By:	/s/ Chris Horton
	Name: Chris Horton
	Title: Vice President

Signature Page to Credit Agreement

BANK OF AMERICA, N.A., as Lender
By:	/s/ Gordon H. Gray
	Name: Gordon H. Gray
	Title: Senior Vice President

Signature Page to Credit Agreement

JPMORGAN CHASE BANK, N.A., as Lender
By:	/s/ Heather Talbott
	Name: Heather Talbott
	Title: Executive Director

Signature Page to Credit Agreement

BANK OF MONTREAL, as Lender
By:	/s/ Brian L. Banke
	Name: Brian L. Banke
	Title: Director

Signature Page to Credit Agreement

GOLDMAN SACHS BANK USA, as Lender
By:	/s/ Mark Walton
	Name: Mark Walton
	Title: Authorized Signatory

Signature Page to Credit Agreement

BANK OF TAIWAN, LOS ANGELES BRANCH, as Lender
By:	/s/ Spencer Tsao
	Name: Spencer Tsao
	Title: AVP & Deputy General Manager

Signature Page to Credit Agreement

COBANK, ACB, as Lender
By:	/s/ C. Brock Taylor
	Name: C. Brock Taylor
	Title: Vice President

Signature Page to Credit Agreement

CHANG HWA COMMERCIAL BANK, LTD., LOS ANGELES BRANCH, as Lender
By:	/s/ Beverley Chen
	Name: Beverley Chen
	Title: VP & General Manager

Signature Page to Credit Agreement

SCHEDULES

Schedule I

LENDERS’ COMMITMENTS

Name of Lender	Commitment Amount	Applicable Percentage
National Rural Utilities Cooperative Finance Corporation	$65,000,000.00	21.65%
KeyBank National Association	$50,000,000.00	16.67%
Bank of America, N.A.	$50,000,000.00	16.67%
JPMorgan Chase Bank, N.A.	$35,000,000.00	11.67%
Bank of Montreal	$25,000,000.00	8.33%
Goldman Sachs Bank USA	$20,000,000.00	6.67%
Bank of Taiwan, Los Angeles Branch	$20,000,000.00	6.67%
CoBank, ACB	$20,000,000.00	6.67%
Chang Hwa Commercial Bank, Ltd., Los Angeles Branch	$15,000,000.00	5.00%
Total	$300,000,000.00	100.00%

Schedule 3.14(a) Existing Indebtedness

Updating the debts detailed in the 10-Q filed with the Securities Exchange Commission for the quarter ending June 30, 2010, to reflect balances as of November 17, 2010, Chugach Electric Association, Inc. has incurred the following:

	Balance			Limit
Bonds payable	$	270,000,000		$	270,000,000
CoBank Promissory Notes	$	37,477,845		$	37,477,845
Commercial Paper	$	75,500,000	1	$	300,000,000
National Rural Utilities Cooperative Finance Corporation	$	0		$	50,000,000
(NRUCFC) Line of Credit Agreement

1Approximate

A-2

Schedule 3.14(b) Existing Liens

None.

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Schedule 3.15 Jointly Owned Assets

Chugach Electric Association, Inc. is joint owner in the following assets as of November 17, 2010:

	Share
Bradley Lake Hydroelectric Plant1		30.4	%
Eklutna Hydroelectric Power Plant		30.0	%
Southcentral Power Project2		70.0	%

1 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 $166,000,000 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). Chugach has a 30.4% share of the project’s capacity.

2 Chugach is in the process of developing a natural gas-fired generation plant on land owned by Chugach near its Anchorage headquarters. The Southcentral Power Project (SPP) will be developed and owned as tenants in common with Anchorage Municipal Light & Power (AML&P). Chugach will own and take approximately 70 percent of the new plant’s output and AML&P will own and take the remaining output. Chugach will proportionately account for its ownership in the SPP.

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Schedule 3.17 Wholesale Power Contracts

Chugach Electric Association, Inc. has certified the following Wholesale Power Contracts which are in effect as of November 17, 2010:

· Modified Agreement for the Sale and Purchase of Electric Power and Energy by and among Chugach Electric Association, Inc., Matanuska Electric Association, Inc., and Alaska Electric Generation and Transmission Cooperative, Inc. dated April 5, 1989;

· First Amendment to Modified Agreement for the Sale and Purchase of Electric Power and Energy dated April 5, 1989 by and among Chugach Electric Association, Inc., Matanuska Electric Association, Inc., and Alaska Electric Generation and Transmission Cooperative, Inc. effective February 10, 1995;

· Second Amendment to Modified Agreement for the Sale and Purchase of Electric Power and Energy dated April 5, 1989 by and among Chugach Electric Association, Inc., Matanuska Electric Association, Inc. and Alaska Electric Generation and Transmission Cooperative, Inc. filed with the Regulatory Commission of Alaska on July 28, 2008;

· Agreement for Sale of Electric Power and Energy between Chugach Electric Association, Inc., Alaska Electric Generation and Transmission Cooperative, Inc., and Homer Electric Association, Inc., signed by the parties on September 25, 27, and 10, 1985, respectively;

· 2006 Agreement for the Sale and Purchase of Electric Power and Energy between Chugach Electric Association, Inc., and the City of Seward effective February 27, 2007;

· Amendment No. 1 to the 2006 Agreement for the Sale and Purchase of Electric Power and Energy between Chugach Electric Association, Inc. and the City of Seward effective February 27, 2007.

A-5

Schedule 6.05(a) Investments

As of November 17, 2010, Investments include the following:

National Rural Utilities Cooperative Finance
Corporation (NRUCFC) capital term certificates	$	6,095,980
National Bank for Cooperatives (CoBank)		5,867,555
NRUCFC		46,668
Other		16,621
Total Investments	$	12,026,811

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Schedule 6.07 Restrictive Agreements

Amended and Restated Indenture, dated April 1, 2001, as the same may have been or may hereafter be amended or supplemented

Master Loan Agreement #00976 between Chugach and CoBank, ACB dated December 27, 2002

Master Loan Agreement between Chugach and CoBank, ACB dated May 3, 2005

Reimbursement and Indemnity Agreement between Chugach and MBIA Insurance Corporation dated February 1, 2002.

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EXHIBITS

Exhibit A

Form of Assignment and Assumption

Assignment and Assumption

This Assignment and Assumption (the "Assignment and Assumption") is dated as of the Effective Date set forth below and is entered into by and between [Insert name of Assignor] (the "Assignor") and [Insert name of Assignee] (the "Assignee"). Capitalized terms used but not defined herein shall have the meanings given to them in the Credit Agreement identified below (as amended, supplemented, restated or otherwise modified from time to time, the "Credit Agreement"), receipt of a copy of which is hereby acknowledged by the Assignee. The Standard Terms and Conditions set forth in Annex 1 attached hereto are hereby agreed to and incorporated herein by reference and made a part of this Assignment and Assumption as if set forth herein in full.

For an agreed consideration, the Assignor hereby irrevocably sells and assigns to the Assignee, and the Assignee hereby irrevocably purchases and assumes from the Assignor, subject to and in accordance with the Standard Terms and Conditions and the Credit Agreement, as of the Effective Date inserted by the Administrative Agent as contemplated below (i) all of the Assignor’s rights and obligations in its capacity as a Lender under the Credit Agreement and any other documents or instruments delivered pursuant thereto to the extent related to the amount and percentage interest identified below of all of such outstanding rights and obligations of the Assignor under the respective facilities identified below (including any letters of credit or guarantees included in such facilities) and (ii) to the extent permitted to be assigned under applicable law, all claims, suits, causes of action and any other right of the Assignor (in its capacity as a Lender) against any Person, whether known or unknown, arising under or in connection with the Credit Agreement, any other documents or instruments delivered pursuant thereto or the loan transactions governed thereby or in any way based on or related to any of the foregoing, including, but not limited to, contract claims, tort claims, malpractice claims, statutory claims and all other claims at law or in equity related to the rights and obligations sold and assigned pursuant to clause (i) above (the rights and obligations sold and assigned pursuant to clauses (i) and (ii) above being referred to herein collectively as, the "Assigned Interest"). Such sale and assignment is without recourse to the Assignor and, except as expressly provided in this Assignment and Assumption, without representation or warranty by the Assignor.

1. Assignor: ______________________________

2. Assignee1: ______________________________

3. Borrower(s): Chugach Electric Association, Inc.

___________________________ 

1 Assignee must be an "Eligible Assignee" (See Section 9.04(b)).

A-1

4. Administrative Agent: National Rural Utilities Cooperative Finance Corporation, as the Administrative Agent under the Credit Agreement.

5. Credit Agreement: That certain Credit Agreement, dated as of November [●], 2010, by and among Chugach Electric Association, Inc., as Borrower, the Lenders party thereto, and National Rural Utilities Cooperative Finance Corporation, as Administrative Agent.

6. Assigned Interest:

Commitment Assigned	Aggregate Amount of Commitment/Loans for all Lenders	Amount of Commitment/Loans Assigned2	Percentage Assigned of Commitment/Loans3
	$	$	%
	$	$	%
	$	$	%

7. Trade Date: ______________]4

___________________________ 

2 Amount to be adjusted by the counterparties to take into account any payments or prepayments made between the Trade Date and the Effective Date.

3 Set forth, to at least 9 decimals, as a percentage of the Commitment/Loans of all Lenders thereunder.

 

4 To be completed if the Assignor and the Assignee intend that the minimum assignment amount is to be determined as of theTrade Date.

A-2

Effective Date: _____________ ___, 20___ 5

The terms set forth in this Assignment and Assumption are hereby agreed to:

ASSIGNOR
[NAME OF ASSIGNOR]
By:
	Name:
	Title:
ASSIGNEE
[NAME OF ASSIGNEE]
By:
	Name:
	Title:

___________________________ 

5 To be inserted by Administrative Agent and shall be the effective date of recordation of transfer in the Register therefore.

A-3

Consented to and accepted:

NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORPORATION,

as Administrative Agent6

By
	Name:
	Title:
[Consented to:]7
[BORROWER]
By
	Name:
	Title:

___________________________ 

6 Consent of Administrative Agent is not required for an assignment to a Lender (See Section 9.04(b) of the Credit Agreement).

7 Borrower’s consent not required for an assignment to a Lender, an Affiliate of a Lender, an Approved Fund, or, if a Default or Event of Default has occurred and is continuing, any other assignee (See Section 9.04(b) of the Credit Agreement).

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ANNEX 1

to Assignment and Assumption

CREDIT AGREEMENT DATED AS OF NOVEMBER [●], 2010

BY AND AMONG

CHUGACH ELECTRIC ASSOCIATION, INC., AS BORROWER,

THE LENDERS PARTY THERETO, AND NATIONAL RURAL UTILITIES

COOPERATIVE FINANCE CORPORATION, AS ADMINISTRATIVE AGENT

STANDARD TERMS AND CONDITIONS FOR

ASSIGNMENT AND ASSUMPTION

1. Representations and Warranties.

1.1 Assignor. The Assignor (a) represents and warrants that (i) it is the legal and beneficial owner of the Assigned Interest, (ii) the Assigned Interest is free and clear of any lien, encumbrance or other adverse claim and (iii) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby; and (b) assumes no responsibility with respect to (i) any statements, warranties or representations made in, or in connection with, the Credit Agreement or any other Loan Document, (ii) the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Loan Documents or any collateral thereunder, (iii) the financial condition of the Borrower, any of its Subsidiaries or Affiliates or any other Person obligated in respect of any Loan Document or (iv) the performance or observance by the Borrower, any of its Subsidiaries or Affiliates or any other Person of any of their respective obligations under any Loan Document.

1.2. Assignee. The Assignee (a) represents and warrants that (i) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby and to become a Lender under the Credit Agreement, (ii) it meets all requirements of an Eligible Assignee under the Credit Agreement (subject to receipt of such consents as may be required under the Credit Agreement), (iii) from and after the Effective Date, it shall be bound by the provisions of the Credit Agreement as a Lender thereunder and, to the extent of the Assigned Interest, shall have the obligations of a Lender thereunder, (iv) it has received a copy of the Credit Agreement, together with copies of the most recent financial statements delivered pursuant to Section 5.01 thereof, as applicable, and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment and Assumption and to purchase the Assigned Interest on the basis of which it has made such analysis and decision independently and without reliance on the Administrative Agent or any other Lender, and (v) if it is a Foreign Lender, attached to the Assignment and Assumption is any documentation required to be delivered by it pursuant to the terms of the Credit Agreement, duly completed and executed by the Assignee; and (b) agrees that (i) it will, independently and without reliance on the Administrative Agent, the Assignor or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Loan Documents, and (ii) it will perform in accordance with their terms all of the obligations that by the terms of the Loan Documents are required to be performed by it as a Lender.

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2. Payments. From and after the Effective Date, the Administrative Agent shall make all payments in respect of the Assigned Interest (including payments of principal, interest, fees and other amounts) to the Assignor for amounts that have accrued to but excluding the Effective Date and to the Assignee for amounts that have accrued from and after the Effective Date.

3. General Provisions. This Assignment and Assumption shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors and assigns. This Assignment and Assumption may be executed in any number of counterparts, which together shall constitute one instrument. Delivery of an executed counterpart of a signature page of this Assignment and Assumption by telecopy shall be effective as delivery of a manually executed counterpart of this Assignment and Assumption. This Assignment and Assumption shall be construed in accordance with and governed by the law of the State of New York.

A-6

Exhibit B-1

Form of Borrowing Request

INITIAL BORROWING REQUEST

Borrower Name: Chugach Electric Association, Inc.

Facility Number:  [●]

Type of Borrowing: Syndicated Loan

Effective Date of Borrowing:

The Borrowing Amount:

Interest Rate Elected:

m LIBO Borrowing m ABR Borrowing

Interest Rate Elections Period if LIBO Borrowing is chosen:

o 1-month LIBO	o 2-month LIBO
o 3-month LIBO	o 6-month LIBO

Wiring Instructions:

Bank Name

City, State

ABA No

Account No

Credit Account Name

Additional Instructions  

B-1-1

Certification

Acting on behalf of the Borrower, I hereby certify that as of the date below: (1) I am duly authorized to make this certification and to request funds on the terms specified herein; (2) the Borrower has met all of the conditions to this Borrowing contained in the Credit Agreement dated as of November [●], 2010 (the "Credit Agreement"; the terms defined therein and not otherwise defined herein being used herein as therein defined), by and among the Borrower, the Lenders party thereto, and National Rural Utilities Cooperative Finance Corporation, as Administrative Agent, governing the terms of this Borrowing Request that the Borrower is required to meet prior to an advance of funds; (3) all of the representations and warranties contained in the Credit Agreement (except those set forth in Section 3.06 and Section 4.01(c)) are true and correct on and as of the date hereof and will be deemed to be true and correct on and as of the Effective Date of this Borrowing unless notice is otherwise given by the Borrower to the Administrative Agent before the Effective Date, in each case, other than any such representations or warranties that, by their terms, refer to a specific date other than such Effective Date, in which case such representations and warranties are true, correct and complete as of such date; and (4) no Default has occurred and is continuing or would result from this Borrowing or from the application of the proceeds therefrom.

Certified By:

Signature	Date	[Name & Title of Authorized Officer of
		Borrower]

Attn: [Jason Mowery]

Fax Number: [703-707-5100]

B-1-2

Exhibit B-2

Form of Borrowing Request

BORROWING REQUEST

Borrower Name: Chugach Electric Association, Inc.

Facility Number:  [●]

Type of Borrowing: Syndicated Loan

Effective Date of Borrowing:

The Borrowing Amount:

Interest Rate Elected:

m LIBO Borrowing m ABR Borrowing

Interest Rate Elections Period if LIBO Borrowing is chosen:

o 1-month LIBO	o 2-month LIBO
o 3-month LIBO	o 6-month LIBO

Wiring Instructions:

Bank Name

City, State

ABA No

Account No

Credit Account Name

Additional Instructions   

B-2-1

Certification

Acting on behalf of the Borrower, I hereby certify that as of the date below: (1) I am duly authorized to make this certification and to request funds on the terms specified herein; (2) the Borrower has met all of the conditions to this Borrowing contained in the Credit Agreement dated as of November [●], 2010 (the "Credit Agreement"; the terms defined therein and not otherwise defined herein being used herein as therein defined), by and among the Borrower, the Lenders party thereto, and National Rural Utilities Cooperative Finance Corporation, as Administrative Agent, governing the terms of this Borrowing Request that the Borrower is required to meet prior to an advance of funds; (3) all of the representations and warranties contained in the Credit Agreement (except those set forth in Section 3.06 and Section 4.01(c)) are true and correct on and as of the date hereof and will be deemed to be true and correct on and as of the Effective Date of this Borrowing unless notice is otherwise given by the Borrower to the Administrative Agent before the Effective Date, in each case, other than any such representations or warranties that, by their terms, refer to a specific date other than such Effective Date, in which case such representations and warranties are true, correct and complete as of such date; and (4) no Default has occurred and is continuing or would result from this Borrowing or from the application of the proceeds therefrom.

Certified By:

Signature	Date	[Name & Title of Authorized Officer of
		Borrower]

Attn: [Jason Mowery]

Fax Number: [703-707-5100]

B-2-2

Exhibit C

Form of Interest Election Request

[This form should only be used to continue or convert a rate on an existing Loan]

INTEREST ELECTION REQUEST

Borrower Name: Chugach Electric Association, Inc.

Loan Number:  [●]

Original Effective Date of Borrowing:

Effective Date of Interest Election:

The Amount of Borrowing*:

* If different options are being elected with respect to different portions of the original Borrowing, indicate also the portion of the original Borrowing to be allocated to this Interest Election Request.

Interest Rate Elected:

m LIBO Borrowing m ABR Borrowing

Interest Rate Elections Period if LIBO Borrowing is chosen:

o 1-month LIBO	o 2-month LIBO
o 3-month LIBO	o 6-month LIBO

C-1

Certification

Acting on behalf of the Borrower, I hereby certify that as of the date below: (1) I am duly authorized to make this certification and to make the Interest Election Request specified herein; and (2) the Borrower has met all of the conditions contained in the Credit Agreement dated as of November [●], 2010 (the "Credit Agreement"; the terms defined therein and not otherwise defined herein being used herein as therein defined), by and among the Borrower, the Lenders party thereto, and National Rural Utilities Cooperative Finance Corporation, as Administrative Agent, governing the terms of this Interest Election Request that the Borrower is required to meet prior to such Interest Election Request; (3) all of the representations and warranties contained in the Credit Agreement are true and correct on and as of the date hereof and will be deemed to be true and correct on and as of the Effective Date of this Interest Election Request unless notice is otherwise given by the Borrower to the Administrative Agent before the Effective Date, in each case, other than any such representations or warranties that, by their terms, refer to a specific date other than such Effective Date, in which case such representations and warranties are true, correct and complete as of such date; (4) no Default has occurred and is continuing or would result from this Borrowing or from the application of the proceeds therefrom; and (5) the terms hereof shall be binding upon Borrower under the provisions of the Credit Agreement.

Certified By:

Signature	Date	[Name & Title of Authorized Officer of
		Borrower]

C-2

Exhibit D

Form of Note

NOTE

$[_________]	[________], 20[__]
	New York, New York

FOR VALUE RECEIVED, CHUGACH ELECTRIC ASSOCIATION, INC., a corporation incorporated and existing under the laws of the State of Alaska (the "Borrower"), hereby promises to pay to [NAME OF LENDER] (the "Lender"), at such office of the Administrative Agent (as defined in the Credit Agreement referred to below) as shall be notified to the Borrower from time to time, the principal sum of [DOLLAR AMOUNT] Dollars (or such lesser amount as shall equal the aggregate unpaid principal amount of the Loans made by the Lender to the Borrower under the Credit Agreement, as defined below), in lawful money of the United States of America and in immediately available funds, on the dates and in the principal amounts provided in the Credit Agreement, and to pay interest on the unpaid principal amount of each such Loan, at such office, in like money and funds, for the period commencing on the date of such Loan until such Loan shall be paid in full, at the rates per annum and on the dates provided in the Credit Agreement.

The date, amount, Type, interest rate and duration of Interest Period (if applicable) of each Loan made by the Lender to the Borrower, and each payment made on account of the principal thereof, shall be recorded by the Administrative Agent on its books, which shall be conclusive evidence of the foregoing information, absent manifest error. Failure of the Administrative Agent to make any such recordation shall not affect any of the obligations of the Borrower under the Credit Agreement, hereunder or under any other Loan Document.

This Note evidences the obligation of the undersigned to repay all Loans advanced by the Lender from time to time under that certain Credit Agreement, dated as of November [●], 2010 (as amended, supplemented, restated or otherwise modified from time to time, the "Credit Agreement"), by and among the Borrower, the Lenders party thereto, and National Rural Utilities Cooperative Finance Corporation, as Administrative Agent. Terms used but not defined in this Note have the respective meanings assigned to them in the Credit Agreement.

The Credit Agreement provides, among other things, for the acceleration of the maturity of this Note upon the occurrence of certain events and for prepayments of Loans upon the terms and conditions specified therein. Reference is made to the Credit Agreement and the other Loan Documents for a statement of certain additional rights and obligations of the undersigned. In the event of any conflict between the terms of this Note and the terms of the Credit Agreement, the terms of the Credit Agreement shall prevail. All of the terms, covenants, provisions, conditions, stipulations, promises and agreements contained in the Loan Documents to be kept, observed and/or performed by the undersigned are made a part of this Note and are incorporated into this Note by this reference to the same extent and with the same force and effect as if they were fully set forth in this Note; the undersigned promises and agrees to keep, observe and perform them or cause them to be kept, observed and performed, strictly in accordance with the terms and provisions thereof.

D-1

No waiver by the Administrative Agent or any Lender of any one or more Defaults by the undersigned in the performance of any of its obligations under this Note shall operate or be construed as a waiver of any other or future Default or Defaults, whether of a like or different nature. No failure or delay on the part of the Administrative Agent or any Lender in exercising any right, power or remedy under this Note (including, without limitation, the right to declare this Note due and payable) shall operate as a waiver of such right, power or remedy nor shall any single or partial exercise of any such right, power or remedy preclude any other or further exercise of such right, power or remedy or the exercise of any other right, power or remedy.

If any term, provision, covenant or condition of this Note or the application of any term, provision, covenant or condition of this Note to any party or circumstance shall be found by a court of competent jurisdiction to be, to any extent, invalid or unenforceable, then the remainder of this Note and the application of such term, provision, covenant, or condition to parties or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby, and each term, provision, covenant or condition of this Note shall be valid and enforced to the fullest extent permitted by law. Upon determination that any such term, provision, covenant or condition is invalid or unenforceable, the Lenders may, but are not obligated to, advance funds to Borrower under this Note until Borrower, Administrative Agent and the other Lenders amend this Note so as to effect the original intent of the parties as closely as possible in a valid and enforceable manner.

For purposes of this Note, Events of Default shall be as defined in the Credit Agreement.

Except as permitted by Section 9.04 of the Credit Agreement, this Note may not be assigned by the Lender to any other Person.

This Note shall be construed in accordance with and governed by the law of the State of New York.

CHUGACH ELECTRIC ASSOCIATION, INC.
By
	Name:
	Title:

D-2

Exhibit E

Form of Solvency Certificate

CHUGACH ELECTRIC ASSOCIATION, INC.

I, ______________, am the Chief Executive Officer of Chugach Electric Association, Inc., a corporation incorporated and existing under the laws of the State of Alaska (the "Company") and I, ______________, am the Chief Financial Officer of the Company, and hereby certify on behalf of the Company that we are duly authorized to execute this Solvency Certificate, which is hereby delivered on behalf of the Company pursuant to Section 4.01(b)(vii) of the Credit Agreement, dated as of November [●], 2010 (as amended, supplemented, restated or otherwise modified from time to time, the "Credit Agreement"), by and among the Lenders party thereto, and National Rural Utilities Cooperative Finance Corporation, as Administrative Agent (collectively with the Lenders, the "Loan Parties") and the Company, as the Borrower. Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to such terms in the Credit Agreement.

We are generally familiar with the properties, businesses and assets of the Company, and we have reviewed, on behalf of the Company, the Loan Documents and the contents of this Solvency Certificate and, in connection herewith, have reviewed such other documentation and information and have made such investigation and inquiries as necessary and prudent therefor. We further certify, on behalf of the Company, that the financial information and assumptions that underlie and form the basis for the representations made in this Solvency Certificate were reasonable when made and were made in good faith and continue to be reasonable as of the date hereof.

The Company understands that the Loan Parties are relying on the truth and accuracy of this Solvency Certificate in connection with the Transactions.

The Company hereby further certifies that:

1.             The Company has reviewed the projected income statements and cash flow statements delivered to the Loan Parties pursuant to Section 4.01(b)(viii) of the Credit Agreement, which were prepared in good faith on the basis of assumptions believed to be reasonable at the time. On the date hereof, after giving effect to the consummation of the Transactions:

(i)             The fair market value of the total assets of the Company is greater than the total amount of the liabilities, including contingent liabilities, of the Company;

(ii)            After giving effect to the consummation of the Transactions, the present fair saleable value of the assets of the Company is not less than the amount that will be required to pay the probable liability of the Company on its debts as they become absolute and matured;

E-1

(iii)           The Company does not intend to, and does not believe that it will, incur debts or liabilities beyond its ability to pay such debts and liabilities as they mature; and

(iv)           On the date hereof, after giving effect to the consummation of the Transactions, the Company is not engaged in business or in a transaction, or is about to engage in business or in a transaction, for which its property would constitute unreasonably small capital for a generation and transmission cooperative with similar power supply obligations.

2.              In reaching the conclusions set forth in this Solvency Certificate, the Company has considered, among other things:

(i)             the cash and other current assets of the Company reflected in the unaudited pro forma balance sheet dated as of [November] [●], 2010;

(ii)            all of the unliquidated and contingent liabilities of the Company, including, without limitation, any claims arising out of pending or, to the best knowledge of the undersigned, threatened litigation against the Company or any of its property and assets and, in so doing, the Company has computed the amount of each such unliquidated or contingent liability as the amount that, in light of all of the facts and circumstances existing on the date of this Solvency Certificate, represents the amount that can reasonably be expected to become an actual or matured liability of the Company;

(iii)           all of the obligations and liabilities of the Company, whether matured or unmatured, liquidated or unliquidated, disputed or undisputed, secured or unsecured, subordinated, absolute, fixed or contingent, including, without limitation, any claims arising out of pending or, to the best knowledge of the undersigned, threatened litigation against the Company or any of its respective property and assets and, in so doing, the Company has computed the amount of each such obligation and liability as the amount that, in light of all of the facts and circumstances existing on the date of this Solvency Certificate, represents the amount that can reasonably be expected to become an actual or matured liability of the Company;

(iv)           historical and anticipated growth in the sales volume of the Company and in the income stream generated by the Company as reflected in, among other things, the cash flow statements;

(v)            the customary sales terms and the trade payables and other accounts payable of the Company;

(vi)           the amount of the credit extended by and to Members and other customers of the Company;

E-2

(vii)          the anticipated interest payable on the indebtedness and other mandatory payments under the Credit Agreement; and

(viii)         the level of capital customarily maintained by the Company.

Delivery of an executed signature page to this Solvency Certificate by telecopier or other electronic method shall be effective as delivery of a manually executed signature page to this Solvency Certificate.

[SIGNATURE PAGE FOLLOWS]

E-3

IN WITNESS WHEREOF, the Chief Executive Officer, and the Chief Financial Officer of the Company have executed this Solvency Certificate in their capacity as officers of the Company and on behalf of the Company this [__] day of [________], 2010.

CHUGACH ELECTRIC ASSOCIATION, INC.

By:

Name:

Title: Chief Executive Officer

By:

Name:

Title: Chief Financial Officer

E-4

Exhibit F-1

Form of Legal Opinion of Borrower’s Special Counsel

November _____, 2010

National Rural Utilities Cooperative Finance Corporation,

as Administrative Agent and to each of the Lenders party to the Credit Agreement

referred to below

Ladies and Gentlemen:

We have acted as counsel for Chugach Electric Association, Inc., a corporation organized and existing under the laws of the State of Alaska (the “Borrower”), in connection with the Credit Agreement, dated as of November, 2010 (the “Credit Agreement”), among the Borrower, the Lenders party thereto, and National Rural Utilities Cooperative Finance Corporation, as the Administrative Agent. Terms used but not defined in this opinion have the respective meanings assigned to them in the Credit Agreement.

This opinion is being delivered to you pursuant to Section 4.01(b)(x) of the Credit Agreement.

I.

We have assumed the authenticity of all records, documents and instruments submitted to us as originals, the genuineness of all signatures, the legal capacity of natural persons and the conformity to the originals of all records, documents and instruments submitted to us as copies. We have based our opinion upon our review of the following records, documents, instruments and certificates, such additional certificates relating to factual matters and such other documents as we have deemed necessary or appropriate for our opinion:

(i)             the Credit Agreement;

(ii)            the Notes being issued on the date hereof (the “Subject Notes” and together with the Credit Agreement, the “Relevant Documents”);

(iii)           the articles of incorporation of the Borrower, certified by the Alaska Department of Commerce and Economic Development as of November            , 2010, and certified to us by an officer of the Borrower as being complete and in full force and effect as of the date of this opinion;

(iv)           the Bylaws of the Borrower certified to us by an officer of the Borrower as being complete and in full force and effect as of the date of this opinion;

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(v)            records certified to us by an officer of the Borrower as constituting all records of proceedings and actions of the board of directors and Members of the Borrower relating to the transactions contemplated by the Relevant Documents;

(vi)           a Certificate of Good Standing relating to the Borrower issued by the Commissioner of the Alaska Department of Commerce and Economic Development, dated November            , 2010;

(vii)          A certificate of the Chief Executive Officer of the Borrower as to the material agreements and material instruments to which the Borrower is a party or by which the Borrower’s properties or assets are bound (the “Certificate Relating to Agreements”); and

(viii)         Each of the agreements and instruments identified in the Certificate Relating to Agreements.

Our opinion expressed in Paragraph 1 of Part III as to the good standing of the Borrower under the laws of the State of Alaska is based solely upon the Certificate of Good Standing enumerated above. We have made no additional investigation after the date of the Certificate of Good Standing in rendering our opinion with respect to the good standing of the Borrower under the laws of the State of Alaska expressed in Paragraph 1 of Part III.

In connection with our opinion expressed in Paragraph 7(iii) of Part III, we have not reviewed, and express no opinion on, (a) financial covenants or similar provisions requiring financial calculations or determinations to ascertain compliance or (b) provisions relating to the occurrence of a “material adverse event” or words of similar import. Moreover, to the extent that any of the agreements and instruments identified in the Certificate Relating to Agreements is governed by the laws of any jurisdiction other than the State of Alaska or New York, our opinion relating to those agreements and instruments is based solely upon the plain meaning of their language without regard to interpretation or construction that might be indicated by the laws governing those agreements and instruments.

Where our opinion relates to our “knowledge,” that knowledge is based upon our examination of the records, documents, instruments and certificates enumerated or described above and the actual contemporaneous knowledge of attorneys in this firm who are currently involved in legal representation of the Borrower in connection with the Credit Agreement. We have not examined any records of any court, administrative tribunal or other similar entity in connection with our opinion.

II.

We express no opinion as to any securities (except to the extent specifically set forth in Paragraph 9 of Part III), tax, anti-trust, land use, safety or hazardous materials laws, rules or regulations or laws, rules or regulations applicable to the Administrative Agent or Lenders by virtue of their status as a financial institutions engaged in business of the type exemplified by the Credit Agreement.

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This opinion is limited to the federal laws of the United States of America (with respect to the opinions expressed in Paragraphs 6, 7(ii) and 9 of Part III), the laws, of the State of New York (with respect to the opinions expressed in Paragraphs 4, 5, 6, 7(ii) and 7(iii) of Part III) and the laws of the State of Alaska (with respect to the opinions expressed in Paragraphs 1, 2, 3, 6, 7 and 8 of Part III), and we disclaim any opinion as to the laws of any other jurisdiction. We further disclaim any opinion as to any statute, rule, regulation, ordinance, order or other promulgation of any local governmental body or as to any related judicial or administrative opinion.

III.

Based upon the foregoing and our examination of such questions of law as we have deemed necessary or appropriate for the purpose of our opinion, and subject to the limitations and qualifications expressed below, it is our opinion that:

1. The Borrower has been duly incorporated and is validly existing and in good standing under the laws of the State of Alaska.

2. The Borrower has all requisite corporate power and corporate authority to enter into and perform the Relevant Documents, to own its properties and to carry on its business as, to our knowledge, it is now conducted.

3. The Relevant Documents have been duly authorized by all necessary corporate action (including action by the Borrower’s Members, if necessary) on the part of the Borrower and have been duly executed and delivered on behalf of the Borrower.

4. Each of the Relevant Documents is a valid and binding obligation of the Borrower, enforceable against the Borrower in accordance with its terms, subject, as to enforcement, (i) to bankruptcy, insolvency, reorganization, arrangement, moratorium and other laws of general applicability relating to or affecting creditors’ rights and (ii) to general principles of equity, whether such enforceability is considered in a proceeding in equity or at law.

5. The Loans and all other obligations of the Borrower under the Loan Documents rank pari passu with all other unsecured and unsubordinated Indebtedness of the Borrower.

6. No governmental consents, approvals, authorizations, registrations, declarations or filings are required for the execution and delivery of the Relevant Documents on behalf of the Borrower or repayment of the Loans, except such as have been obtained or made. No approval of the Regulatory Commission of Alaska or any other Governmental Authority is required for the use of any Credit Extension (including the first Credit Extension).

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7. Neither the execution and delivery of the Relevant Documents on behalf of the Borrower nor the performance by the Borrower of the Relevant Documents (i)conflicts with any provision of the Articles of Incorporation or Bylaws of the Borrower, (ii) violates or breaches any law, rule or regulation (including, without limitation, Regulation T, U, or X of the Board), or any writ, judgment injunction decree or award, or any order of any Governmental Authority, of which we have knowledge, applicable to the Borrower, or (iii) violates or results in a breach or default under the Indenture, any of the Wholesale Power Contracts or Fuel Supply Agreements or any other agreement or instrument identified in the Certificate Relating to Agreements, gives rise to a right thereunder to require any payment to be made by the Borrower, or results in the creation of imposition of any Lien on any asset of the Borrower thereunder.

8. We do not have knowledge of any action, suit or proceeding against the Borrower that is either pending or has been threatened in writing and that (i) involves any of the Loan Documents or the Transactions, or (ii) if adversely determined, could reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect.

9. The Borrower is not (a) an “investment company” as defined in, or subject to regulation under, the Investment Company Act of 1940, as amended, (b) a “natural gas company” as defined in, or subject to regulation under, the Natural Gas Act of 1938 as amended, (c) a “public utility” under and as defined in, or subject to regulation under, the Federal Power Act of 1935, as amended, or (d) a “holding company” or a “subsidiary company” of a “holding company” or an “affiliate” of a “holding company” or of a “subsidiary company” of a “holding company” as such terms are defined in (and under) the Public Utility Holding Company Act of 2005, as amended, or otherwise subject to regulation under the Public Utility Holding Company Act of 2005, as amended.

IV.

We further advise you that:

A. As noted, the enforceability of the Relevant Documents is subject to the effect of general principles of equity. These principles include, without limitations, concepts of commercial reasonableness, materiality and good faith and fair dealing.

B. The Administrative Agent and Lenders may not involve penalties for defaults that bear no relation to the damage suffered and we express no opinion as to whether a court would determine whether or not any payment in cash or kind would constitute a penalty.

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C. The enforceability of the Relevant Documents is subject to the effects of (i) Section 1-203 of the New York Uniform Commercial Code (the “UCC”), which imposes an obligation of good faith in the performance or enforcement of a contract, (ii) Section 1-102 of the UCC, which provides that obligations of good faith, diligence, reasonableness and care prescribed by the UCC may not be disclaimed by agreement, although the parties may by agreement determine the standards by which the performance of such obligations is to be measured if those standards are not manifestly unreasonable, and (iii) legal principles under which a court may refuse to enforce, or may limit the enforcement of, a contract or any clause of a contract that a court finds as a matter of law to have been unconscionable at the time it was made.

D. The effectiveness of indemnities, rights of contribution, exculpatory provisions and waivers of the benefits of statutory provisions may be limited on public policy grounds.

E. Provisions of the Relevant Documents requiring that waivers must be in writing may not be binding or enforceable if a non-executory oral agreement has been created modifying any such provision or an implied agreement by trade practice or course of conduct has given rise to waiver.

F. Provisions of any agreement requiring a party to pay another party’s attorneys’ fees and costs in actions to enforce the provisions of such agreement may be construed to entitle the prevailing party in any action, whether or not that party is the specified party, to be awarded its reasonable attorneys’ fees, costs and necessary disbursements.

G. The enforceability of the Relevant Documents may also be subject to the effect of generally applicable rules of law that limit or affect the enforceability of provisions purporting to permit service by mail.

V.

This opinion is rendered to you in connection with the Relevant Documents and is for your benefit. This opinion may not be relied upon by any other person, firm, corporation or other entity (other than your successors and assigns as Lenders, the Administrative Agent and Persons that acquire participations in your Loans) without our prior written consent. We disclaim any obligation to advise you of any change in law that occurs, or any facts of which we become aware, after the date of this opinion.

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Exhibit F-2

Form of Legal Opinion of Borrower’s In-House Counsel

November _____, 2010

National Rural Utilities Cooperative Finance Corporation,

as Administrative Agent and to each of the Lenders party to the Credit Agreement

referred to below:

Ladies and Gentlemen:

I am the General Counsel of Chugach Electric Association, Inc., a corporation organized and existing under the laws of the State of Alaska (the “Borrower”), in connection with the Credit Agreement, dated as of November, 2010 (the “Credit Agreement”), among the Borrower, the Lenders party thereto, and National Rural Utilities Cooperative Finance Corporation, as the Administrative Agent. Terms used but not defined in this opinion have the respective meanings assigned to them in the Credit Agreement.

This opinion is being delivered to you pursuant to Section 4.01(b)(x) of the Credit Agreement.

I.

I have assumed the authenticity of all records, documents and instruments submitted to us as originals, the genuineness of all signatures (except those of, or on behalf of, the Borrower), the legal capacity of natural persons and the conformity to the originals of all records, documents and instruments submitted to us as copies. I have based my opinion upon my review of the following records, documents, instruments and certificates, such additional certificates relating to factual matters and such other documents as I have deemed necessary or appropriate for my opinion:

(i)            the Credit Agreement;

(ii)           the Notes being issued on the date hereof (the “Subject Notes” and together with the Credit Agreement, the “Relevant Documents”);

(iii)          the articles of incorporation of the Borrower, certified by the Alaska Department of Commerce and Economic Development as of November            , 2010;

(iv)         the Bylaws of the Borrower;

(v)          the records of proceedings and actions of the board of directors and Members of the Borrower relating to the transactions contemplated by the Relevant Documents;

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(vi)         a Certificate of Good Standing relating to the Borrower issued by the Commissioner of the Alaska Department of Commerce and Economic Development, dated October 9, 2008; and

(vii)        Each of the Wholesale Power Contracts and Fuel Supply Agreements.

In connection with my opinion expressed in Paragraph 7(iii) of Part III, I have not reviewed, and express no opinion on, (a) financial covenants or similar provisions requiring financial calculations or determinations to ascertain compliance, or (b) provisions relating to the occurrence of a “material adverse event” or words of similar import. Moreover, to the extent that any of the Wholesale Power Contracts or Fuel Supply Agreements is governed by the laws of any jurisdiction other than the State of Alaska, my opinion relating to those agreements is based solely upon the plain meaning of their language without regard to interpretation or construction that might be indicated by the laws governing those agreements and instruments.

Where my opinion relates to my “knowledge,” that knowledge is based upon my examination of the records, documents, instruments and certificates enumerated or described above and my actual knowledge. I have not examined any records of any court, administrative tribunal or other similar entity in connection with my opinion.

II.

I express no opinion as to any securities, tax, anti-trust, land use, safety or hazardous materials laws, rules and regulations or laws, rules or regulations applicable to the Administrative Agent or Lenders by virtue of their status as a financial institutions engaged in business of the type exemplified by the Credit Agreement.

This opinion is limited to the laws of the State of Alaska, and I disclaim any opinion as to the laws of any other jurisdiction.

III.

Based upon the foregoing and my examination of such questions of law as I have deemed necessary or appropriate for the purpose of my opinion, and subject to the limitations and qualifications expressed below, it is our opinion that:

1. The Borrower has been duly incorporated and is validly existing and in good standing under the laws of the State of Alaska.

2. The Borrower has all requisite corporate power and corporate authority to enter into and perform the Relevant Documents, to own its properties and to carry on its business as it is now conducted.

3. The Relevant Documents have been duly authorized by all necessary corporate action (including action by the Borrower’s Members, if necessary) on the part of the Borrower and have been duly executed and delivered on behalf of the Borrower.

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4. Each of the Relevant Documents is a valid and binding obligation of the Borrower, enforceable against the Borrower in accordance with its terms, subject, as to enforcement, (i) to bankruptcy, insolvency, reorganization, arrangement, moratorium and other laws of general applicability relating to or affecting creditors’ rights and (ii) to general principles of equity, whether such enforceability is considered in a proceeding in equity or at law.

5. No governmental consents, approvals, authorizations, registrations, declarations or filings are required for the execution and delivery of the Relevant Documents on behalf of the Borrower or repayment of the Loans, except such as have been obtained or made. No approval of the Regulatory Commission of Alaska or any other Governmental Authority is required for the use of any Credit Extension (including the first Credit Extension).

6. Neither the execution and delivery of the Relevant Documents on behalf of the Borrower nor the performance by the Borrower of the Relevant Documents (i) conflicts with any provision of the Articles of Incorporation or Bylaws of the Borrower, (ii) violates or breaches any law, rule or regulation, or any writ, judgment injunction decree or award, or any order of any Governmental Authority applicable to the Borrower, or (iii) violates or results in a breach or default under the Indenture, any of the Wholesale Power Contracts or Fuel Supply Agreements, gives rise to a right thereunder to require any payment to be made by the Borrower, or results in the creation of imposition of any Lien on any asset of the Borrower thereunder.

7. There is no action, suit or proceeding against the Borrower that is either pending or that, to my knowledge, has been threatened in writing and that (i) involves any of the Loan Documents or the Transactions, or (ii) if adversely determined, could reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect.

IV.

I further advise you that:

A. As noted, the enforceability of the Relevant Documents is subject to the effect of general principles of equity. These principles include, without limitations, concepts of commercial reasonableness, materiality and good faith and fair dealing.

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B. The Administrative Agent and Lenders may not involve penalties for defaults that bear no relation to the damage suffered and we express no opinion as to whether a court would determine whether or not any payment in cash or kind would constitute a penalty.

C. The enforceability of the Relevant Documents is subject to the effects of (i) Section 1-203 of the Alaska Uniform Commercial Code (the “UCC”), which imposes an obligation of good faith in the performance or enforcement of a contract, (ii) Section 1-102 of the UCC, which provides that obligations of good faith, diligence, reasonableness and care prescribed by the UCC may not be disclaimed by agreement, although the parties may by agreement determine the standards by which the performance of such obligations is to be measured if those standards are not manifestly unreasonable, and (iii) legal principles under which a court may refuse to enforce, or may limit the enforcement of, a contract or any clause of a contract that a court finds as a matter of law to have been unconscionable at the time it was made.

D. The effectiveness of indemnities, rights of contribution, exculpatory provisions and waivers of the benefits of statutory provisions may be limited on public policy grounds.

E. Provisions of the Relevant Documents requiring that waivers must be in writing may not be binding or enforceable if a non-executory oral agreement has been created modifying any such provision or an implied agreement by trade practice or course of conduct has given rise to waiver.

F. Provisions of any agreement requiring a party to pay another party’s attorneys’ fees and costs in actions to enforce the provisions of such agreement may be construed to entitle the prevailing party in any action, whether or not that party is the specified party, to be awarded its reasonable attorneys’ fees, costs and necessary disbursements.

G. The enforceability of the Relevant Documents may also be subject to the effect of generally applicable rules of law that limit or affect the enforceability of provisions purporting to permit service by mail.

V.

This opinion is rendered to you in connection with the Relevant Documents and is for your benefit. This opinion may not be relied upon by any other person, firm, corporation or other entity (other than your successors and assigns as Lenders, the Administrative Agent and Persons that acquire participations in your Loans) without our prior written consent. I disclaim any obligation to advise you of any change in law that occurs, or any facts of which we become aware, after the date of this opinion.

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Very truly yours,

Mark K. Johnson

General Counsel

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Exhibit G

Form of Compliance Certificate

COMPLIANCE CERTIFICATE

I, [_____________], the Chief Executive Officer of Chugach Electric Association, Inc. (the "Company") and I, [_____________], the Chief Financial Officer of the Company, and, as such, Responsible Officers of the Company, DO HEREBY CERTIFY on behalf of the Company and to the best of our knowledge, after due inquiry, that:

(a)            We have conducted a review of (i) the Credit Agreement dated as of November [●], 2010 (as amended, supplemented, restated or otherwise modified from time to time, the "Credit Agreement"), by and among the Company, the Lenders party thereto, and National Rural Utilities Cooperative Finance Corporation, as Administrative Agent (ii) the financial statements of the Company and (iii) such other documents as we have deemed necessary for this certification. Capitalized terms used and not defined herein shall have the meanings assigned to them in the Credit Agreement. This Compliance Certificate is being delivered pursuant to Section 5.01(c) of the Credit Agreement.

(b)            The financial statements being delivered with this Compliance Certificate present fairly in all material respects the financial condition and results of operations of the Company in accordance with GAAP consistently applied.

(c)            [No Default has occurred during the period beginning on [_____], 20[__] and ending on the date hereof.] [Attached hereto as Annex 1 is a detailed description of each Default that has occurred during the period beginning on [_____], 20[__] and ending on the date hereof, together with a description of any action taken or proposed to be taken with respect thereto.]

(d)            Attached hereto as Annex 2 are detailed calculations demonstrating compliance with each covenant set forth in Section 6.08 of the Credit Agreement as of the date hereof.

(e)            Attached hereto as Annex 3 is a complete and correct list of the Wholesale Power Contracts as of the date hereof.

(f)            Attached hereto as Annex 4 is a complete and correct list of (i) each agreement, lease, deed of trust, mortgage, credit agreement, loan agreement, indenture, purchase agreement, Guarantee, letter of credit or other arrangement (other than those that have been filed as exhibits to annual reports, quarterly reports and other reports filed by the Borrower with the SEC)8providing for or otherwise relating to any Indebtedness or any extension of credit (or commitment for any extension of credit) to, or Guarantee by, the Borrower outstanding on the date hereof, the aggregate principal or face amount of which equals or exceeds (or may equal or exceed) $1,000,000, and the aggregate principal or face amount outstanding or that may become outstanding under each such agreement, lease, deed of trust, mortgage, credit agreement, loan agreement, indenture, purchase agreement, Guarantee, letter of credit or other arrangement and (ii) each Lien securing Indebtedness of any Person outstanding on the date hereof, the aggregate principal or face amount of which equals or exceeds (or may equal or exceed) $1,000,000 and covering any property of the Borrower, and the aggregate Indebtedness secured (or that may be secured) by each such Lien and the property covered by each such Lien;

_________________________________

8 Parenthetical to be included only if Borrower is an SEC reporting company.

G-1

(g)            Since the date of the financial statements referred to in Section 5.01 of the Credit Agreement, a change in GAAP [and in the application of GAAP with respect to the financial statements of the Company] has [not] occurred[, and the effect of such change on the financial statements accompanying this Compliance Certificate is [_________]]9.

WITNESS my hand this [__] day of [_____], 20[__].

By:

Name:

Title: Chief Executive Officer

WITNESS my hand this [__] day of [_____], 20[__].

By:

Name:

Title: Chief Financial Officer

_________________________________ 

9 Please indicate whether a change in GAAP has occurred.

G-2

Exhibit H

Form of New Indenture

[Separately attached.]

H-1

See Second Amended and Restated Indenture of Trust dated as of January 20, 2011, between Chugach Electric Association, Inc. and U.S. Bank National Association filed as Exhibit 4.18 to this 2010 Form 10-K Annual Report

H-2

EX-10.71

Exhibit 10.71

SPECIAL CONTRACT FOR

NATURAL GAS TRANSPORTATION SERVICE

Whereas, ENSTAR Natural Gas Company ("Company”), and Chugach Electric Association, Inc. ("Customer”) desire to enter into a contract for the transportation of Customer’s natural gas; and

Whereas, the Customer is certificated to provide electric public utility service in and around Anchorage, Alaska; and

Whereas, since April 2008, the Company has transported natural gas to the Customer’s Beluga Power Plant under the Company’s Very Large Firm Transport (VLFT) Tariff (“Tariff”) utilizing a VLFT transportation service agreement with Marathon Oil Company (Marathon); and

Whereas, Marathon terminated the VLFT service agreement effective September 30, 2010; and

Whereas, the Customer has an immediate need for the transportation of Gas to supply its Beluga Power Plant; and

Whereas, due to the changes in Cook Inlet natural gas production since 2008, the Company is no longer able to provide VLFT service to the Beluga Power Plant at the level desired by the Customer year round on a firm basis; and

Whereas, the Customer has asked the Company whether it can provide limited firm transportation service beginning November 15, 2010, through March 31, 2011, and firm transportation service from April 1, 2011 through October 31, 2011; and

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Whereas, because of the urgent and temporary situation facing the Customer, the Company is willing to provide transportation service on a limited firm basis for the period commencing on November 15, 2010 and ending on March 31, 2011 (“Period I”); and

Whereas, the Company is further willing to provide transportation service on a firm basis on April 1, 2011 and ending on October 31, 2011 (“Period II”); and

Whereas, by doing so, the Company is not undertaking any express or implied commitment to the Customer beyond the term of this Special Contract, and is not agreeing that it has any obligation to serve the Customer;

Be it Resolved that due to the unique circumstances of the Customer's short-term transportation service requirements qualify it for a special contract; and

Further Resolved that the Company is willing to do what it can to support the Customer’s needs under the terms stated below, provided that it does not interfere with its ability to meet other, existing firm delivery obligations.

In consideration of the covenants and conditions in this Special Contract, the parties agree as follows:

ARTICLE I

PARTIES

1.1 The parties to this contract are ENSTAR Natural Gas Company, a division of SEMCO Energy, Inc. (“Company”) and Chugach Electric Association, Inc. (“Customer”).

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ARTICLE II

TERM

2.1 Term

2.1.1  The full term of this Special Contract shall be from November 15, 2010 through October 31, 2011.  Any extension of term will be by mutual agreement of both parties, in writing, at least 90 days prior to the expiration date of the full term.

2.1.2  Period I (Limited Firm Transportation Service) shall be from November 15, 2010 through March 31, 2011.

2.1.3   Period II (Firm Transportation Service) shall be from April 1, 2011 through October 31, 2011.

ARTICLE III

MODIFIED TARIFF PROVISIONS

3.1 Transportation of Gas

The Company agrees to transport up to a maximum of 20,000 thousand cubic feet per day (Mcf/d) during Period I (Limited Firm Transportation Service) and Period II (Firm Transportation Service).  This is the Contract Peak Demand.  To assist the Company in providing this service, the Customer shall provide the Company with the forecasts and nominations required by Sections 1605c and 1605d of the Company’s Tariff, including but not limited to the Monthly and Daily nominations required by Sections 1605d(1) and 1605d(3), and adhere to the balancing provisions as set out in Section 1605e.

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3.2 Price

In both Period I and Period II, in consideration of the Services provided by the Company to the Customer, the Customer shall pay the Company the rates in the Company's Tariff Schedule VLFT (Sections 2150b, 2150c, and 2150d) with the exception of the monthly demand charge as set forth and defined in Section 2150b.  The Monthly Demand Charge under this Special Contract will be $40,000. The Monthly Demand Charge set forth in the previous sentence is a discount from the firm charge multiplied by the Contracted Peak Demand.  The Customer will also reimburse the Company for all tariffed charges incurred to transport gas on the west side of Cook Inlet by the Company to provide Services under this Special Contract. Exhibit A provides an example of when the Company may incur west side transportation fees to provide Services under this Special Contract.   The terms of Section 2150a of the Company’s Tariff shall also apply, except that a separate Very Large Firm Transportation Service Agreement is not required.

3.3 Period I Services

3.3.1 During Period 1, the Company will use commercially reasonable efforts to provide transportation services to the Customer up to the Contracted Peak Demand. However, the Company will not incur transportation fees to support this Special Contract except when such transportation fees are reimbursable by the Customer, as provided for in Article 3.2.  The Company is not required to curtail services to other firm service customers to provide transportation services under this Special Contract.

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Exhibit B is a pressure table that describes the possible delivery volumes at the range of pressures that are anticipated after Customer completes re-piping at Beluga Power Plant.  Customer must complete re-piping at the Beluga Power Plant to accommodate the delivery pressures that may vary between 450 pounds per square inch (psi) and 850 psi.  Customer acknowledges that its failure to complete the necessary re-piping work will limit its ability to accept gas with a pressure of less than 725 psi.  If Customer does not complete the re-piping, gas will be delivered at a minimum of 725 psi from the ENSTAR/APC pipeline. The Customer accepts responsibility for timely completing the necessary re-piping work.

3.3.2 If the Company is unable to deliver the Contracted Peak Demand, the Customer agrees to waive reimbursement from the Company for any Interruption Expense it might incur as defined by the Company’s Tariff Section 1205 (Interruption Cost) for Period I.   The pricing agreed to in this Special Contract, which covers the full period of the agreement (Periods I and II), is structured with a price discount to acknowledge Limited Firm Transportation Service provided by the Company during Period I.

3.3.3 The Company will not be responsible for any damages the Customer may incur as the result of the Company’s inability to meet the Contracted Peak Demand during Period I – Limited Firm Transportation Service, including reimbursement for any Interruption Costs as specified in Article 3.3.2 above.

3.3.4 The Company and the Customer will work together to utilize the steps defined in the 2009 Gas Emergency Agreement Letter to maintain adequate transmission and distribution pressures in the Company’s transportation system during any gas supply emergency.

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3.3.5 If the Customer incurs Interruption Expense as a result of curtailment or interruption of any or all of the transportation of the Contracted Peak Demand during Period I, it is not entitled to reimbursement of those Interruption Expenses by the Company.  This Special Contract does not affect the Customer’s right for reimbursement if the Customer incurs Interruption Expenses for events unrelated to curtailment or interruption of the transportation of the Contracted Peak Demand.  Examples of events that could cause interruption or curtailment are presented in Exhibit C.

3.4 Nominations and Balancing

3.4.1 Nominations shall be provided to ENSTAR Gas Control in writing and confirmed with ENSTAR Gas Control before gas flows.   The Customer agrees to provide the initial transportation nominations by 12:00 PM (noon) each day prior to requesting transportation service.  The customer will nominate gas into the ENSTAR system on a daily basis using four (4) standard nomination periods in a day (24 hour period starting at 12:00 AM through 11:59 PM (midnight)):

a. 12:00 AM to 6:00 AM

b. 6:00 AM to 12:00 PM

c. 12:00 PM to 6:00 PM

d. 6:00 PM to 11:59.59 PM

The Customer will nominate gas based on an average load calculation for each intra-day nomination period.  The Company and Customer understand that Customer deliveries will vary from the average based on actual (instantaneous) generation requirements.

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3.4.2 Customer will comply with Daily balancing tolerances per the Tariff.  The Customer will schedule daily gas balance accrual settlement on a weekly basis.

3.4.3 Customer acknowledges that events outside the control of the Company may limit the Company’s ability to transport natural gas. These events include: Cold Weather, either severe cold or continuously cold temperatures which may reduce the Company’s line pressures; and restricted supplies of natural gas available from west side producers.  The Company will communicate with the Customer to provide reasonable notification of possible transportation constraints.  In the event of transportation constraints under this article, to the extent possible, the Company will reduce transportation services gradually. The Company will notify Customer as soon as it is aware of an impending delivery constraint, and will endeavor to avoid sudden or instantaneous restrictions of gas to the Beluga Power Plant.   

ARTICLE IV

DELIVERY/RECEIPT POINTS

4. 1          Delivery Point

The Delivery Point for this Special Contract is the Customer’s Beluga Power Plant at the Company’s Metering Station #B253, Meter 8107.

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4.2.          Receipt Points

4.2.1        Period 1 Receipt Points

Period I Receipt Points are as follows:

a. Interconnection of the KNPL – APC Kenai pipelines: Station K681, Meter

411.  Suppliers and Supplier contact information:

ConocoPhillips Company (“COP”) and ConocoPhillips Alaska, Inc. (“CPAI”)

Attention: Cook Inlet Marketing

Cook Inlet Control

Telephone: (907) 265-1605

(907) 263-4704 or cell: (907) - 748-5966

Facsimile: (918) 662-6895

E-mail: von.l.hutchins@conocophillips.com

brandy.ostrinsky@conocophillips.com

b. Interconnection of the Beluga River Unit – APC Beluga pipelines:  Station

B601.  Suppliers and Supplier contact information:

ConocoPhillips Company (“COP”) and ConocoPhillips Alaska, Inc. (“CPAI”)

Attention: Cook Inlet Marketing

Cook Inlet Control

Telephone: (907) 265-1605

(907) 263-4704 or cell: (907) – 748-5966

Facsimile: (918) 662-6895

E-mail: von.l.hutchins@conocophillips.com

brandy.ostrinsky@conocophillips.com

Union Oil of California (“Union”)

Attention: Gas Control

Cc: Commercial Manager

Telephone: (907) 283-2552

(907) 263-7800

Facsimile: (907) 263-7847

E-mail: MCBUAKGC@chevron.com

Cc: orrga@chevron.com

Page 8 of 19

4.2.2        Period 2 Receipt Points

Period 2 Receipt Points are as follows:

a. Interconnection of the KNPL – APC Kenai pipelines: Station K681, Meter

411.  Suppliers and Supplier contact information:

ConocoPhillips Company (“COP”) and ConocoPhillips Alaska, Inc. (“CPAI”)

Attention: Cook Inlet Marketing

Cook Inlet Control

Telephone: (907) 265-1605

(907) 263-4704 or cell: (907) – 748-5966

Facsimile: (918) 662-6895

E-mail: von.l.hutchins@conocophillips.com

brandy.ostrinsky@conocophillips.com

Marathon Alaska Production LLC

Attention: Gas Supply and Transportation Representative

Telephone: (907) 283-1308

Facsimile: (907) 283-6175

E-mail: fwbassetti@marathonoil.com

b. Interconnection of the KKPL – APC Kenai pipelines:  Station K680, Meter

601.  Suppliers and Supplier contact information:

Marathon Alaska Production LLC

Attention: Gas Supply and Transportation Representative

Telephone: (907) 283-1308

Facsimile: (907) 283-6175

E-mail: fwbassetti@marathonoil.com

Page 9 of 19

ARTICLE V

APPLICABILITY OF THE COMPANY'S TARIFF

5.1 Tariff

Except as expressly modified by this Special Contract, all of the terms and conditions of the Company's Tariff (RCA No. 4) shall apply to the Services provided by the Company to the Customer under this Special Contract, including without limitation Section 1200 (Interruption).  Further, due to the anticipated average and peak daily demand of the Customer, the following Sections of the Company's Transportation provisions will apply: Section 1605c (Forecasts), Section 1605d (Nominations), Section 1605e (Balancing), Section1605f (Pressure), 1605g (Measuring Stations), Section 1605h (Measurement), and Section 1605j (Credit and Billing).

5.2 Balancing

With respect to Balancing (Section 1605e) the Customer's daily nominations will be compared to the actual volumes delivered to the Customer for the purposes of applying the Daily Balancing Tolerances and computing Over or Under Supply (Sections 1605e(3) and 1605e(4)).

5.3 The Company's Tariff

The Customer acknowledges that it has a copy of the Company's Tariff RCA No. 4 and is familiar with its provisions.

Page 10 of 19

ARTICLE VI

RCA APPROVAL

6.1 RCA Approval

The Parties understand that this Special Contract does not take effect without the prior approval of the Regulatory Commission of Alaska and is, at all times, subject to revisions by the Commission.   This Special Contract shall be effective on the date of a final order by the RCA approving this Special Contract.

6.2 Termination Due to Form of RCA Approval or Amendment

ln the event that revisions to this Special Contract are required by the RCA or any other governmental body acting within its jurisdiction and the revisions are not acceptable to either party, either party may terminate this Special Contract by giving notice under this Article 6.2 within thirty (30) days of receipt of the order requiring the revisions.

ARTICLE VII

ADDRESSES

7.1           Notices

All notices, except as provided for nominations or billings, shall be given in writing at the address set forth below. Notice shall be deemed to have been given when received by the Company or the Customer at those addresses.

Page 11 of 19

7.1.1           FOR THE COMPANY:

For Transportation Nominations from the Customer, Scheduling and Day to Day Operations:

ENSTAR Natural Gas Control

ATTN:  Gas Control

Physical Address:

401 E. International Airport Road

Anchorage, AK  99518

Mailing Address:

P.O. Box 190288

Anchorage, AK  99519-0288

Telephone: 907 334-7788

Facsimile: 907 334-7779

E-mail: EnstarGasControl@enstarnaturalgas.com

For Payments:

ENSTAR Natural Gas Company

ATTN:  General Accounting Supervisor

Physical Address:

3000 Spenard Road

Anchorage, AK  99503

Mailing Address:

P.O. Box 190288

Anchorage, AK  99519-0288

Telephone: 907 334-7628

Facsimile: 907 272-3403

E-mail: natalia.nelson@enstarnaturalgas.com

For all other Notices:

ENSTAR Natural Gas Company

Attention: Manager, Gas Supply &

Supervisor, Business Development

Address:       Physical: 3000 Spenard Road

Anchorage, AK 99503

Mailing: P. O. Box 190288

Anchorage, AK 99519

Telephone: (907) 334-7756

Facsimile: (907) 334-7671

E-mail: Mark.Slaughter@enstarnaturalgas.com

Inna.Johansen@enstarnaturalgas.com

Page 12 of 19

7.1.2       FOR THE CUSTOMER:

For Scheduling and Day to Day Operations:

Attention: Director System Control

cc: Manager, Fuel Supply

Address:       Physical: 5601 Electron Drive

Anchorage, AK 99518

Mailing: P.O. Box 196300

Anchorage, AK 99519

Telephone: (907) 762-4779

Facsimile: (907) 762-4792

E-mail: burke_wick@chugachelectric.com

andrew_white@chugachelectric.com

For Billings and Payment:

Attention: Director System Control

Address:       Physical: 5601 Electron Drive

Anchorage, AK 99518

Mailing: P.O. Box 196300

Anchorage, AK 99519

Telephone: (907) 762-4779

Facsimile: (907) 762-4792

E-mail: burke_wick@chugachelectric.com

For All Other Notices:

Attention: Director System Control

Address:       Physical:  5601 Electron Drive

Anchorage, AK 99518

Mailing: P.O. Box 196300

Anchorage, AK 99519

Telephone: (907) 762-4779

Facsimile: (907) 762-4792

E-mail: burke_wick@chugachelectric.com

Page 13 of 19

ARTICLE VIII

OTHER TERMS

8.1 Indemnification

The Customer will indemnify, defend and hold the Company harmless against any and all claims by other Cook Inlet purchasers or producers concerning the purchasing of Gas or the priority of Gas taken under this Special Contract.

8.2 Limit of Obligation

By making this commitment to transport Gas to the Customer, the Company is not agreeing that it has any obligation, beyond the term of this Special Contract, to transport Gas to the Customer’s Beluga Power Plant.

8.3 Gas Availability

This Special Contract is contingent upon the Customer securing sufficient commitment of Gas from its suppliers and delivery of such gas to the Receipt Points.

ARTICLE IX

MISCELLANEOUS

9.1 Binding Upon Successors

This Special Contract shall be binding upon and inure to the benefit of the legal representatives, successors and assigns of the parties.  Except as provided below, neither party may assign its rights and obligations under this Special Contract without first obtaining the written consent of the other.  Consent is not required if all or substantially all of the assets of the Company or the Customer are acquired by another person or the Company or the Customer is merged, consolidated or reorganized with another person, provided that the assignee assumes in writing the assignor’s obligations under this Special Contract.  Nothing contained in this Article shall prevent either party from pledging or mortgaging its rights under the Special Contract for security of its indebtedness.

Page 14 of 19

 9.2 Special Contract Not to be Construed Against Either Party as Drafter

The parties recognize that this Special Contract is the product of the joint efforts of the parties and agree that it shall be construed according to its plain meaning and shall not be construed against either party as drafter.

9.3 Entire Agreement

This Special Contract, including Exhibits A through C and the Company’s Tariff, constitutes the entire agreement and understanding between the parties concerning the subject matter of this transaction, and all prior agreements, understandings and representations, whether oral or written, concerning this subject matter are superseded by this written Special Contract.  No amendment to this Special Contract shall be binding on either party until reduced to writing and signed by the parties.

9.4 Headings

The headings throughout this Special Contract are for reference purposes only and shall not be considered in interpreting this Special Contract.

9.5           No Incidental or Consequential Damages

Neither party shall have any liability to the other for incidental or consequential damages resulting from this Special Contract.

Page 15 of 19

9.6 No Intended Third-Party Beneficiary

The parties understand and agree that no person or entity is an intended third party beneficiary of this Special Contract.

IN WITNESS WHEREOF, the parties have executed this Special Contract in two (2) originals.

Chugach Electric Association, Inc.
By:	/s/ Bradley W. Evans
Title:	CEO
Date:	October 15, 2010
ENSTAR Natural Gas Company, a Division of SEMCO Energy, Inc.
By:	/s/ Colleen Starring
Title:	President
Date:	Oct. 15, 2010

Page 16 of 19

Exhibit A

Reimbursement of West Side Transportation Costs

If the COMPANY secures additional gas on the west side; i.e., gas from Trading Bay producers, to support transportation service under this contract the CUSTOMER agrees to reimburse the COMPANY for all transportation fees in Period I and Period II.

Example:

The Customer desires to have the Company transport 20,000 Mcf per day (Mcf/d) of gas to the Customer’s Beluga Power Plant but the Company’s Beluga pipeline pressures are at 550 pounds per square inch (psi), allowing only 10,000 Mcf/d to be delivered to the Beluga Power Plant.  The Company may secure additional west side gas of 20,000 Mcf/d via the Marathon operated CIGGS and BPL pipelines to increase the Company’s Beluga Pipeline pressures sufficient to allow the 20,000 Mcf/d transport to occur.  The Customer will reimburse the Company for transportation costs on the CIGGS & BPL pipelines for the additional 10,000 Mcf/d gas necessary to deliver the entire 20,000 Mcf/d.

Page 17 of 19

Exhibit B

Indicative Pressure Table

Beluga Pressure   (PSI)	CEA Delivery (Mcf/d)
600	20,000
575	15,000
550	10,000
525	5,000
500	0

The table above will apply after Chugach Electric Association completes the re-piping project at the Beluga Power Plant to allow for lower pressure gas deliveries from the ENSTAR/APC Beluga Pipeline B601, 8107 meter.  If CEA does not complete the re-piping, gas will be delivered with a minimum pressure of 725 psi from the ENSTAR/APC Beluga pipeline.

Page 18 of 19

Exhibit C

Events That Could Cause Interruption

1. Cold weather

a. Severe cold (typified by loss of line pressure for 3 to 5 days).

i. APC line pressure indicators.

b. Continuous cold (typified by loss of line pressure over time (5 to 7 days)).

i. APC line pressure indicators.

2. Restricted west side supply

a. Low field production from west side suppliers.

Event management:

ENSTAR will provide reasonable notification to CEA of possible transportation constraint(s) due to a weather event and will exercise commercially reasonable efforts to reduce services under this Special Contract gradually.

Page 19 of 19

EX-31.1

Exhibit 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

Certification Pursuant to 18 U.S.C. Section 1350 (Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002)

I, Bradley W. Evans, certify that:

1. I have reviewed this annual report on Form 10-K of Chugach Electric Association, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of Chugach as of, and for, the periods presented in this report;

4. Chugach’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for Chugach and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of Chugach’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in our internal control over financial reporting that occurred during the fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting; and

5. The other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to our auditors and the audit committee of our Board of Directors:

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect our ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in our internal control over financial reporting.

Date: March 28, 2011	/s/ Bradley W. Evans
	Bradley W. Evans
	Chief Executive Officer
	Principal Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

Certification Pursuant to 18 U.S.C. Section 1350 (Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002)

I, Michael R. Cunningham, certify that:

1. I have reviewed this annual report on Form 10-K of Chugach Electric Association, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of Chugach as of, and for, the periods presented in this report;

4. Chugach’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for Chugach and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of Chugach’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in our internal control over financial reporting that occurred during the fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting; and

5. The other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to our auditors and the audit committee of our Board of Directors:

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect our ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in our internal control over financial reporting.

Date: March 28, 2011	/s/ Michael R. Cunningham
	Michael R. Cunningham
	Chief Financial Officer
	Principal Financial Officer

 

EX-32.1

Exhibit 32.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

Certification Pursuant to 18 U.S.C. Section 1350 (Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002)

In connection with the annual report on Form 10-K of Chugach Electric Association, Inc. (the "Company") for the year ended December 31, 2010, as filed with the Securities and Exchange Commission (the "Report"), I, Bradley W. Evans, Chief Executive Officer and Principal Executive Officer of the Company, hereby certify as the date hereof, solely for purposes of Title 18, Chapter 63, Section 1350 of the United States Code, that to the best of my knowledge:

(1) the Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company at the dates and for the periods indicated.

Date: March 28, 2011	/s/ Bradley W. Evans
	Bradley W. Evans
	Chief Executive Officer
	Principal Executive Officer

EX-32.2

Exhibit 32.2

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

Certification Pursuant to 18 U.S.C. Section 1350 (Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002)

In connection with the annual report on Form 10-K of Chugach Electric Association, Inc. (the "Company") for the year ended December 31, 2010, as filed with the Securities and Exchange Commission (the "Report"), I, Michael R. Cunningham, Chief Financial Officer and Principal Financial Officer of the Company, hereby certify as the date hereof, solely for purposes of Title 18, Chapter 63, Section 1350 of the United States Code, that to the best of my knowledge:

(1) the Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company at the dates and for the periods indicated.

Date: March 28, 2011	/s/ Michael R. Cunningham
	Michael R. Cunningham
	Chief Financial Officer
	Principal Financial Officer