Commitments And Contingencies

3 Months Ended

Mar. 31, 2013

Commitments And Contingencies [Abstract]

Commitments And Contingencies

9.   COMMITMENTS AND CONTINGENCIES

Concentrations

Chugach has three Collective Bargaining Unit Agreements (CBA’s), representing approximately 70 percent of its workforce.  Chugach successfully reached agreement with all three International Brotherhood of Electrical Workers (IBEW) bargaining units renewing the CBA’s through June 30, 2017.  After employee ratification, two of the IBEW CBA’s were accepted by the Board of Directors (Board) on March 27, 2013.  A third IBEW CBA was ratified by employees and accepted by the Board on April 24, 2013.  The three CBA extensions provide for wage increases in all years and include health and welfare premium cost sharing provisions.

Generation Commitments

Chugach and ML&P have jointly constructed and now own, as tenants in common, a new natural gas-fired power plant near Chugach’s Anchorage headquarters.  SPP began commercial operation on February 1, 2013, furnishing 200 MW provided by four generating units.  Chugach owns and will take approximately 70 percent of the new plant’s output and ML&P owns and will take the remaining output.  Chugach proportionately account for its ownership in SPP and related inventory. 

Chugach made payments of $15.2 million in the first three months of 2013, which substantially satisfied Chugach’s remaining commitments pursuant to its contracts associated with SPP.

Fuel Supply Contracts

Chugach has fuel supply contracts with various producers at market terms.  A gas supply contract between Chugach and ConocoPhillips Alaska, Inc. and ConocoPhillips, Inc. (collectively “COP”), provided gas beginning in 2010 and will terminate December 31, 2016.  The total amount of gas under the contract is currently estimated to be 60 billion cubic feet (BCF).  A Marathon Alaska Production, LLC (MAP) contract provided gas beginning April 1, 2011, and will terminate December 31, 2014.  Both contract extension options have been exercised.  The total amount of gas under contract with MAP is currently estimated at 40 BCF.  Hilcorp Alaska, LLC (Hilcorp) purchased Marathon Alaska Production assets effective February 1, 2013.  These contracts fill 100 percent of Chugach’s needs through December 2014, approximately 70 percent of Chugach’s needs through December 2015 and approximately 40 percent in 2016.  All of the production is expected to come from Cook Inlet, Alaska. 

Economy Energy Sales

On October 5, 2012, Chugach and GVEA finalized arrangements for Chugach to provide economy energy to GVEA until March of 2015.  Sales will be made under the terms and conditions of Chugach’s economy energy sales tariff. The price to GVEA will include the cost of fuel, variable operations and maintenance expense and a margin.  Chugach has also entered into gas supply arrangements with Hilcorp for GVEA economy energy sales, which was approved by the RCA on March 1, 2013.

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 matters in the aggregate is or are likely to have a material adverse effect on Chugach’s results of operations, financial condition or liquidity.