FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
X QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
--------------------------------------
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
(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, 1996
NONE NONE
CHUGACH ELECTRIC ASSOCIATION, INC.
INDEX
Part I. Financial Information Page Number
Balance Sheets, September 30, 1996 (Unaudited) and December 31, 1995 3
Statements of Revenues, Expenses and Patronage Capital, Three-Months Ended
September 30, 1996 and 1995 and Nine-Months Ended September 30, 1996 and
1995 (Unaudited) 5
Statements of Cash Flows, Nine-Months Ended September 30, 1996 and 1995
(Unaudited) 6
Notes to Financial Statements (Unaudited) 7
Management's Discussion and Analysis of Financial Condition and Results of
Operations (Unaudited) 8
Part II. Other Information
Item 1. Legal Proceedings 11
Item 6. Exhibits and Reports on Form 8-K 13
Signatures 14
Exhibits - Index 15
Exhibits 16
2
CHUGACH ELECTRIC ASSOCIATION, INC.
Balance Sheets
Assets
September 30, 1996 December 31, 1995
------------ ------------
(Unaudited)
Utility plant:
Electric plant in service ............................. $607,762,381 $587,877,992
Construction work in progress ......................... 17,591,609 27,068,964
------------ ------------
625,353,990 614,946,956
Less accumulated depreciation ......................... 210,880,665 196,677,723
------------ ------------
Net utility plant .................... 414,473,325 418,269,233
------------ ------------
Other property and investments, at cost:
Nonutility property ................................... 3,550 3,550
Investments in associated organizations ............... 7,419,304 7,513,807
Restricted cash - margins from economy
energy sales, all repurchase agreements ............ 2,104,203 3,026,634
------------ ------------
9,527,057 10,543,991
------------ ------------
Current assets:
Cash and cash equivalents ............................. 3,013,133 6,371,687
Cash - restricted construction funds .................. 1,035,447 --
Special deposits ...................................... 88,098 97,789
Accounts receivable, net .............................. 13,610,955 17,108,823
Materials and supplies, at average cost ............... 20,246,087 18,498,783
Prepayments ........................................... 1,598,606 675,117
Other current assets .................................. 288,801 412,209
------------ ------------
Total current assets ................... 39,881,127 43,164,408
------------ ------------
Deferred charges ........................................... 12,584,062 12,812,691
------------ ------------
$476,465,571 $484,790,323
------------ ------------
See accompanying notes to unaudited financial statements.
3
CHUGACH ELECTRIC ASSOCIATION, INC.
Balance Sheets
Liabilities and Equities
September 30, 1996 December 31, 1995
------------ ------------
(Unaudited)
Equities and margins:
Memberships ........................................ $ 801,793 $ 765,123
Patronage capital .................................. 100,599,198 95,421,358
Other .............................................. 2,963,752 3,044,069
------------ ------------
104,364,743 99,230,550
------------ ------------
Long-term obligations, excluding current installments:
First mortgage bonds payable ....................... 251,553,000 294,054,000
National Bank for Cooperatives (CoBank)
bonds payable ................................... 56,352,847 11,587,703
------------ ------------
307,905,847 305,641,703
------------ ------------
Current liabilities:
Bank overdraft ..................................... -- 492,204
Note(s) payable .................................... 5,500,000 8,000,000
Current installments of long-term debt and
capital leases .................................. 6,001,109 5,665,749
Accounts payable ................................... 3,677,762 6,659,477
Consumer deposits .................................. 1,064,555 1,119,056
Accrued interest ................................... 1,296,554 8,052,786
Salaries, wages and benefits ....................... 3,922,202 3,772,608
Fuel ............................................... 4,289,676 2,289,776
Other .............................................. 4,741,805 2,624,341
------------ ------------
Total current liabilities ............ 30,493,663 38,675,997
------------ ------------
Deferred credits ........................................ 33,701,318 41,242,073
------------ ------------
$476,465,571 $484,790,323
------------ ------------
See accompanying notes to unaudited financial statements.
4
CHUGACH ELECTRIC ASSOCIATION, INC.
Statements of Revenues, Expenses and Patronage Capital
Three-months Nine-months
ended September 30 ended September 30
1996 1995 1996 1995
------------- ------------ ------------- ------------
(Unaudited) (Unaudited)
Operating revenues ................................ $ 31,187,058 $ 29,353,885 $ 97,529,513 $ 95,975,346
------------- ------------ ------------- ------------
Operating expenses:
Production ................................... 9,642,575 8,276,679 26,340,626 23,310,563
Purchased power .............................. 2,671,658 2,733,659 7,590,852 7,955,084
Transmission ................................. 971,775 757,068 2,558,468 2,365,108
Distribution ................................. 1,957,063 2,654,834 6,788,497 7,721,999
Consumer accounts ............................ 1,714,338 1,818,577 5,283,576 5,253,204
Administrative, general and other ............ 3,073,386 3,166,450 9,746,665 10,208,034
Depreciation and amortization ................ 5,217,446 4,856,515 15,454,996 14,356,847
------------- ------------ ------------- ------------
Total operating expenses ............. 25,248,241 24,263,782 73,763,680 71,170,839
------------- ------------ ------------- ------------
Interest:
On long-term debt .............................. 5,998,474 6,429,557 18,685,241 19,261,417
Other .......................................... 376,545 135,062 877,380 519,899
Charged to construction - credit ............... (153,418) (309,662) (391,513) (894,673)
------------- ------------ ------------- ------------
Net interest expense ................. 6,221,601 6,254,957 19,171,108 18,886,643
------------- ------------ ------------- ------------
Net operating margins ................ (282,784) (1,164,854) 4,594,725 5,917,864
------------- ------------ ------------- ------------
Nonoperating margins:
Interest income .............................. 180,726 212,017 571,869 578,123
Other ........................................ 89,546 70,345 144,037 (17,650)
------------- ------------ ------------- ------------
Total non-operating margins .......... 270,272 282,362 715,906 560,473
------------- ------------ ------------- ------------
Assignable margins ................... (12,512) (882,492) 5,310,631 6,478,337
Patronage capital at beginning of period .......... 100,660,740 98,385,504 95,421,358 91,079,686
Retirement of capital credits and
estate payments ................................ (49,030) (26,371) (132,791) (81,382)
------------- ------------ ------------- ------------
Patronage capital at end of period ................ $ 100,599,198 $ 97,476,641 $ 100,599,198 $ 97,476,641
------------- ------------ ------------- ------------
See accompanying notes to unaudited financial statements.
5
CHUGACH ELECTRIC ASSOCIATION, INC.
Statements of Cash Flows
Nine-months ended September 30
1996 1995
------------ ------------
(Unaudited)
Cash flows from operating activities:
Assignable margins ................................................................. $ 5,310,631 $ 6,478,337
------------ ------------
Adjustments to reconcile assignable margins to net cash used in operating
activities:
Depreciation and amortization .................................................. 15,454,996 14,356,847
Changes in assets and liabilities:
(Increase) decrease in assets:
Accounts receivable, net ..................................................... 3,497,868 1,921,848
Materials and supplies ....................................................... (1,747,304) 4,417,032
Deferred charges ............................................................. 228,629 (441,656)
Prepayments .................................................................. (923,489) (813,696)
Other ........................................................................ 20,084 (112,253)
Increase (decrease) in liabilities:
Accounts payable ............................................................. (2,981,715) (648,379)
Accrued interest ............................................................. (6,756,232) (6,956,652)
Deferred credits ............................................................. (7,540,755) (2,742,479)
Consumer deposits, net ....................................................... (54,501) (19,049)
Other ........................................................................ 4,266,957 60,387
------------ ------------
Total adjustments ................................................. 3,464,538 9,021,950
------------ ------------
Net cash provided by operating activities ......................... 8,775,169 15,500,287
------------ ------------
Cash flows from investing activities:
Extension and replacement of plant ................................................. (11,659,088) (19,865,538)
Investments in associated organizations ............................................ 94,503 188,008
------------ ------------
Net cash used in investing activities ................................................. (11,564,585) (19,677,530)
------------ ------------
Cash flows from financing activities:
Net change in bank overdraft ....................................................... (492,204) 512,924
Proceeds from long-term debt ....................................................... 23,500,000 10,000,000
Repayments of long-term debt ....................................................... (20,900,496) (5,357,189)
Retirement of patronage capital .................................................... (132,791) (81,382)
Short-term borrowings, net ......................................................... (2,500,000) (1,500,000)
Other .............................................................................. (43,647) (106,780)
------------ ------------
Net cash provided by (used) in financing activities ............... (569,138) 3,467,573
------------ ------------
Net decrease in cash and cash equivalents ......................... (3,358,554) (709,670)
Cash and cash equivalents at beginning of period ...................................... 6,371,687 5,975,927
------------ ------------
Cash and cash equivalents at end of period ............................................ $ 3,013,133 $ 5,266,257
------------ ------------
See accompanying notes to unaudited financial statements.
6
CHUGACH ELECTRIC ASSOCIATION, INC.
Notes to Financial Statements
September 30, 1996
(Unaudited)
1. Presentation of Financial Information
During interim periods, Chugach Electric Association, Inc. (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 footnotes contained in Form 10-K when reviewing interim financial
results. Management believes that the accompanying interim financial
statements reflect all adjustments that are necessary for a fair statement
of the results of the interim period presented. All adjustments made in the
accompanying interim financial statements are of a normal recurring nature.
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, 1997 but
is expected to be renewed. At September 30, 1996, Chugach had no
outstanding balance on the CoBank line. 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, 1996,
there was an outstanding balance of $5.5 million at an interest rate of
6.30%. The NRUCFC line of credit expires February 19, 1998.
3. Restricted Cash
Beginning in the first quarter of 1996, Chugach began receiving grant funds
from the Alaska Industrial Development and Export Authority (AIDEA) to
finance the siting study for the Southern Intertie. Under the terms of the
grant agreement, Chugach agreed to deposit these funds in a separate
interest bearing bank account at its main banking institution. Chugach
reimburses itself from this account monthly for expenditures related to the
siting study. At September 30, 1996, this account contained a balance of
$1,035,447.
7
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Unaudited)
Results of Operations
Current Year Quarter Versus Prior Year Quarter
Operating revenues, that include sales of electric energy to retail, wholesale
and economy energy customers and other miscellaneous revenues, increased by 6.3%
for the quarter ended September 30, 1996 over the same quarter in 1995. The
increase in revenues is attributable to higher kilowatt hour (kWh) sales to
retail customers and one of the wholesale customer classes. Higher fuel costs
also contributed to the increase since fuel and purchased power costs are passed
directly to Chugach's customers through a fuel and purchased power adjustment
factor. Demand and energy rates were higher by 0.4% and 0.7% for the wholesale
customer classes in the third quarter of 1996 over the same period in 1995 which
also contributed to the increase in revenues. Retail demand and energy rates did
not change between the two quarters. All of these factors more than offset a
small decrease in sales to one of the wholesale customer classes.
Refer to the year to date comparison section for a discussion of outstanding
issues with the Alaska Public Utilities Commission (APUC).
Production expense increased for the quarter ended September 30, 1996 over the
same period in 1995. This increase was due primarily to higher fuel costs
associated with the increase in kWh sales and entering Period 2 under the
long-term fuel supply contracts. For several years prior to this, the price of
fuel had been ramped upwards to smooth the transition into Period 2. Entering
Period 2 completed the ramp from the inexpensive take-or-pay gas contracts (old
Beluga gas) to the new more market-based prices. Thus, future fuel costs are
expected to be higher in comparison to prior periods. Transmission expense was
higher for the quarter ended September 30, 1996 over the same period in 1995.
The majority of this increase was caused by higher overhead line maintenance
costs related to transmission right-of-way clearing activities. Distribution
expense decreased during the third quarter of 1996 primarily due to lower costs
associated with line maintenance expense (related to a reduction in distribution
right-of-way clearing activities).
Other interest expense increased in the current period due to a higher average
outstanding balance on the short-term line of credit. Interest charged to
construction decreased for the quarter ended September 30, 1996 compared to the
same period in 1995 due to a decrease in the balance in construction work in
progress during the period.
Current Year to Date Versus Prior Year to Date
Operating revenues for the nine-month period ended September 30, 1996 increased
relative to the same period in 1995. This increase in revenues was mainly due to
higher kWh sales to
8
retail and one of the wholesale customer classes. The higher sales levels more
than offset slight decreases in average rates charged to these two classes.
Furthermore, these impacts (higher sales and reduction in average rates)
combined to offset a decrease in kWh sales and a small increase in average rates
charged to the other wholesale rate class.
In April 1996 Chugach filed for a $1.15 million revenue requirement increase
through its Simplified Rate Filing (SRF) procedure which resulted in proposed
wholesale demand and energy rate increases of 2.5% to one wholesale customer
class and 5.3% to the other. These rate increases were put into effect in May
1996 by the APUC on an interim-refundable basis pending investigation of several
ratemaking issues. At the present time, Chugach and its wholesale customers are
negotiating settlement proposals that address several of the issues raised in
this docket. It is not known how the Commission will rule in this proceeding.
In August 1996 the Chugach Board of Directors elected to discontinue Chugach's
participation in the SRF process to establish changes to base rates. Changing
ratemaking methodology must be approved by the APUC, hence, the request is
currently pending. Chugach will continue to be regulated by the APUC in the
establishment of rate levels and options. Recovery of variations in fuel and
purchased power costs will continue to occur through quarterly fuel surcharge
filings.
Production expense increased for the nine-month period ended September 30,
1996 for essentially the same reasons outlined in the quarter-to-date comparison
section. Distribution expense decreased during the period due primarily to a
lower level of line maintenance expense related to a reduction in distribution
right-of-way clearing activities. The other operating expenses remained
relatively constant when compared to the same period in 1995.
Other interest expense increased and interest-charged-to-construction decreased
for the nine-months ended September 30, 1996, for the same reasons outlined
above in the analysis of the quarter-to-quarter variance.
For the nine-month period ended September 30, 1996, Non-operating margins were
higher than those for the same period in 1995. This is primarily due to the
failure of a submarine cable that was recorded in 1995. No similar event
occurred in 1996.
Financial Condition
Total assets declined by 1.7% from December 31, 1995 to September 30, 1996. The
decrease is due primarily to the lower balance in net utility plant. This lower
balance was caused by the higher accumulated depreciation reserve resulting from
higher depreciation rates that have been implemented over a three-year phase-in
program. The seasonal decline in accounts receivable and the reduction in
restricted cash (due to amortization of the rate stabilization fund, see below)
also contributed to the lower total asset balance. These impacts more than
offset an increase in materials and supplies inventory caused by the
refurbishment of several major generation components held in inventory. Notable
changes to total liabilities include the decrease in First Mortgage bonds
payable and the corresponding increase in CoBank long-term debt resulting from
the repurchases of the Series 1 2022 bonds. Accrued interest decreased due to
the semi-annual bond interest payment made in September. Deferred credits
decreased due
9
to additional amortization of the original gain on refinancing resulting from
the aforementioned bond repurchases. These impacts more than offset the increase
in other liabilities due to the reclassification of the current portions of both
the rate stabilization fund and the submarine cable reserve that will be
returned to customers in 1996 and early 1997.
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, 1996,
Chugach had $5.5 million outstanding with NRUCFC that carried an interest rate
of 6.30%.
Capital construction in 1996 is estimated at approximately $26 million. At
September 30, 1996, approximately $11.7 million has been expended.
Chugach has negotiated a supplemental indenture (Third Supplemental Indenture of
Trust) with CoBank for up to $80 million in future bond financing. At September
30, 1996, Chugach had bonds in the amount of $56.6 million outstanding under
this financing arrangement. The balance is comprised of a $1.6 million bond
(CoBank 1) that carries an interest rate of 8.95% maturing in 2002, a $10.0
million bond (CoBank 2) priced at 7.76% due in 2005, a $21.5 million bond
(CoBank 3) priced at 6.30% (repriced monthly) and a $23.5 million bond (CoBank
4) priced at 6.30% (also repriced monthly). 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 also for $80 million. At September 30, 1996, there were no
amounts outstanding under this financing arrangement.
To date, Chugach has repurchased $39.3 million of its Series 1 2022 bonds. This
strategy has been in response to the favorable long-term interest rate
environment. Chugach will continue to explore similar repurchase transactions if
market conditions warrant such action. Except for any further repurchases of its
bonds (and any similar future refinancings), Chugach does not anticipate
issuance of additional long-term debt in 1996.
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 1996.
Chugach's current ratios (current assets divided by current liabilities) at
December 31, 1995 and September 30, 1996 were as follows:
Current Ratio
December 31, 1995 1.12
September 30, 1996 1.31
10
Environmental Matters
Regulatory initiatives arising out of recent amendments to State and Federal
environmental laws (including the Clean Air Act Amendments of 1990) may require
significant capital expenditures in the future. These initiatives have not
developed to the point where their financial impact on Chugach can be
determined. Chugach is commenting on proposed revisions to the Alaska air
quality protection rules. The Association has focused its efforts on minimizing
the financial impact on Chugach of the new regulations, while meeting the
requirements of State and Federal law. Other environmental compliance changes
will require new substation designs to incorporate spill-containment features.
The cost of incorporating these features has been considered in future
construction work plan projects.
Refer to Part II, Item 1 for an update on the status of the Standard Steel
Salvage Yard Site litigation.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Standard Steel Salvage Yard Site
As previously reported in the Form 10-Q for the period ended June 30, 1996, a
cost recovery action was filed in Federal District Court on December 27, 1991,
by the United States against Chugach and six other Potentially Responsible
Parties (PRPs) seeking reimbursement of removal and response action costs (Past
Response Costs) incurred by US Environmental Protection Agency (EPA) at the
Standard Steel and Metals Salvage Yard Superfund Site in Anchorage, Alaska
(Site). The six other PRPs named in the action are the Alaska Railroad,
Westinghouse Electric Corporation, Sears, Roebuck and Co., Montgomery Ward &
Co., J.C. Penney Company, Inc. and Bridgestone/Firestone, Inc.
On September 23, 1992, Chugach entered into an Administrative Order on Consent
(AOC) with the EPA to perform a remedial investigation and feasibility study
(RI/FS) for the Site. Under a separate agreement, several federal agency PRPs
are reimbursing Chugach for 75% of the costs of performing the RI/FS. Chugach's
contractors now have completed the RI/FS for the Site and, based on the results
of the RI/FS, EPA has selected a remedy for cleanup of the Site which has been
documented in a Record of Decision (ROD). The preferred remedy for cleanup of
the Site selected by EPA is soil treatment by means of stabilization and
solidification (S/S). Although Chugach's contractors completed the RI/FS, EPA
has required Chugach to perform additional work pursuant to the AOC. Since the
last report in the Form 10-Q, EPA has required Chugach under the AOC to conduct
site repair work and a treatability study in addition to removing drums
containing potentially regulated materials.
As previously reported in the Form 10-Q, all of the PRPs and the United States
government, including EPA and the Department of Justice (DOJ), negotiated a
Partial Consent Decree to
11
settle both the cost recovery action and the PRPs' (including the federal PRPs')
alleged liability for costs associated with the Site through completion of work
under the AOC and entry of the Partial Consent Decree. The Partial Consent
Decree reflects a settlement in which the United States has agreed to compromise
some of its costs. The Partial Consent Decree was lodged with the Federal
District Court on October 9, 1996, and is expected to be entered by the Court in
November 1996.
The Partial Consent Decree allocates to Chugach 14.37% of Past Response Costs,
DOJ enforcement costs (through entry of the Consent Decree), RI/FS Costs, and
EPA oversight costs (through completion of work under the AOC) incurred in
connection with the Site. RI/FS Costs include scrap and drum removal costs and
expenses associated with the site work and treatability study being conducted by
Chugach's contractors during the fall and winter of 1996- 1997 and EPA oversight
costs include all costs of overseeing work conducted under the AOC, including
the site work and treatability study. Because Chugach is currently funding the
RI/FS, the Partial Consent Decree requires the other PRPs to reimburse Chugach
and, in the event any PRP fails to make such reimbursement, the Partial Consent
Decree provides a credit to Chugach for the unreimbursed amounts. If applicable,
this credit will be applied to reduce Chugach's obligation to pay EPA oversight
costs so that the total amount paid by Chugach will not exceed 14.37% of the
costs being settled under the Partial Consent Decree.
The total estimated cost of the settlement under the Partial Consent Decree is
approximately $6,800,000 for Past Response Costs (including interest from
December 1991), RI/FS costs (including scrap and drum removal, site repair and
treatability study costs), DOJ enforcement costs (as compromised by the US) and
EPA oversight costs. This total cost is an estimate because costs (both RI/FS
and Oversight) have not been fully incurred in connection with the drum removal
and treatability study and because interest will continue to accrue on Past
Response Costs until paid by the PRPs. The Partial Consent Decree does not
settle Chugach's liability for future costs of designing and performing a remedy
to cleanup the Site (Future Costs). Applying Chugach's percentage share under
the Partial Consent Decree (14.37%), the total Chugach will have to pay to
settle all costs associated with the Site except Future Costs is approximately
$977,160.
Although the Consent Decree does not settle Chugach's or the other private PRPs'
liability for Future Costs, the Partial Consent Decree does bind the federal
PRPs and the Alaska Railroad to pay an aggregate share of 64% of Future Costs.
In addition, since the last report in the Form 10-Q, Chugach and the five other
private PRPs have reached a settlement to divide the remaining 36% of Future
Costs among themselves. The 36% of Future Costs will be allocated between the
private PCB (polychlorinated biphenyl) generators (Chugach and Westinghouse) and
the private lead generators (primarily Sears) in accordance with a 57% - 43%
allocation, respectively. Thus, assuming the private PCB generator share will be
divided 75% - 25% between Chugach and Westinghouse (as it has in the past),
Chugach's percentage share of liability for Future Costs will equal 15.39%.
Chugach's agreement to perform remedial design and remedial action (RD/RA) at
the Site will be memorialized in a new Consent Decree to be negotiated among the
private PRPs and the United States. This new Consent Decree is expected to
contain the scope of work for the RD/RA as well as settlement terms, including
EPA's covenant not to sue Chugach and the
12
other private PRPs for Future Costs once the RD/RA is completed. Based on the
scope of work required under the ROD and cost estimates contained in the FS
report, the current estimate of Future Costs of RD/RA at the Site ranges from
$5,231,200 to $6,619,800. Although EPA has selected S/S as the cleanup remedy in
the ROD, the actual, full scope of the S/S cleanup at the Site will not be
known, and the projected costs associated with the remedy cannot be refined,
until EPA approves remedial design documents. Based on currently available
information, however, Chugach's share of Future Costs for RD/RA work at the Site
will be between approximately $805,082 and $1,018,787 (15.39% of estimated
low-end and high-end RD/RA costs). This amount is expected to be paid in
installments by Chugach as the RD/RA work is being performed throughout 1997 and
1998.
In addition to the RD/RA costs estimated above, EPA will charge Chugach and the
other PRPs the costs of EPA's oversight of the RD/RA. At this time, EPA has not
provided an estimate of RD/RA oversight costs. Based on the projected oversight
costs relating to the RI/FS and EPA oversight costs at other sites, EPA's RD/RA
oversight costs may be between $500,000 and $750,000. Combining Chugach's
anticipated costs under the Partial Consent Decree and projected share of costs
for the RD/RA (including EPA oversight costs), the total that Chugach may pay
for all costs associated with the Site ranges from approximately $1,859,192 to
$2,111,372.
Four of Chugach's insurance carriers have agreed under a reservation of rights
to pay, and currently are paying, Chugach's costs of defense for the Site. The
carriers have reserved their rights regarding indemnification of Chugach for
response costs. Management believes that all past and future costs incurred for
response, removal, investigation and cleanup of the Site would be fully
recoverable in rates or covered by insurance and therefore would have no impact
on Chugach's financial condition or results of operations.
Items 2, 3, 4 and 5
Not Applicable
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
Closing documents dated September 30, 1996 First Mortgage Bond,
CoBank Series (CoBank-4), Due June 15, 2022, pursuant to the Third
Supplemental Indenture of Trust.
Partial Consent Decree in Standard Steel Superfund Site matter.
Financial Data Schedule.
(b) Reports on Form 8-K:
No reports on Form 8-K were filed for the quarter ended September
30, 1996.
13
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, 1996
By: /s/ Evan J. Griffith, Jr.
Evan J. Griffith, Jr.
Executive Manager, Finance & Planning
Date: November 13, 1996
14
EXHIBITS
Listed below are the exhibits which are filed as part of this Report:
Exhibit
number Description Page **
4.4.4 Closing documents dated September 30, 1996 First
Mortgage Bond, CoBank Series (CoBank-4), Due
June 15, 2022 pursuant to the Third Supplemental
Indenture of Trust. N/A
19.2 Partial Consent Decree in Standard Steel Superfund
Site matter. N/A
27 Financial Data Schedule N/A
** Filed Electronically
15