Regulatory Matters	9 Months Ended
Sep. 30, 2011
Regulatory Matters
Regulatory Matters	4. REGULATORY MATTERS Request for Regulatory Asset On January 21, 2011, Chugach issued $90 million of First Mortgage Bonds (2011 Series A, Tranche A) at an interest rate of 4.20 percent and $185 million of First Mortgage Bonds (2011 Series A, Tranche B) at an interest rate of 4.75 percent. The proceeds of the 2011 Series A Bonds were used for the refinancing of Chugach's $150 million of 2001 Series A Bonds that matured on March 15, 2011, at an interest rate of 6.55 percent and will be used for the refinancing of Chugach's $120 million of 2002 Series A Bonds that mature on February 1, 2012 at an interest rate of 6.20 percent. On March 22, 2011, Chugach submitted a petition to the RCA requesting authorization to create regulatory assets for the deferral of interim interest expense associated with the refinancing of its 2001 and 2002 Series A Bonds. The 2011 financing reduced interest rate risk and allowed Chugach to capitalize on historic lows in long-term interest rates to minimize the long-term financial cost to members. Chugach deferred the interim interest expense and recognized a regulatory assets as it believed that recovery through future rates was probable as we had received approval for similar costs historically. The requested amortization period was over the life of the bonds or between 20 and 30 years. The deferral of interest for the portion of the 2011 bonds used to pay off the 2001 Series A Bonds that matured on March 15, 2011, totaled approximately $1.0 million. The deferral of interest for the portion of the 2011 bonds used to pay off the 2002 Series A Bonds that matures on February 1, 2012, was estimated at $5.7 million. Chugach also requested approval to recover the associated refinancing costs in electric rates through amortization over the life of the new 2011 Series A Bonds. The RCA issued a final order in this docket on September 16, 2011, approving Chugach's request. 2008 Test Year Rate Case In Order Nos. U-09-080(10)/U-09-097(9), the RCA approved Chugach's retail refund plan and required Chugach to file notification to the RCA upon the completion of disbursement of the refunds. In March of 2011, Chugach completed the retail refund and filed its required notification to the RCA that the refunds had been issued. On May 17, 2011, the RCA issued Orders U-09-080(11)/U-09-097(10), acknowledging Chugach's notification and closing Dockets U-09-080 and U-09-097. December 31, 2010 Test Year Simplified Rate Filing On March 31, 2011, Chugach submitted a Simplified Rate Filing (SRF) to the RCA and requested a system demand and energy rate increase of 0.9 percent, or approximately $1.0 million on an annual basis. The filing was based on the December 31, 2010 test year for proposed rate adjustments effective in mid May 2011. On a customer class basis, Chugach requested demand and energy rate increases of 0.3 percent to Chugach retail customers and 2.2 percent to its wholesale classes. The RCA issued a letter order on May 13, 2011 approving the filing. The updated rates became effective May 16, 2011. June 30, 2011 Test Year Simplified Rate Filing On September 28, 2011, Chugach submitted a SRF to the RCA and requested a system demand and energy rate decrease of 1.3 percent, or approximately $1.5 million on an annual basis. The filing was based on the June 30, 2011 test year for proposed rate adjustments effective mid November 2011. Chugach expects a ruling by the RCA on or before November 14, 2011. 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 International Station Power Plant (historically known as "IGT") at a transportation rate of $0.63 per thousand cubic feet (MCF). The agreement contains a fixed monthly charge of $2,840 for firm service. In December of 2010, ENSTAR applied for an extension of this tariff rate to provide gas transportation to Chugach to service the Bernice Lake Power Plant. Previously, transportation was provided as part of a natural gas supply contract. Under the new contract, Chugach is responsible for transportation of the natural gas. The RCA approved the request in February of 2011. Chugach and ENSTAR have negotiated a Gas Transportation Agreement. On September 15, 2011, ENSTAR filed the Gas Transportation Agreement with the RCA, subject to Chugach Board approval by October 31, 2011. Chugach's Board of Directors approved the agreement on October 26, 2011. The agreement provides for transport of up to 20,000 MCF of gas per day to Chugach's Beluga power plant. The total cost for the one year period is expected to be approximately $1 million. Chugach will recover this cost through the fuel and purchased power surcharge process. Extension of Seward Power Sales Agreement On May 6, 2011, Chugach submitted a request to the RCA to extend the term of the 2006 Agreement for the Sale and Purchase of Electric Power and Energy between Chugach and the City of Seward to December 31, 2016. The current contract expires on December 31, 2011. The RCA issued a letter order on May 26, 2011, approving the extension. Bernice Lake Asset Purchase and Capacity Agreement On July 12, 2011, Chugach, Alaska Electric and Energy Cooperative, Inc. (AEEC) and HEA entered into an Asset Purchase and Sale Agreement whereby Chugach has agreed to sell and AEEC has agreed to purchase the Bernice Lake Power Plant located in Nikiski, Alaska. The sale also includes associated transmission substation facilities located on the premises. The Bernice Lake facility is located on land that is leased to Chugach by HEA. The current lease expires on November 30, 2011 but has been extended by HEA to be consistent with the closing date contained in the Asset Purchase and Sale Agreement. The sale and book value of assets is equal to approximately $11.9 and $4.4 million, respectively. Associated with the Asset Purchase and Sale Agreement described above, Chugach also entered into an Agreement for Sale of Electric Capacity with AEEC and HEA (Capacity Agreement). The agreement is a purchased power agreement that allows Chugach to purchase the capacity and related energy from the Bernice Lake Power Plant from the closing date of the sale of the facility (Asset Purchase and Sale Agreement) to AEEC through December 31, 2013. This agreement allows Chugach to sell the Bernice Lake Power Plant and simultaneously ensure system retail and wholesale deliverability requirements are met through December 31, 2013. Chugach submitted the Asset Purchase and Capacity Agreement to the RCA on July 21, 2011. On August 2, 2011, the RCA issued Order No. 1 of Docket U-11-094 / U-11-95 and indicated that a final order would be issued no later than January 17, 2012. The RCA has scheduled a hearing for this matter on November 28 and 29, 2011. Fire Island Wind Project On June 23, 2011, Chugach submitted a request to the RCA for approval of a new power purchase agreement (PPA) between Chugach and Fire Island Wind, LLC (FIW), a special purpose entity wholly-owned by Cook Inlet Region, Inc. Chugach also requested authorization from the RCA to recover the costs of all energy purchases under the PPA through its retail quarterly fuel and purchased power process at the time the project becomes commercially operational, which is currently expected to occur before October 1, 2012. Annual cost of these purchases is expected to be about $4.7 million. An affiliate of FIW is responsible for the construction of the interconnection between the project and Chugach's transmission system. Chugach is the recipient of a grant in the amount of $25.0 million appropriated from the State of Alaska. The grant will be used to offset construction of the transmission line. Chugach is not expected to incur any capital costs associated with this line. The PPA is a 25 year agreement whereby Chugach purchases the output of the facility over a 25 year term, commencing January 1, 2013. The Fire Island Wind project is comprised of eleven 1.6 megawatt wind turbine generators with a total nameplate capacity of 17.6 megawatts which are expected to generate approximately 50,000 MWh per year. The generators will be located on the southern part of Fire Island in Anchorage, Alaska. Intervenors in the docket were Municipal Light & Power (ML&P), the Attorney General, Golden Valley Electric Association, Inc. (GVEA) and MEA. The RCA held a public hearing from September 27 through September 30, 2011. On October 10, 2011, the RCA issued an order approving Chugach's request for assurance of cost recovery associated with the PPA. The RCA order also granted approval for Chugach to recover costs associated with the PPA through its fuel and purchased power surcharge process. The RCA order also requires Chugach to submit follow-up reports and filings by November 10, 2011 and a specific rate recovery plan by March 31, 2012.

Regulatory Matters

9 Months Ended

Sep. 30, 2011

Request for Regulatory Asset

On January 21, 2011, Chugach issued $90 million of First Mortgage Bonds (2011 Series A, Tranche A) at an interest rate of 4.20 percent and $185 million of First Mortgage Bonds (2011 Series A, Tranche B) at an interest rate of 4.75 percent. The proceeds of the 2011 Series A Bonds were used for the refinancing of Chugach's $150 million of 2001 Series A Bonds that matured on March 15, 2011, at an interest rate of 6.55 percent and will be used for the refinancing of Chugach's $120 million of 2002 Series A Bonds that mature on February 1, 2012 at an interest rate of 6.20 percent.

On March 22, 2011, Chugach submitted a petition to the RCA requesting authorization to create regulatory assets for the deferral of interim interest expense associated with the refinancing of its 2001 and 2002 Series A Bonds. The 2011 financing reduced interest rate risk and allowed Chugach to capitalize on historic lows in long-term interest rates to minimize the long-term financial cost to members. Chugach deferred the interim interest expense and recognized a regulatory assets as it believed that recovery through future rates was probable as we had received approval for similar costs historically. The requested amortization period was over the life of the bonds or between 20 and 30 years.

The deferral of interest for the portion of the 2011 bonds used to pay off the 2001 Series A Bonds that matured on March 15, 2011, totaled approximately $1.0 million. The deferral of interest for the portion of the 2011 bonds used to pay off the 2002 Series A Bonds that matures on February 1, 2012, was estimated at $5.7 million. Chugach also requested approval to recover the associated refinancing costs in electric rates through amortization over the life of the new 2011 Series A Bonds.

The RCA issued a final order in this docket on September 16, 2011, approving Chugach's request.

2008 Test Year Rate Case

In Order Nos. U-09-080(10)/U-09-097(9), the RCA approved Chugach's retail refund plan and required Chugach to file notification to the RCA upon the completion of disbursement of the refunds. In March of 2011, Chugach completed the retail refund and filed its required notification to the RCA that the refunds had been issued. On May 17, 2011, the RCA issued Orders U-09-080(11)/U-09-097(10), acknowledging Chugach's notification and closing Dockets U-09-080 and U-09-097.

December 31, 2010 Test Year Simplified Rate Filing

On March 31, 2011, Chugach submitted a Simplified Rate Filing (SRF) to the RCA and requested a system demand and energy rate increase of 0.9 percent, or approximately $1.0 million on an annual basis. The filing was based on the December 31, 2010 test year for proposed rate adjustments effective in mid May 2011. On a customer class basis, Chugach requested demand and energy rate increases of 0.3 percent to Chugach retail customers and 2.2 percent to its wholesale classes.

The RCA issued a letter order on May 13, 2011 approving the filing. The updated rates became effective May 16, 2011.

June 30, 2011 Test Year Simplified Rate Filing

On September 28, 2011, Chugach submitted a SRF to the RCA and requested a system demand and energy rate decrease of 1.3 percent, or approximately $1.5 million on an annual basis. The filing was based on the June 30, 2011 test year for proposed rate adjustments effective mid November 2011. Chugach expects a ruling by the RCA on or before November 14, 2011.

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 International Station Power Plant (historically known as "IGT") at a transportation rate of $0.63 per thousand cubic feet (MCF). The agreement contains a fixed monthly charge of $2,840 for firm service. In December of 2010, ENSTAR applied for an extension of this tariff rate to provide gas transportation to Chugach to service the Bernice Lake Power Plant. Previously, transportation was provided as part of a natural gas supply contract. Under the new contract, Chugach is responsible for transportation of the natural gas. The RCA approved the request in February of 2011.

Chugach and ENSTAR have negotiated a Gas Transportation Agreement. On September 15, 2011, ENSTAR filed the Gas Transportation Agreement with the RCA, subject to Chugach Board approval by October 31, 2011. Chugach's Board of Directors approved the agreement on October 26, 2011. The agreement provides for transport of up to 20,000 MCF of gas per day to Chugach's Beluga power plant. The total cost for the one year period is expected to be approximately $1 million. Chugach will recover this cost through the fuel and purchased power surcharge process.

Extension of Seward Power Sales Agreement

On May 6, 2011, Chugach submitted a request to the RCA to extend the term of the 2006 Agreement for the Sale and Purchase of Electric Power and Energy between Chugach and the City of Seward to December 31, 2016. The current contract expires on December 31, 2011. The RCA issued a letter order on May 26, 2011, approving the extension.

Bernice Lake Asset Purchase and Capacity Agreement

On July 12, 2011, Chugach, Alaska Electric and Energy Cooperative, Inc. (AEEC) and HEA entered into an Asset Purchase and Sale Agreement whereby Chugach has agreed to sell and AEEC has agreed to purchase the Bernice Lake Power Plant located in Nikiski, Alaska. The sale also includes associated transmission substation facilities located on the premises. The Bernice Lake facility is located on land that is leased to Chugach by HEA. The current lease expires on November 30, 2011 but has been extended by HEA to be consistent with the closing date contained in the Asset Purchase and Sale Agreement. The sale and book value of assets is equal to approximately $11.9 and $4.4 million, respectively.

Associated with the Asset Purchase and Sale Agreement described above, Chugach also entered into an Agreement for Sale of Electric Capacity with AEEC and HEA (Capacity Agreement). The agreement is a purchased power agreement that allows Chugach to purchase the capacity and related energy from the Bernice Lake Power Plant from the closing date of the sale of the facility (Asset Purchase and Sale Agreement) to AEEC through December 31, 2013. This agreement allows Chugach to sell the Bernice Lake Power Plant and simultaneously ensure system retail and wholesale deliverability requirements are met through December 31, 2013. Chugach submitted the Asset Purchase and Capacity Agreement to the RCA on July 21, 2011.

On August 2, 2011, the RCA issued Order No. 1 of Docket U-11-094 / U-11-95 and indicated that a final order would be issued no later than January 17, 2012. The RCA has scheduled a hearing for this matter on November 28 and 29, 2011.

Fire Island Wind Project

On June 23, 2011, Chugach submitted a request to the RCA for approval of a new power purchase agreement (PPA) between Chugach and Fire Island Wind, LLC (FIW), a special purpose entity wholly-owned by Cook Inlet Region, Inc. Chugach also requested authorization from the RCA to recover the costs of all energy purchases under the PPA through its retail quarterly fuel and purchased power process at the time the project becomes commercially operational, which is currently expected to occur before October 1, 2012. Annual cost of these purchases is expected to be about $4.7 million. An affiliate of FIW is responsible for the construction of the interconnection between the project and Chugach's transmission system. Chugach is the recipient of a grant in the amount of $25.0 million appropriated from the State of Alaska. The grant will be used to offset construction of the transmission line. Chugach is not expected to incur any capital costs associated with this line.

The PPA is a 25 year agreement whereby Chugach purchases the output of the facility over a 25 year term, commencing January 1, 2013. The Fire Island Wind project is comprised of eleven 1.6 megawatt wind turbine generators with a total nameplate capacity of 17.6 megawatts which are expected to generate approximately 50,000 MWh per year. The generators will be located on the southern part of Fire Island in Anchorage, Alaska.

Intervenors in the docket were Municipal Light & Power (ML&P), the Attorney General, Golden Valley Electric Association, Inc. (GVEA) and MEA.

The RCA held a public hearing from September 27 through September 30, 2011. On October 10, 2011, the RCA issued an order approving Chugach's request for assurance of cost recovery associated with the PPA. The RCA order also granted approval for Chugach to recover costs associated with the PPA through its fuel and purchased power surcharge process. The RCA order also requires Chugach to submit follow-up reports and filings by November 10, 2011 and a specific rate recovery plan by March 31, 2012.