SETTLEMENT AGREEMENT

         THIS SETTLEMENT  AGREEMENT  ("Agreement")  is entered into by and among
GOLDEN VALLEY ELECTRIC ASSOCIATION, INC. ("GVEA"), CHUGACH ELECTRIC ASSOCIATION,
INC.  ("Chugach") and the MUNICIPALITY OF ANCHORAGE,  d/b/a ANCHORAGE  MUNICIPAL
LIGHT & POWER ("ML&P").

                                R E C I T A L S:

         WHEREAS,  GVEA and  Chugach  are  parties to the  Chugach-GVEA  Nonfirm
Energy Agreement ("Nonfirm Energy Agreement") dated May 18, 1989; and

         WHEREAS,  on September 24, 1 997, the APUC issued an Order  authorizing
GVEA to  acquire  the  electric  utility  loads  formerly  served  by  Fairbanks
Municipal Utilities System; and

         WHEREAS,  GVEA,  Chugach  and ML&P  desire to create an open market for
certain nonfirm energy transactions;

         NOW, THEREFORE,  in consideration of mutual covenants contained herein,
the parties agrees as follows:

         1. This Agreement  shall become  effective on the date when  Amendatory
Agreement No. 2 to Agreement for the Sale and Purchase of Nonfirm Energy between
Chugach Electric Association,  Inc. and Golden Valley Electric Association, Inc.
("Amended  Chugach-Golden  Valley  Nonfirm  Agreement")  and this  Agreement are
approved by an Order of the Alaska Public  Utilities  Commission  ("Commission")
and upon  approval  by the  Commission  of  payment  by GVEA to ML&P  for  power
previously delivered pursuant to the contract at issue in Docket No. U-97-200.

         2.  Golden  Valley and Chugach  have agreed to amend the  ChugachGolden
Valley  Nonfirm  Agreement  to permit  GVEA to purchase a portion of its nonfirm
energy  requirements  on the Economy Energy Spot Market in amounts  representing
nonfirm energy associated with GVEA's FMUS system acquisition.

         3.  Participation  in the  competitive  market  created by the  Amended
Chugach-Golden  Valley  Nonfirm  Agreement  will be open to, but not limited to,
ML&P, Chugach,  and such other electric utilities,  independent power producers,
power marketers,  and other entities as may be willing and able to sell electric
energy to GVEA in accordance with applicable law and Commission  regulations.  A
copy of the Amendatory Agreement No. 2 to Agreement for the Sale and Purchase of
Nonfirm  Energy between  Chugach  Electric  Association,  Inc. and Golden Valley
Electric Association, Inc. is attached hereto.

         4. Upon this Settlement  Agreement  becoming  effective,  the following
proceedings and disputes shall be deemed to be settled by and among the parties,



who will take appropriate  steps to terminate such  proceedings  without request
for any other action or relief from the court or the Commission, as the case may
be:

                  A.  Chugach  Electric  Association,   Inc.  v.  Golden  Valley
                  Electric Association, Inc., Case No. 3AN-97-8552CI;

                  B.       ML&P-GVEA Contract Docket U-97-200 before APUC; and

                  C.  A  "FMUS  Market  -  Nonfirm  Energy   Agreement"   Docket
                  U-97-188].

         IN WITNESS  WHEREOF,  the  parties  have caused  this  Agreement  to be
executed by their duly authorized officers or representatives.



                                            GOLDEN VALLEY ELECTRIC ASSOCIATION,
                                            INC.


                                            By:    /s/ Mile Kelly
                                               -------------------------------

                                            Title: President & CEO
                                                  ----------------------------


                                            CHUGACH ELECTRIC ASSOCIATION, INC.


                                            By:    /s/ Eugene N. Bjornstad
                                               -------------------------------

                                            Title: General Manager
                                                  ----------------------------


                                            ANCHORAGE MUNICIPAL LIGHT & POWER


                                            By:             /s/
                                               -------------------------------

                                            Title: Municipal Manager
                                                  ----------------------------



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