FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
X QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
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SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2000
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OR
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 (I.R.S. Employer
incorporation or organization) Identification No.)
5601 Minnesota Drive Anchorage, Alaska 99518
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(Address of principal executive offices) (Zip Code)
(907)563-7494
(Registrant's telephone number, including area code)
None
(Former name,former address and former fiscal year,if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X . No .
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
CLASS OUTSTANDING AT NOVEMBER 1, 2000
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NONE NONE
CHUGACH ELECTRIC ASSOCIATION, INC.
INDEX
Page Number
CAUTION REGARDING FORWARD-LOOKING STATEMENTS 3
PART I FINANCIAL INFORMATION
Item 1. Financial Statements 3
Balance Sheets, September 30, 2000 (Unaudited) and December 31, 1999 4
Statements of Revenues, Expenses and Patronage Capital, Three and
Nine Months Ended September 30, 2000 and 1999 (Unaudited) 6
Statements of Cash Flows, Nine Months Ended September 30, 2000 and
1999(Unaudited) 7
Notes to Financial Statements (Unaudited) 8
Item 2. Management's Discussion and Analysis of Results of Operations
and Financial Condition (Unaudited) 10
Item 3. Quantitative and Qualitative Disclosures About Market Risk 14
PART II OTHER INFORMATION
Item 1. Legal Proceedings 15
Item 2. Changes in Securities and Use of Proceeds 16
Item 3. Defaults Upon Senior Securities 16
Item 4. Submission of Matters to a Vote of Security Holders 16
Item 5. Other Information 16
Item 6. Exhibits and reports on Form 8-K 16
Signatures 17
Exhibits 18
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 or the Association) 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 affect of those events or circumstances on any of the forward-looking
statements contained in this report.
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
The unaudited financial statements of Chugach for the quarter ended September
30, 2000 follow:
CHUGACH ELECTRIC ASSOCIATION, INC.
Balance Sheets
Assets
September 30, 2000 December 31, 1999
------------------ -----------------
(Unaudited)
Utility plant:
Electric plant in service $ 648,797,612 $ 641,627,328
Construction work in progress 70,584,581 47,257,296
------------ ------------
719,382,193 688,884,624
Less accumulated depreciation 259,870,408 243,082,832
------------ ------------
Net utility plant 459,511,785 445,801,792
------------ ------------
Other property and investments, at cost:
Nonutility property 480,918 413,515
Investments in associated organizations 8,990,917 8,946,861
------------ ------------
9,471,835 9,360,376
------------ ------------
Current assets:
Cash and cash equivalents 0 4,110,030
Cash - restricted construction funds 402,044 538,404
Special deposits 182,164 182,164
Accounts receivable, net 13,962,578 17,911,749
Materials and supplies, at average cost 17,506,323 17,180,136
Prepayments 1,313,140 861,947
Other current assets 363,441 341,702
------------ ------------
Total current assets 33,729,690 41,126,132
------------ ------------
Deferred charges 21,587,117 22,067,237
------------ ------------
$524,300,427 $518,355,537
============ ============
See accompanying notes to unaudited financial statements.
CHUGACH ELECTRIC ASSOCIATION, INC.
Balance Sheets
Liabilities and Equities
September 30, 2000 December 31, 1999
------------------ -----------------
(Unaudited)
Equities and margins:
Memberships $ 996,893 $ 960,808
Patronage capital 123,730,266 117,335,481
Other 4,240,262 4,228,356
------------ ------------
128,967,421 122,524,645
------------ ------------
Long-term obligations, excluding current Installments:
First mortgage bonds payable 169,542,000 194,139,000
National Bank for Cooperatives bonds
Payable 142,677,945 143,011,295
------------ ------------
312,219,945 337,150,295
------------ ------------
Current liabilities:
Bank Overdraft 1,758,843 0
Notes payable 33,966,659 0
Current installments of long-term debt 6,430,350 6,372,405
Accounts payable 4,668,223 9,508,851
Consumer deposits 1,169,403 1,059,677
Accrued interest 1,685,768 6,066,114
Salaries, wages and benefits 4,592,737 4,053,228
Fuel 5,453,518 4,381,304
Other 1,950,339 2,527,798
------------ ------------
Total current liabilities 61,675,840 33,969,377
------------ ------------
Deferred credits 21,437,221 24,711,220
------------ ------------
$524,300,427 $518,355,537
============ ============
See accompanying notes to unaudited financial statements.
CHUGACH ELECTRIC ASSOCIATION, INC.
Statements of Revenues, Expenses and Patronage Capital
Three months ended September 30 Nine months ended September 30
------------------------------- ------------------------------
2000 1999 2000 1999
(Unaudited) (Unaudited)
Operating Revenue $ 37,201,515 $ 32,075,076 $ 114,258,272 $ 103,807,293
------------ ------------ ------------- -------------
Operating Expenses:
Production 12,890,904 9,384,454 36,257,283 29,383,994
Purchased power 2,456,575 2,205,731 7,072,014 5,962,379
Transmission 949,998 754,449 2,491,633 2,416,893
Distribution 2,574,665 2,343,063 7,521,075 6,575,734
Consumer Accounts 1,247,316 1,178,644 3,995,952 3,385,068
Sales Expense 289,372 228,185 817,221 947,180
Administrative, general and other 5,035,824 5,460,297 14,743,566 15,793,370
Depreciation and amortization 5,747,653 4,608,949 17,180,273 15,354,973
--------- --------- ---------- ----------
Total operating expenses 31,192,307 26,163,772 90,079,017 79,819,591
---------- ---------- ---------- ----------
Interest:
On long-term debt 6,245,878 6,081,895 18,956,861 17,985,345
Other 549,767 231,958 1,083,306 589,453
Charged to construction-credit (717,281) (407,860) (1,706,470) (588,390)
--------- --------- ----------- ---------
Net interest expense 6,078,364 5,905,993 18,333,697 17,986,408
--------- --------- ---------- ----------
Net operating margins (69,156) 5,311 5,845,558 6,001,295
-------- ----- --------- ---------
Nonoperating margins:
Interest income 123,217 139,152 513,235 438,905
Other 97,044 59,954 323,536 85,913
------ ------ ------- ------
Total nonoperating margins 220,261 199,106 836,771 524,818
------- ------- ------- -------
Assignable margins 151,105 204,417 6,682,329 6,526,113
Patronage capital at beginning of 123,726,878 115,870,695 117,335,481 109,622,996
period
Retirement of capital credits and (147,717) (10,086) (287,544) (84,083)
estate payments --------- -------- --------- --------
Patronage capital at end of period $ 123,730,266 $ 116,065,026 $ 123,730,266 $ 116,065,026
============= ============= ============= =============
See accompanying notes to unaudited financial statements.
CHUGACH ELECTRIC ASSOCIATION, INC.
Statements of Cash Flows
Nine months ended September 30
------------------------------
2000 1999
---- ----
(Unaudited)
Cash flows from operating activities:
Assignable margins $ 6,682,329 $ 6,526,113
----------- -----------
Adjustments to reconcile assignable margins to net cash
provided by operating activities:
Depreciation and amortization 17,180,273 15,354,973
Changes in assets and liabilities:
(Increase) decrease in assets:
Accounts receivable 3,949,171 5,065,400
Prepayments (451,193) (649,504)
Materials and supplies (326,189) (1,284,489)
Deferred charges 480,120 (6,683,954)
Other 47,219 (332,357)
Increase (decrease) in liabilities:
Accounts payable (4,840,628) (1,720,721)
Consumer deposits 109,726 12,658
Accrued interest (4,380,345) (5,279,871)
Deferred credits (3,273,999) (4,042,999)
Other 1,034,264 (2,055,475)
----------- -----------
Net cash provided (used) by operating activities 16,210,748 4,909,774
Cash flows from investing activities:
Extension and replacement of plant (30,890,266) (30,369,637)
Investments in associated organizations (44,056) 4,503
----------- -----------
Net cash used in investing activities (30,934,322) (30,365,134)
----------- -----------
Cash flows from financing activities:
Net change in bank overdraft 1,758,843 0
Short-term borrowings, net 33,966,659 25,000,000
Net proceeds (repayments) of long-term debt (24,872,405) 1,516,199
Retirement of patronage capital (287,544) (84,083)
Other 47,991 301,513
----------- ----------
Net cash provided by financing activities 10,613,544 26,733,629
----------- ----------
Net increase in cash and cash equivalents (4,110,030) 1,278,269
Cash and cash equivalents at beginning of period 4,110,030 2,312,574
----------- ----------
Cash and cash equivalents at end of period $0 $3,590,843
=========== ==========
See accompanying notes to unaudited financial statements.
CHUGACH ELECTRIC ASSOCIATION, INC.
Notes to Financial Statements
SEPTEMBER 30, 2000
(Unaudited)
1. Presentation of Financial Information
During interim periods, Chugach follows the accounting policies set forth
in its audited financial statements included in Form 10-K filed with the
Securities and Exchange Commission. Users of interim financial information
are encouraged to refer to the footnotes contained in Chugach's Form 10-K
when reviewing interim financial results. The accompanying unaudited
interim financial statements reflect all adjustments which are, in the
opinion of management, necessary to a fair statement of the results for the
interim period presented.
2. Lines of Credit
Chugach maintains a line of credit of $35 million with National Bank for
Cooperatives (CoBank). The CoBank line of credit expires August 1, 2001,
but carries an annual automatic renewal clause. At September 30, 2000,
$33.9 million was outstanding on this line of credit, however, an
additional $1.1 million was acquired on October 10, 2000. This line of
credit, as of November 2000, carried an interest rate of 8.15%. There was
an amendment to the Line of Credit Agreement between Chugach and National
Bank for Cooperatives, dated September 13, 2000 and signed November 2,
2000, which added the CoBank's Weekly Quoted Variable Rate as an interest
rate option available to the line of credit. In addition, the Association
has an annual line of credit of $50 million available at the National Rural
Utilities Cooperative Finance Corporation (NRUCFC). At September 30, 2000,
there was no outstanding balance on this line of credit, however, $5
million was acquired on October 11, 2000. This line of credit, as of
November 2000, carried an interest rate of 8.550%. The NRUCFC line of
credit expires October 14, 2002.
3. Segment Reporting
Chugach has adopted the Financial Accounting Standards Board Statement No.
131, Disclosures About Segments of an Enterprise and Related Information,
which establishes standards for reporting information about a company's
operating segments. The Association had divided its operations into two
reportable segments: Energy and Internet service. The energy segment
derives its revenues from sales of electricity to residential, commercial
and wholesale customers, while the Internet segment derives its revenues
from provision of residential and commercial internet services and
products. The reporting segments follow the same accounting policies used
for the Association's financial statements and is described in the summary
of significant accounting policies. Management evaluates a segment's
performance based upon profit or loss from operations. Jointly used assets
are allocated by percentage of reportable segment usage and centrally
incurred costs are allocated using factors developed by the Association
that are patterned upon usage.
The Internet segment received approval to begin operations during 1998,
the results of which are immaterial to the financial statements because
actual operations didn't commence until February 1999. The following is a
tabulation of business segment information year to date as of September 30,
2000:
Operating Revenues
Internet $866,092
Energy $113,392,180
------------
Total operating revenues $114,258,272
============
Assignable Margins
Internet $ -855,783
Energy $7,538,112
----------
Total assignable margins $6,682,329
==========
Assets
Internet $613,145
Energy $523,687,282
------------
Total assets $524,300,427
============
Capital Expenditures
Internet $25,000
Energy $32,540,358
-----------
Total capital expenditures $32,565,358
===========
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
(Unaudited)
Reference is made to the information contained under the caption "CAUTION
REGARDING FORWARD-LOOKING STATEMENTS" at the beginning of this Report.
For certain information concerning a Treasury rate-lock transaction entered into
by Chugach in March 1999, reference is made to information appearing under the
caption "Additional Information Regarding Treasury Rate-Lock" in Item 5 of Part
II of this report.
RESULTS OF OPERATIONS
Current Year Quarter Versus Prior Year Quarter
Operating revenues, which include sales of electric energy to retail, wholesale
and economy energy customers and other miscellaneous revenues, increased by 16%
for the quarter ended September 30, 2000, over the same quarter in 1999. The
increase in revenues is primarily attributable to higher economy energy sales to
Golden Valley Electric Association, Inc. (GVEA) because of the shutdown of the
Healy Clean Coal Plant (HCCP) that commenced in late 1999 and has continued into
2000. This shutdown has made it economical and feasible for GVEA to purchase
much of their energy requirements from Chugach, as it is more economical for
GVEA to purchase energy than to generate it themselves.
Retail demand and energy rates did not change from the third quarter of 2000
compared to the third quarter of 1999. Wholesale demand and energy rates charged
to Homer Electric Association (HEA), and Matanuska Electric Association (MEA),
declined 0.70 percent and 0.80 percent, respectively, from third quarter 1999 to
third quarter 2000.
In June of 2000, the Regulatory Commission of Alaska issued a final order on the
1996 test year revenue requirement filing. As a result of this order, which
resolved contested issues in the 1996 test year, and pursuant to the Settlement
Agreement with Alaska Electric Generation & Transmission Cooperative (AEG&T),
Chugach issued refunds to AEG&T members HEA and MEA in the amount of $332,157
and $503,272, respectively, on July 25, 2000. Consistent with the Settlement
Agreement, these refunds were based on demand and energy purchases retroactive
to January 1, 1997. These refunds were in addition to the refunds issued earlier
this year by Chugach in the amounts of $86,132 to HEA and $1,809,801 to MEA that
represented uncontested amounts from the 1996 test year filing. As a result of
the final order on the 1996 test year, wholesale demand and energy rates charged
to HEA and MEA decreased 0.70 percent and 0.80 percent, respectively, effective
on the August 2000 wholesale power bills.
A provision for wholesale rate refunds were recorded in 1997, 1998, 1999 and
2000, which totaled $2,651,361, to accommodate the refunds to AEG&T members HEA
and MEA discussed above.
Power Production and Purchased Power expense increased from the third quarter
1999 to the third quarter 2000 due to an increase in fuel prices. Transmission
expense increased and Distribution Maintenance expense decreased from third
quarter 1999 to third quarter 2000, due to a shift in line clearing activity
focus from distribution in 1999 to transmission in 2000. Distribution Operations
and Consumer Accounts expense increased from the third quarter 1999 to third
quarter 2000 due to an update to the clearing process for information services
and garage expenses. This update shifted costs from the Administrative and
General expense financial category to more appropriate functional areas of the
company. This contributed to the decrease from the third quarter 1999 to the
third quarter 2000 in administrative and general expense. Sales expense
increased slightly in this period, compared to the same period last year, due to
additional advertising expense related to new customer convenience service
promotions. Depreciation expense increased, from third quarter 1999 to third
quarter 2000, due to additional plant put into service during that time.
Interest on long-term debt increased in the third quarter 2000 over the same
period last year as a result of the issuance of CoBank 7 bond in December 1999,
as well as higher interest rates in 2000, which affect the long-term debt that
carry variable interest rates. Interest Charged to Construction and Allowance
for Funds Used During Construction (AFUDC) were higher in the third quarter 2000
due to significantly higher Construction Work in Progress (CWIP) balances
compared to the third quarter 1999. Other Interest expense increased in the
third quarter 2000 as compared to the same period in 1999 due to increased
activity in the line of credit to fund the Beluga Unit 6 re-powering project,
the Cooper Lake overhaul project and as a result of the debt- service payment
made in mid September.
Financial Condition
Total assets increased by 1% from December 31, 1999, to September 30, 2000. The
increase was due to an increase in electric plant in service and CWIP, related
to the re-powering of Beluga Units 6 & 7 and the Cooper Lake overhaul. This,
however, was offset by a decrease in cash and cash equivalents caused by the
funding requirements to the above-mentioned projects and the decrease of
accounts receivable. The decrease in accounts receivable was caused by the
payment of wholesale power bills that were accrued but not paid by December 31,
1999, and the over-collection of the fuel surcharge in the past quarter. There
was also an increase in prepayments due to the annual payment of the corporate
insurance premium. Notable changes to total liabilities include the increase in
notes payable due to borrowing activity in the first, second and third quarter,
as well as the increase in bank overdraft due to the capital funding
requirements needed to fund the Beluga Unit 6 re-powering and the Cooper Lake
overhaul. This was offset by a decrease in accounts payable. There was also an
increase in accrued salaries, wages and benefits due to overall increases in
company-wide benefits, as well as increases associated with new contracts with
the International Brotherhood of Electrical Workers (IBEW). Additionally, the
fuel liability increased due to rising fuel prices and accrued interest
decreased as a result of the September semi-annual bond payment.
Liquidity and Capital Resources
Chugach has satisfied its operational and capital cash requirements primarily
through internally- generated funds, an annual $50 million line of credit from
NRUCFC and a $35 million line of credit with CoBank. At September 30, 2000,
there was no balance outstanding with NRUCFC, however, $5 million was acquired
on October 11, 2000. This line of credit carried an interest rate of 8.550% as
of November 2000. As of the same date, $33.9 million was outstanding with
CoBank, however, an additional $1.1 million was acquired on October 10, 2000.
This line of credit carried an interest rate of 8.15% as of November 2000.
Capital construction in 2000 is estimated at $34.2 million. At September 30,
2000, approximately $32.57 million has been expended. Capital improvement
expenditures are expected to decrease in the fourth quarter due to the
construction season winding down.
Chugach currently has no limit on supplemental indentures that facilitate
borrowing from CoBank. At September 30, 2000, Chugach had bonds in the amount of
$143 million outstanding under this financing arrangement. The balance is
comprised of a $511 thousand bond (CoBank 1) which carries an interest rate of
8.95% maturing in 2002, a $10 million bond (CoBank 2) priced at 7.76% due in
2005, a $21.5 million bond (CoBank 3), priced at 5.60%, a $23.5 million bond
(CoBank 4) priced at 5.60%, a $15 million bond (CoBank 5) priced at 5.60% due in
2002, 2007 and 2012, a $42.5 million bond (CoBank 6) carrying a variable
interest rate currently priced at 8.15% (as of November 2000) and a $30 million
bond (CoBank 7) carrying a variable interest rate currently priced at 8.15% (as
of November 2000) both due in March, 2002. Principal payments on the CoBank 3
and 4 bonds commence in 2003 and continue through 2022. Additionally, Chugach
has negotiated a similar supplemental indenture (Fifth Supplemental Indenture of
Trust) with NRUCFC for $80 million. At September 30, 2000, there were no amounts
outstanding under this financing arrangement.
As previously reported, Chugach has acquired and retired $97.7 million of its
Series A 2022 bonds on the open market.
Chugach management continues to expect that cash flows from operations and
external funding sources will be sufficient to cover operational and capital
funding requirements in 2000 and thereafter.
Changes in Accounting Principles
Chugach is required to implement Statement of Financial Accounting Standards
No. 133, Accounting for Derivative Instruments and Hedging Activities
(SFAS No. 133), effective January 1, 2001. Due to the interest rate risk
inherent in the existing treasury rate lock, Chugach cannot currently
determine the impact of implementation of SFAS No. 133 on its financial
condition or its results of operations.
OUTLOOK
Nationwide, the electric utility industry is entering a period of competition.
Although there have been obstacles to overcome, Chugach still believes that
electric utilities in Alaska will not be immune from competitive forces,
however, the competitive marketplace seems more distant, as there has been
little to no movement in that direction. Nevertheless, Chugach has taken several
steps to more effectively position the organization to meet the challenge of a
competitive market for electricity.
Chugach has been active at the Alaska Legislature in support of the customer's
right to choose their electric power supplier. Virtually all Alaskan utilities
are opposing Chugach's efforts to develop competition.
Chugach operates with three divisions: Finance and Energy Supply, Transmission
and Distribution Network Services, and Retail Services. Chugach operates a key
account program for larger customers and has developed new services to enhance
existing customers' satisfaction.
Chugach commenced operation as an internet service provider in February 1999.
Also in 1999, Chugach began selling microwave bandwidth to industrial customers.
ENVIRONMENTAL MATTERS
Compliance with Environmental Standards
Chugach's operations are subject to certain federal, state and local
environmental laws that Chugach monitors to ensure compliance. The costs
associated with environmental compliance are included as a component of both the
operating and capital budget processes. Chugach accrues for costs associated
with environmental remediation obligations when such costs are probable and
reasonably estimable.
Environmental Matters
Chugach discovered polychlorinated biphenyls (PCB's) in paint, caulking and
greases at the Cooper Lake Hydroelectric plant during initial phases of a
turbine overhaul. Chugach has worked with the Federal Energy Regulatory Agency
(FERC) and the Environmental Protection Agency (EPA) to devise a method of
dealing with the contamination and is conducting the appropriate mitigation.
Meanwhile, the overhaul is continuing.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Chugach is exposed to a variety of risks, including changes in interest rates
and changes in commodity prices due to repricing mechanisms inherent in gas
supply contracts. In the normal course of its business, Chugach manages its
exposure to these risks as described below. Chugach does not engage in trading
market risk sensitive instruments for speculative purposes.
Interest rate risk - As of September 30, 2000, except for CoBank 6 and 7 which
carry variable interest rates that are periodically repriced, Chugach's
outstanding borrowings were at fixed interest rates. The following table
provides information regarding cash flows (dollars in thousands):
Fair
2001 2002 2003 2004 2005 Thereafter Total Value
---- ---- ---- ---- ---- ---------- ----- -----
Long-term debt, including
current portion $6,430 $82,910 $5,907 $6,447 $17,036 $199,920 $318,650 $329,902
Commodity price risk - Chugach's gas contracts provide for adjustments to gas
prices based on fluctuations of certain commodity prices and indices. Fuel and
purchased power costs are passed directly to Chugach's wholesale and retail
customers through a fuel surcharge. Fluctuations in the price paid for gas
pursuant to long-term gas supply contracts and changes in purchased power
expense levels do not normally impact margins. The fuel surcharge mechanism
mitigates the commodity price risk related to market fluctuations in the price
of natural gas.
PART II OTHER INFORMATION
Item 1. Legal Proceedings
Chugach Electric Association, Inc., v. Matanuska Electric Association, Inc.,
3AN-99-10830 CI
- --------------------------------------------------------------------------------
For additional information, refer to the discussion of this matter in Part I,
Item 3 - Legal Proceedings - LITIGATION - 3AN-99-10830 CI, of the Form 10-K
filed by Chugach with respect to the annual report for the period ending
December 31, 1999, and Part II, Item 1 - Legal Proceedings of the Form 10-Q
filed by Chugach for the period ending March 31, 2000, and June 30, 2000. No
material changes have occurred since the last report on this matter.
Chugach Electric Association, Inc., v. Alaska Public Utilities Commission,
3AN-98-11548 CI
- --------------------------------------------------------------------------------
For additional information, refer to the discussion of this matter in Part I,
Item 1 - Business - GENERAL - Competition, of the Form 10-K filed by Chugach
with respect to the annual report for the period ending December 31, 1999, and
Part II, Item 1 - Legal Proceedings of the Form 10-Q filed by Chugach for the
period ending March 31, 2000, and June 30, 2000. No material changes have
occurred since the last report on this matter.
Matanuska Electric Association, Inc., v. Chugach Electric Association, Inc.,
3AN-99-8152 CI
- --------------------------------------------------------------------------------
For additional information, refer to the discussion of this matter in Part I,
Item 3 - Legal Proceedings - LITIGATION - 3AN-99-8152CI, of the Form 10-K filed
by Chugach with respect to the annual report for the period ending December 31,
1999. No material changes have occurred since the last report on this matter.
In the Matter of the Investigation into the Rates Changes Implemented by Chugach
Electric Association, Inc., under TA 1718 (U-96-37) and In the Matter of the
Tariff Revision, Designated as TA 195-8 by Chugach Electric Association, Inc.,
To Decrease the Wholesale Demand and Energy Rates of Homer Electric Association,
Inc., and Matanuska Electric Association, Inc., (U-99-78) For additional
information, refer to the discussion of this matter in Item 2 - Management's
Discussion and Analysis of Financial Condition and Results of Operations -
RESULTS OF OPERATIONS - Current Year Quarter Versus Prior Year Quarter, of the
Form 10-Q filed by Chugach for the period ending June 30, 2000. The parties and
the RCA are in the process of reviewing the 1997 and 1998 Test Years to
determine any refund amounts, which may result from review of the revenue
requirements for each of these Test Years. Chugach does not anticipate refunds
to be material for these Test Years.
Chugach Electric Association, Inc., v. Alaska Public Utilities Commission ,
Case No. 3AN 98-9775 CI
- --------------------------------------------------------------------------------
For additional information, refer to the discussion of this matter in Part I,
Item 1 - Business - GENERAL - Rate Regulation and Rates, of the Form 10-K filed
by Chugach with respect to the annual report for the period ending December 31,
1999, and Part II, Item 1 - Legal Proceedings of the Form 10-Q filed by Chugach
for the period ending June 30, 2000. The matter has been appealed to the Alaska
Supreme Court by the appellee, Matanuska Electric Association, Inc., but not by
the Commission.
Item 2. Changes in Securities and Use of Proceeds
Not applicable
Item 3. Defaults Upon Senior Securities
Not applicable
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable
Item 5. Other Information
Additional Information Regarding Treasury Rate-Lock
On March 17, 1999, Chugach entered into a Treasury rate-lock transaction with
Lehman Brothers Financial Products Inc. (Lehman Brothers) for the purpose of
taking advantage of favorable market interest rates in anticipation of
refinancing Chugach's Series A Bonds due 2022 on their first call date (March
15, 2002). As of September 30, 2000, the aggregate principal amount of Series A
Bonds due 2022 was $164,310,000. Under the Treasury rate-lock contract, Chugach
will receive a lump-sum payment from Lehman Brothers on March 15, 2002, if the
yield on 10- or 30-year Treasury bonds as of mid-February, 2002, exceeds a
specified target level (5.653% and 5.838%, respectively). Conversely, on the
same date, Chugach will be required to make a payment to Lehman Brothers if the
yield on the 10- or 30-year Treasury bonds falls below its stated target yield.
The treasury rate lock agreement had a yield to maturity value on November 13,
2000, that approximated $1,465,471.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
Financial Data Schedule
(b) Reports on Form 8-K:
No reports on Form 8-K were filed for the quarter ended September 30,
2000.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CHUGACH ELECTRIC ASSOCIATION, INC.
By: /s/Eugene N. Bjornstad
Eugene N. Bjornstad, General Manager
Date: November 13, 2000
By: /s/Evan J. Griffith
Evan J. Griffith
Executive Manager, Finance & Energy Supply
Date: November 13, 2000
EXHIBITS
Listed below are the exhibits which are filed as part of this Report:
Exhibit
Number Description Page
10.52.5 Amendment to Line of Credit Agreement between Chugach
and National Bank for Cooperatives (thirty-five million)
dated September 13, 2000 19
27 Financial Data Schedule **