UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-Q
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|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXHANGE ACT OF 1934
For the quarterly period ended March 31, 2007
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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Commission file number 33-42125
CHUGACH ELECTRIC ASSOCIATION, INC.
(Exact name of registrant as specifies in its charter)
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State of Alaska 92-0014224
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
5601 Electron Drive, Anchorage, AK 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)
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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. |X| Yes |_| No
Indicate by check mark whether the registrant is large accelerated filer, and
accelerated filer, or a non-accelerated filer. See definition of "accelerated
filer and large accelerated filer" in Rule 12b-2 of the Exchange Act.
Large accelerated filer |_| Accelerated filer |_| Non-accelerated filer |X|
Indicate by check mark whether the registrant is a shell company, as defined in
Rule 12b-2 of the Act. |_| Yes |X| No
CHUGACH ELECTRIC ASSOICATION, INC.
TABLE OF CONTENTS
Caution Regarding Forward-Looking Statements 2
Part I. Financial Information
- -----------------------------
Item 1. Financial Statements (unaudited) 2
Balance Sheets - as of March 31, 2007 and December 31, 2006 3
Statements of Operations - Three months ended March 31, 2007
and March 31, 2006 5
Statements of Changes in Equities and Margins - Three months
Ended March 31, 2007 and March 31, 2006 6
Statements of Cash Flows, Three Months Ended March 31, 2007
and March 31, 2006 7
Notes to Financial Statements 8
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 15
Item 3. Quantitative and Qualitative Disclosures About Market Risk 21
Item 4. Controls and Procedures 23
Part II. Other Information
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Item 1. Legal Proceedings 23
Item 1A. Risk Factors 24
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 24
Item 3. Defaults Upon Senior Securities 24
Item 4. Submission of Matters to a Vote of Security Holders 24
Item 5. Other Information 24
Item 6. Exhibits 24
Signatures 25
Exhibits 26
1
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) 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
effect of those events or circumstances on any of the forward-looking statements
contained in this report, except as required by law.
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The unaudited financial statements and notes to the financial statements of
Chugach as of and for the quarter ended March 31, 2007, follow.
2
Chugach Electric Association, Inc.
Balance Sheets
(Unaudited)
Assets March 31, 2007 December 31, 2006
- ----------------------------------------------------- ----------------- -----------------
Utility Plant:
Electric Plant in service $ 793,357,751 $ 787,005,028
Construction work in progress 22,828,930 20,254,298
----------------- -----------------
Total utility plant 816,186,681 807,259,326
Less accumulated depreciation (354,978,088) (347,736,514)
----------------- -----------------
Net utility plant 461,208,593 459,522,812
Other property and investments, at cost:
Nonutility property 24,461 24,461
Investments in associated organizations 11,888,530 11,888,530
Special Funds 645,582 0
----------------- -----------------
Total other property and investments 12,558,573 11,912,991
Current assets:
Cash and cash equivalents 3,095,661 9,844,914
Special deposits 206,191 206,191
Accounts receivable, net 35,598,936 32,899,571
Materials and supplies 28,121,695 25,424,493
Prepayments 1,746,903 1,487,966
Other current assets 397,147 280,562
----------------- -----------------
Total current assets 69,166,533 70,143,697
Deferred charges, net 21,001,283 21,460,648
----------------- -----------------
Total assets $ 563,934,982 $ 563,040,148
================= =================
See accompanying notes to financial statements.
3
Chugach Electric Association, Inc.
Balance Sheets (continued)
(Unaudited)
Liabilities, Equities and Margins March 31, 2007 December 31, 2006
- ---------------------------------------------------- ----------------- -----------------
Equities and margins:
Memberships $ 1,307,528 $ 1,297,633
Patronage capital 145,661,003 141,117,620
Other 8,293,332 8,300,847
----------------- -----------------
Total equities and margins 155,261,863 150,716,100
Long-term obligations, excluding current installments:
Bonds Payable 299,600,000 305,500,000
National Bank for Cooperatives 44,162,961 45,303,530
----------------- -----------------
Total long-term obligations 343,762,961 350,803,530
Current liabilities:
Current installments of long-term obligations 14,182,155 13,728,569
Short-term obligations 3,500,000 0
Accounts payable 10,277,975 10,308,668
Consumer deposits 2,381,910 2,217,613
Fuel cost over-recovery 857,446 300,567
Accrued interest 2,069,705 6,364,100
Salaries, wages and benefits 5,872,240 6,021,473
Fuel 18,846,216 16,158,783
Other 4,026,782 4,112,020
----------------- -----------------
Total current liabilities 62,014,429 59,211,793
Deferred Credits 2,250,147 2,308,725
Other Liabilities 645,582 0
----------------- -----------------
Total liabilities, equities and margins $ 563,934,982 $ 563,040,148
================= =================
See accompanying notes to financial statements.
4
Chugach Electric Association, Inc.
Statements of Operations
(Unaudited)
Three months ended March 31
2007 2006
------------ ------------
Operating revenues $ 71,453,124 $ 66,885,593
Operating expenses:
Fuel 28,307,939 27,986,180
Production 3,474,724 3,192,912
Purchased power 10,741,367 7,210,732
Transmission 1,724,152 1,391,959
Distribution 3,340,193 3,037,093
Consumer accounts 1,213,349 1,302,003
Administrative, general and other 5,081,551 4,800,629
Depreciation and amortization 7,231,936 7,049,384
------------ ------------
Total operating expenses 61,115,211 55,970,892
Interest on long-term debt 6,091,851 6,035,709
Other 86,394 0
Charged to construction (159,230) (115,418)
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Net interest expenses 6,019,015 5,920,291
------------ ------------
Net operating margins 4,318,898 4,994,410
Nonoperating margins:
Interest income 203,258 163,438
Other 66,662 43,581
Property gain (loss) 0 (12,756)
------------ ------------
Total nonoperating margins 269,920 194,263
------------ ------------
Assignable margins $ 4,588,818 $ 5,188,673
============ ============
Please see accompanying notes to financial statements.
5
Chugach Electric Association, Inc.
Statements of Changes in Equities and Margins
(Unaudited)
Other Equities Patronage
Memberships and Margins Capital Total
----------- ----------- ------- -----
Balance, January 1, 2007 $ 1,297,633 $ 8,300,847 $ 141,117,620 $ 150,716,100
Assignable margins 0 0 4,588,818 4,588,818
Retirement of capital credits 0 0 (45,435) (45,435)
Unclaimed capital credit retirements 0 19,740 0 19,740
Memberships and donations received 9,895 (27,255) 0 (17,360)
-------------------------------------------------------------
Balance, March 31, 2007 $ 1,307,528 $ 8,293,332 $ 145,661,003 $ 155,261,863
=============================================================
Balance, January 1, 2006 $ 1,250,398 $ 7,603,376 $ 136,185,378 $ 145,039,152
Assignable margins 0 0 5,188,673 5,188,673
Nonoperating margins 0 (23,625) 23,625 0
Retirement of capital credits 0 0 (157,455) (157,455)
Unclaimed capital credit retirements 0 56,014 0 56,014
Memberships and donations received 10,355 (165,019) 0 (154,664)
-------------------------------------------------------------
Balance, March 31, 2006 $ 1,260,753 $ 7,470,746 $ 141,240,221 $ 149,971,720
=============================================================
See accompanying notes to financial statements.
6
Chugach Electric Association, Inc.
Statements of Cash Flows
(Unaudited)
Three months ended March 31
2007 2006
------------ ------------
Cash flows from operating activities:
- -------------------------------------
Assignable margins $ 4,588,818 $ 5,188,673
------------ ------------
Adjustments to reconcile assignable margins to net cash provided
activities:
Depreciation and amortization 7,574,970 7,787,269
Capitalized interest (226,491) (159,056)
Write off of deferred charges 0 345,899
Other 0 (12,683)
Changes in assets and liabilities:
(Increase) decrease in assets:
Accounts receivable (2,699,365) 1,812,450
Fuel cost under-recovery 0 1,781,833
Materials and supplies (2,697,202) (429,367)
Prepayments (258,937) 262,473
Other assets (116,585) (124,535)
Deferred charges 116,331 (348,782)
Increase (decrease) in liabilities:
Accounts payable (30,693) (3,678,251)
Consumer deposits 164,297 31,034
Fuel cost over-recovery 556,879 763,637
Accrued interest (4,294,395) (4,272,972)
Salaries, wages and benefits (149,233) (122,405)
Fuel 2,687,433 (1,109,223)
Other liabilities (85,238) 220,562
Deferred credits 0 (774,665)
------------ ------------
Net cash provided by operating activities 5,130,589 7,161,891
------------ ------------
Investing activities:
- ---------------------
Extension and replacement of plant (8,691,226) (1,926,136)
------------ ------------
Net cash used for investing activities (8,691,226) (1,926,136)
------------ ------------
Cash flows from financing activities:
- -------------------------------------
Repayments of long-term obiligations (6,586,983) (6,237,828)
Proceeds from short-term borrowing 3,500,000 0
Memberships and donations received (refunded) 2,380 (122,275)
Retirement of patronage capital and estate payments (45,435) (133,830)
Net receipts (refunds) on consumer advances for construction (58,578) 430,145
------------ ------------
Net cash used for financing activities (3,188,616) (6,063,788)
------------ ------------
Net decrease in cash and cash equivalents (6,749,253) (828,033)
Cash and cash equivalents at beginning of period $ 9,844,914 $ 10,650,594
- ------------------------------------------------ ------------ ------------
Cash and cash equivalents at end of period $ 3,095,661 $ 9,822,561
- ------------------------------------------ ============ ============
Supplemental disclosure of non-cash investing and financing activities
Retirement of plant $ 8,398 $ 479,798
Supplemental disclosure of cash flow information - interest expense paid,
excluding amounts capitalized $ 6,080,529 $ 5,750,359
============ ============
See accompanying notes to financial statements.
7
Chugach Electric Association, Inc.
Notes to Financial Statements
(Unaudited)
1. PRESENTATION OF FINANCIAL INFORMATION
The accompanying unaudited interim financial statements include the
accounts of Chugach Electric Association, Inc. (Chugach) and have been
prepared in accordance with generally accepted accounting principles for
interim financial information. Accordingly, they do not include all of the
information and footnotes required by accounting principles generally
accepted in the United States of America for complete financial
statements. They should be read in conjunction with our audited financial
statements for the year ended December 31, 2006, filed as part of our
annual report on Form 10-K. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. The results of operations for interim
periods are not necessarily indicative of the results that may be expected
for an entire year or any other period.
2. DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
a. Description of Business
Chugach is the largest electric utility in Alaska. Chugach is engaged in
the generation, transmission and distribution of electricity to directly
serve retail customers in the Anchorage and upper Kenai Peninsula areas.
Through an interconnected regional electrical system, Chugach's power
flows throughout Alaska's Railbelt, a 400-mile-long area stretching from
the coastline of the southern Kenai Peninsula to the interior of the
state, including Alaska's largest cities, Anchorage and Fairbanks.
Chugach also supplies much of the power requirements of three wholesale
customers, Matanuska Electric Association, Inc. (MEA), Homer Electric
Association, Inc. (HEA), and the City of Seward (Seward). Chugach's
members are the consumers of the electricity sold.
Chugach operates on a not-for-profit basis, and accordingly, seeks only to
generate revenues sufficient to pay operating and maintenance costs, the
cost of purchased power, capital expenditures, depreciation, and principal
and interest on all indebtedness and to provide for reserves. Chugach is
subject to the regulatory authority of the Regulatory Commission of Alaska
(RCA).
b. Management Estimates
In preparing the financial statements, management of Chugach is required
to make estimates and assumptions relating to the reporting of assets and
liabilities and the disclosure of contingent assets and liabilities as of
the date of the balance sheet and revenues and expenses for the reporting
period. Critical estimates include allowance
8
Chugach Electric Association, Inc.
Notes to Financial Statements
(Unaudited)
for doubtful accounts and the estimated useful life of utility plant.
Actual results could differ from those estimates.
c. Regulation
The accounting records of Chugach conform to the Uniform System of
Accounts as prescribed by the Federal Energy Regulatory Commission (FERC).
Chugach meets the criteria, and accordingly, follows the accounting and
reporting requirements of Statement of Financial Accounting Standards
(SFAS) No. 71, Accounting for the Effects of Certain Types of Regulation
(SFAS 71).
SFAS No. 71 provides for the recognition of regulatory assets and
liabilities as allowed by regulators for costs or credits that are
reflected in current rates or are considered probable of being included in
future rates. The regulatory assets or liabilities are then relieved as
the cost or credit is reflected in rates.
d. Income Taxes
Chugach is exempt from federal income taxes under the provisions of
Section 501(c)(12) of the Internal Revenue Code, except for unrelated
business income. For the three months ended March 31, 2007, Chugach
received no unrelated business income.
3. LINES OF CREDIT
Chugach maintains a $7.5 million line of credit with CoBank, ACB (CoBank), which
will expire on October 31, 2007, subject to annual renewal at the discretion of
the parties. On March 29, 2007, Chugach borrowed $3.5 million. The balance was
paid back on April 4, 2007. Interest on the borrowings is calculated using the
CoBank Base Rate on the first business day of the week plus 3%. The borrowing
rate at March 31, 2007 was 6.79% and at December 31, 2006 the borrowing rate was
6.66%. In addition to the CoBank line of credit, Chugach has an annual line of
credit of $50 million available with the National Rural Utilities Cooperative
Finance Corporation (NRUCFC). Chugach did not utilize this line of credit during
the first quarter of 2007. The borrowing rate is calculated using the total rate
per annum as may be fixed by CFC and will not exceed the Prevailing Prime Rate,
plus one percent per annum. The borrowing rate at March 31, 2007 was 6.9% and at
December 31, 2006 the borrowing rate was 7.15%. The NRUCFC line of credit
expires October 15, 2007.
9
Chugach Electric Association, Inc.
Notes to Financial Statements
(Unaudited)
4. LEGAL PROCEEDINGS
Matanuska Electric Association, Inc. v. State of Alaska, Regulatory Commission
of Alaska, Superior Court Case No. 3AN-06-8243 Civil
On May 17, 2006, MEA appealed and on May 30, 2006, Homer Electric Association,
Inc., (HEA) cross appealed the RCA's decision in Commission Docket No. U-04-102,
see "Footnote 5, Regulatory Matters - Revision to Current Depreciation Rates
(Docket No. U-04-102)." On appeal, MEA claims the Commission's decision dated
January 10, 2006 to authorize Chugach to implement new depreciation rates as of
January 1, 2005 constituted illegal retroactive ratemaking. MEA also contends
that the Commission's reliance on avoidance of regulatory lag as a basis for its
decision was improper. HEA's points on appeal challenge several decisions by the
Commission on estimated lives of General Plant on the ground that there is not
substantial evidence in the record to support such a decision. HEA and MEA both
challenge the discovery rulings of the Commission. Chugach will join the State
of Alaska in defending the Commission's rulings. On April 25, 2007 the Court
issued a briefing schedule. MEA's opening brief is due June 4, 2007. RCA's and
Chugach's briefs are due July 14, 2007.
The ultimate resolution of this matter is not currently determinable. In the
opinion of management, an adverse outcome is not likely to have a material
adverse effect on Chugach's results of operations, financial condition or
liquidity. No reserves have been established for this matter.
Matanuska Electric Association, Inc. v. Chugach Electric Association, Inc.,
Superior Court Case No. 3PA-06-1295 Civil
On May 17, 2006, MEA filed suit against Chugach in Superior Court asserting
three claims. MEA contends that by publishing unbundled financial statements
Chugach has in effect stated that MEA owes Chugach a debt. Chugach denies having
made statements to this effect. Unbundled financial statements are an analytic
tool developed by Chugach that separate the financial statements into two
business units consisting of the Generation and Transmission (G&T) and the
Distribution functions of the company. The unbundled financial statements
reflect the operating results of each separate entity. Statements of Revenues,
Expenses and Patronage Capital, Balance Sheets and Statements of Cash Flows are
prepared monthly for each business unit. MEA's action is based on the result of
Chugach's financial analysis showing intercompany receivable/payable entries on
the unbundled balance sheets.
The first of MEA's claims is that it is entitled to declaratory judgment to the
effect that MEA does not owe a debt to Chugach or to Chugach's Distribution
function. Second, MEA claims that Chugach has breached its Bylaws and the Power
Sales Agreement under which Chugach is obligated to sell MEA power by publishing
its unbundled financial analysis. On this basis, MEA seeks a declaration that
Chugach's actions violate the Bylaws and the Power Sales Agreement. MEA also
asks for an injunction against
10
Chugach Electric Association, Inc.
Notes to Financial Statements
(Unaudited)
further assertions, which Chugach denies having made, that MEA owes Chugach or
Chugach's Distribution function a debt. Finally, MEA seeks damages, including
punitive damages, to punish Chugach and deter it from continuing to publish the
analysis.
Chugach moved to dismiss MEA's first (declaratory judgment) and third
(defamation) claims in their complaint. Following oral argument, on February 7,
2007 the court denied Chugach's motion to dismiss the declaratory judgment claim
and granted Chugach's motion to dismiss the defamation claim.
With respect to the declaratory judgment claim, the court indicated that it
needed to look beyond the pleadings to determine whether Chugach's publications
suggest that MEA owes a substantial debt to Chugach. On April 20, 2007 Chugach
filed a motion for summary judgment on MEA's first and second claims. Trial is
currently scheduled for June 2007. On May 7 MEA filed a motion to postpone the
trial date until the fall and to extend time to answer Chugach's motion for
summary judgment. Chugach has opposed MEA's motion.
The ultimate resolution of this matter is not determinable. In the opinion of
management, an adverse outcome is not likely to have a material adverse effect
on Chugach's results of operations, financial condition or liquidity. No
reserves have been established for this matter.
5. REGULATORY MATTERS
Revision to Current Depreciation Rates (Docket No. U-04-102)
In 2004, Chugach implemented new depreciation rates based on an update of the
1999 Depreciation Study utilizing Electric Plant in Service balances as of
December 31, 2002. The 2002 Depreciation Study resulted in an increase to 2004
depreciation expense, which was not material to the financial statements. The
2002 Depreciation Study was submitted to the RCA for approval on November 19,
2004, resulting in the RCA opening a docket to review the proposed new rates.
Chugach, however, implemented the new rates effective January 1, 2004. Chugach
did not request a change in electric rates charged to customers based on the
proposed revisions to depreciation rates.
On March 9, 2005, the RCA ruled in Order No. 2 that depreciation rates may not
be implemented without prior approval of the RCA.
On September 21, 2005, the RCA issued Order No. 8 requiring Chugach to adjust
its underlying 2004 financial records to reflect the results as if Chugach had
not implemented unapproved rates. In November of 2005, Chugach reversed the 2004
depreciation expense and depreciation reserves that were previously recorded
using the 2002 Depreciation Study rates and calculated 2004 depreciation expense
for all
11
Chugach Electric Association, Inc.
Notes to Financial Statements
(Unaudited)
categories of plant using the 1999 Depreciation Study rates as approved by the
RCA in Docket U-01-108. The adjustment was not material to Chugach's financial
statements.
In Order No. 9 dated January 10, 2006, the RCA ruled substantially in Chugach's
favor approving the 2002 Depreciation Study with certain changes to the proposed
depreciation rates. The main effect of this decision is to allow Chugach to
revise its depreciation rates effective as of January 1, 2005.
Because Chugach did not request changes to the electric rates charged to our
customers based on the proposed new depreciation rates, there was no immediate
electric rate impact.
Wholesale customers MEA and HEA were active in the proceeding. Subsequently, MEA
filed an appeal of the RCA's decision in Superior Court, see "Footnote 4, Legal
Proceedings - Matanuska Electric Association, Inc. v. State of Alaska,
Regulatory Commission of Alaska, Superior Court Case No. 3AN-06-8243 Civil."
2005 Test Year General Rate Case (Docket No. U-06-134)
On September 27, 2006, the Chugach Board of Directors authorized and instructed
management to file a general rate case with the RCA. On September 29, 2006,
Chugach filed a general rate case based on a 2005 test year and requested a
revenue increase of $10.6 million for the Generation and Transmission (G&T)
function and a revenue decrease of $7.8 million for the Distribution function.
Overall revenues are proposed to increase $2.8 million.
Chugach expects the case to be fully adjudicated by January 1, 2008, assuming no
appeals or other delay in the regulatory process.
The Commission permitted intervention from Chugach's wholesale customers and the
Regulatory Affairs and Public Advocacy (RAPA) section within the Attorney
General's office of the State of Alaska. It also permitted intervention of a
single Chugach retail member.
A scheduling order was issued on January 23, establishing a hearing schedule to
adjudicate the case. Discovery from the intervenors in the case on Chugach's
filing and pre-filed initial testimony has been completed. Intervener testimony
has been submitted. Chugach is currently reviewing and doing discovery on this
testimony. Chugach's reply testimony is due by May 29. The hearing is currently
scheduled to occur in August 2007.
6. RECENT ACCOUNTING PRONOUNCEMENTS
In February, 2007, the Financial Accounting Standards Board ("FASB") issued
Statement of Accounting Standards ("SFAS") No. 159, "The Fair Value Option for
Financial Assets and Financial Liabilities - Including an amendment of FASB
Statement No. 115." SFAS
12
Chugach Electric Association, Inc.
Notes to Financial Statements
(Unaudited)
No. 159 allows for certain financial assets and liabilities to be measured at
fair value on an instrument-by-instrument basis subject to certain restrictions.
SFAS No. 159 is effective for financial statements issued for fiscal years
beginning after November 15, 2007. Chugach will begin application of SFAS No.
159 on January 1, 2008, and does not expect it to have a material affect on our
results of operations, financial position, and cash flows.
In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements." SFAS
No. 157 provides guidance for using fair value to measure assets and
liabilities. In addition, this statement defines fair value, establishes a
framework for measuring fair value, and expands disclosures about fair value
measurements. This statement applies when other accounting pronouncements
require fair value measurement; it does not require new fair value measurements.
This statement is effective for financial statements issued for fiscal years
beginning after November 15, 2007, and interim periods within those fiscal
years. Chugach will begin application of SFAS No. 157 on January 1, 2008, and
does not expect it to have a material affect on our results of operations,
financial position, and cash flows.
In March 2006, the FASB issued SFAS No. 156, "Accounting for Servicing of
Financial Assets -- an amendment of FASB Statement No. 140." SFAS No. 156
requires an entity to recognize a servicing asset or servicing liability each
time it undertakes an obligation to service a financial asset by entering into a
servicing contract in specific situations. Additionally, the servicing asset or
servicing liability is initially measured at fair value; however, an entity may
elect the "amortization method" or "fair value method" for subsequent balance
sheet reporting periods. Application of SFAS No. 156 on January 1, 2007, did not
have a material affect on our results of operations, financial position, and
cash flows.
In February 2006, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Standard "(SFAS") No. 155, "Accounting for Certain Hybrid
Instruments", which is an amendment of SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities", and SFAS No. 140, "Accounting for Transfers
and Servicing of Financial Assets and Extinguishments of Liabilities -- a
replacement of FASB Statement No. 125." SFAS No. 155 allows financial
instruments that have embedded derivatives to be accounted for as a whole
(eliminating the need to bifurcate the derivative from its host) if the holder
elects to account for the whole instrument on a fair value basis. The Statement
also establishes a requirement to evaluate interests in securitized financial
assets to identify interests that are freestanding derivatives or that are
hybrid financial instruments that contain an embedded derivative requiring
bifurcation and clarifies that concentrations of credit risk in the form of
subordination are not embedded derivatives. Application of SFAS No. 155 on
January 1, 2007, did not have a material affect on our results of operations,
financial position, and cash flows.
13
Chugach Electric Association, Inc.
Notes to Financial Statements
(Unaudited)
In September 2006, the FASB issued FASB Staff Position ("FSP") AUG AIR-1,
"Accounting for Planned Major Maintenance Activities." FSP AUG AIR-1 prohibits
the use of the accrue-in-advance method of accounting for planned major
maintenance activities in annual and interim financial reporting periods.
Chugach implemented this Staff Position effective January 1, 2007. Because
Chugach does not accrue in advance for planned major maintenance activities, the
implementation of FSP AUG AIR-1 did not have an impact on our results of
operations or financial condition.
14
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Reference is made to the information contained under the caption "CAUTION
REGARDING FORWARD-LOOKING STATEMENTS" at the beginning of this report.
RESULTS OF OPERATIONS
Current Year Quarter Versus Prior Year Quarter
Total operating revenues, which include sales of electric energy to retail,
wholesale and economy energy customers and other miscellaneous revenues,
increased 6.8% from $66.9 million in the first quarter of 2006 compared to $71.5
million in the first quarter of 2007. This increase was primarily due to
increased retail and wholesale energy sales and increased revenue recovered
through the fuel and purchased power surcharge mechanism due to higher fuel
prices. Retail and wholesale energy sales increased in the first quarter of 2007
compared to the same quarter of 2006 primarily due to colder weather in February
and March of the current year. Wholesale energy sales also increased due to
higher sales to industrial and residential class sales as well as uninterrupted
energy sales to Seward during the first quarter of 2007. In 2006, energy sales
to Seward were reduced due to an avalanche that cut the 69kV transmission line
requiring Seward to rely on its own generation during the first quarter of 2006.
Economy energy sales were lower in the first quarter of 2007 compared to the
same quarter of 2006 due to reduced sales to Golden Valley Electric Association
due to Dynamite Slough transmission line work and maintenance on Beluga Units 6
and 8 which limited our Beluga generation.
Based on the results of fixed and variable cost recovery established in
Chugach's last rate case, wholesale rates contributed approximately $7.3 million
and $7.0 million to Chugach's fixed costs for the quarter ended March 31, 2007
and 2006, respectively.
The following table shows the base rate sales revenue and fuel and purchased
power revenue by customer class that is included in revenue for the quarters
ended March 31, 2007 and 2006:
(in millions)
- ---------------------------------------------------------------------------------------------------------------------
Base Rate Sales Revenue Fuel and Purchased Power Revenue Total Revenue
- ---------------------------------------------------------------------------------------------------------------------
2007 2006 % Variance 2007 2006 % Variance 2007 2006 % Variance
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
Retail
Residential $ 13.3 $ 13.3 0.0% $ 9.1 $ 7.6 19.7% $ 22.4 $ 20.9 7.2%
Small Commercial $ 2.4 $ 2.3 4.3% $ 1.9 $ 1.5 26.7% $ 4.3 $ 3.8 13.2%
Large Commercial $ 7.7 $ 7.2 6.9% $ 7.8 $ 6.3 23.8% $ 15.5 $ 13.5 14.8%
Lighting $ 0.3 $ 0.3 0.0% $ 0.0 $ 0.0 n/a $ 0.3 $ 0.3 0.0%
Total Retail $ 23.7 $ 23.1 2.6% $ 18.8 $ 15.4 22.1% $ 42.5 $ 38.5 10.4%
Wholesale
HEA $ 2.6 $ 2.6 0.0% $ 6.6 $ 5.2 26.9% $ 9.2 $ 7.8 17.9%
MEA $ 5.7 $ 5.5 3.6% $ 11.0 $ 8.8 25.0% $ 16.7 $ 14.3 16.8%
SES $ 0.3 $ 0.2 50.0% $ 0.9 $ 0.5 80.0% $ 1.2 $ 0.7 71.4%
Total Wholesale $ 8.6 $ 8.3 3.6% $ 18.5 $ 14.5 27.6% $ 27.1 $ 22.8 18.9%
Economy Sales $ 0.3 $ 1.4 (78.6%) $ 0.8 $ 3.6 n/a $ 1.1 $ 5.0 (78.0%)
Miscellaneous $ 0.8 $ 0.6 33.3% $ 0.0 $ 0.0 n/a $ 0.8 $ 0.6 33.3%
Total Revenue $ 33.4 $ 33.4 0.0% $ 38.1 $ 33.5 13.7% $ 71.5 $ 66.9 6.9%
- ---------------------------------------------------------------------------------------------------------------------
15
The following table summarizes kWh sales for the quarters ended March 31:
2007 2006
Customer kWh kWh
-------- --- ---
Retail 335,923,757 331,871,496
Wholesale 344,323,838 330,602,415
Economy Energy 16,976,950 88,938,040
----------- -----------
Total 697,224,545 751,411,951
=========== ===========
Retail demand and energy and wholesale demand and energy rates charged to HEA,
MEA and Seward did not change in the first quarter of 2007 compared to the first
quarter of 2006.
Total operating expenses increased $5.1 million, or 9.2%, in the first quarter
of 2007 over the same period of 2006. Fuel expense increased $321.8 thousand, or
1.1%, due primarily to higher fuel prices. For the quarter ended March 31, 2007,
Chugach used 6,650,974 MCF of fuel at an average effective price of $5.03 per
MCF, which does not include 1,022,604 MCF of fuel that is recorded in purchased
power. For the same period in 2006, Chugach used 7,108,027 MCF of fuel at an
average effective price of $4.20 per MCF, which does not include 446,856 MCF of
fuel that is recorded in purchased power.
Production expense increased $281.8 thousand, or 8.8%, in the first quarter of
2007 compared to the same period in 2006 due primarily to an increase in labor
and materials associated with maintenance projects related to Beluga Units 3 and
5.
Purchased power increased $3.5 million, or 49.0%, in the first quarter of 2007
compared to the first quarter of 2006. The increase is due in part to higher
fuel prices as well as continued transmission line work at Dynamite Slough and
maintenance on Beluga Units 6 and 8, limiting output from Beluga, which resulted
in higher purchased power costs. In the first quarter of 2007, Chugach purchased
176,044 MWh of energy at an average effective price of 5.91 cents per kWh. For
the same period in 2006, Chugach purchased 128,040 MWh of energy at an average
price of 5.37 cents per kWh.
Transmission expense increased $332.2 thousand, or 23.9%, in the first quarter
of 2007 compared to the same quarter of 2006. The increase is primarily due to
increased labor related to maintenance of overhead lines and substations. The
increase is also due to professional service costs related to transmission line
clearing as well as contract services for maintenance at the Point MacKenzie and
University substations.
Distribution expense increased $303.0 thousand, or 10.0%, for the quarter ended
March 31, 2007 compared to the same period of 2006. The increase is due to labor
and professional services in January, which were related to an outage that
occurred in December 2006 and extended into the first quarter of 2007.
16
Consumer accounts expenses decreased $88.7 thousand, or 6.8%, for the quarter
ended March 31, 2007 compared to the same period of 2006. The decrease is
primarily due to lower labor expense due to unfilled positions as well as lower
temporary labor expense.
Administrative, general and other expenses increased $280.9 thousand, or 5.9%,
for the quarter ended March 31, 2007 compared to the same period of 2006. The
increase is primarily due to increased professional service costs related to the
2005 test year rate case, fuel supply planning and process and gap analysis
associated with Sarbanes Oxley compliance.
Interest on long term debt did not materially change in the first quarter of
2007 compared to the same quarter of 2006. Other interest expense increased
$86.4 thousand, or 100.0%, primarily due to interest paid on an adjustment to an
electric account. Interest charged to construction increased $43.8 thousand, or
38.0%, due to a higher rate being charged to the average balance in construction
work-in-progress (CWIP) during the first quarter of 2007 compared to the same
quarter in 2006.
Nonoperating margins increased $75.6 thousand, or 38.9%, in the first quarter of
2007 compared to the same quarter of 2006. The increase is primarily due to
higher interest rates on our invested cash balance for the first quarter of
2007. The increase was also due to an increase in allowance for funds used
during construction (AFUDC) during the first quarter of 2007 compared to the
first quarter of 2006 due to a higher rate being charged to the average CWIP
balance.
Financial Condition
Total assets increased $894.3 thousand, or 0.2%, from December 31, 2006, to
March 31, 2007. Net utility plant increased $1.7 million, or 0.4%, due to the
completion of the Dynamite Slough tower and line rebuild and continued
construction of the Postmark substation. The increase was offset by increased
accumulated depreciation. Special funds increased $645.6 thousand, or 100.0%,
due to the value of employee contributions to a deferred compensation plan being
recorded in the first quarter of 2007. Accounts receivable increased $2.7
million, or 8.2% due primarily to the timing of a monthly billing to one of our
wholesale customers. Materials and supplies increased $2.7 million, or 10.6%,
due to the increase in distribution and generation inventory for scheduled
maintenance and the upcoming construction season. Prepayments increased $258.9
thousand, or 17.4%, due in part to corporate insurance premiums being paid in
the first quarter of 2007. The increases were offset by a $6.7 million, or
68.6%, decrease in cash and cash equivalents due, in part, to the semi-annual
interest payments on the 2001 and 2002 Series A Bonds, and the principal payment
on the 2002 Series B Bond in the first quarter of 2007. The increases were
offset by a $459.4 thousand, or 2.1%, decrease in deferred charges primarily due
to three months of amortization charges.
Total liabilities decreased $3.6 million, or 0.9%, from December 31, 2006 to
March 31, 2007. The decrease in total liabilities includes a $7.0 million, or
2.0%, decrease in long-term obligations due the reclassification of the 2002
Series B Bond and the CoBank 3
17
Bond to current installments combined with a $453.6 thousand, or 3.3%, increase
in current installments of long-term obligations and a $3.5 million, or 100%,
increase in short-term obligations due to the use of the CoBank line of credit
during the first quarter of 2007. In addition, accrued interest decreased $4.3
million, or 67.5%, as a result of the semi-annual interest payment on the 2001
and 2002 Series A Bonds in the first quarter of 2007. The decreases were offset
by increases in fuel cost over-recovery, fuel payable and other liabilities.
Fuel cost over-recovery increased $556.8 thousand, or 185.3%, due to the over
collection of the previous quarter's fuel and purchased power costs through the
fuel an purchased power surcharge mechanism. Fuel payable increased $2.7
million, or 16.6%, primarily due to higher fuel prices. Other liabilities
increased $645.6 thousand, or 100.0%, due to the value of employee contributions
to a deferred compensation plan being recorded in the first quarter of 2007.
Total equities and margins increased $4.5 million, or 3.0%, in the first quarter
of 2007 compared to year-end 2006 due primarily to margins generated during the
first quarter of 2007.
LIQUIDITY AND CAPITAL RESOURCES
Chugach has satisfied its operational and capital cash requirements primarily
through internally generated funds, an annual $7.5 million line of credit with
CoBank and a $50 million line of credit from NRUCFC. At March 31, 2007, there
was a $3.5 million outstanding balance with CoBank and no outstanding balance
with NRUCFC. The outstanding balance with CoBank was repaid on April 4, 2007.
Chugach also has a term loan facility with CoBank. Loans made under this
facility are evidenced by promissory notes governed by the Master Loan
Agreement, which became effective on January 22, 2003. At March 31, 2007,
Chugach had the following promissory notes outstanding with this facility:
Promissory Principal Interest Rate at Maturity Principal
Note Balance March 31, 2007 Date Payment Dates
---- ------- -------------- ---- -------------
CoBank 2 $ 7,000,000 5.50% 2010 2005 - 2010
CoBank 3 19,017,242 6.79% 2022 2003 - 2022
CoBank 4 21,427,874 6.79% 2022 2003 - 2022
CoBank 5 5,000,000 6.79% 2007 2007
-----------
Total $52,445,116
On January 22, 2003, Chugach and CoBank finalized a new Master Loan Agreement
pursuant to which the CoBank term loan facility was converted from secured to
unsecured debt and the obligations represented by the outstanding bonds then
held by CoBank were converted into promissory notes governed by the new Master
Loan Agreement. Chugach's mortgage indenture was replaced in its entirety by an
Amended and Restated Indenture dated April 1, 2001. All liens and security
interests imposed under the indenture were terminated and all outstanding
Chugach bonds (including new
18
bonds of 2001 Series A, 2002 Series A and 2002 Series B) became unsecured
obligations governed by the terms of the Amended and Restated Indenture.
Chugach had the following bonds outstanding at March 31, 2007:
Principal Interest Rate at Maturity Principal
Bond Balance March 31, 2007 Date Payment Dates
---- ------- -------------- ---- -------------
2001 Series A $150,000,000 6.55% 2011 2011
2002 Series A $120,000,000 6.20% 2012 2012
2002 Series B $ 35,500,000 5.30% 2012 2008 - 2012
------------
Total $305,500,000
Capital construction in 2007 is estimated at $45.0 million. At March 31, 2007,
approximately $8.7 million had been expended. Capital improvement expenditures
are expected to increase in the second quarter as the construction season
accelerates.
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 2007 and thereafter.
CRITICAL ACCOUNTING POLICIES
Our accounting and reporting policies comply with U.S. generally accepted
accounting principles (GAAP). The preparation of financial statements in
conformity with GAAP requires that management apply accounting policies and make
estimates and assumptions that affect results of operations and reported amounts
of assets and liabilities in the financial statements. Significant accounting
policies are described in Note 1 of Item 8 "Financial Statements and
Supplementary Data" of our Form 10-K for the fiscal year ended December 31,
2006. Critical accounting policies are those policies that management believes
are the most important to the portrayal of Chugach's financial condition and
results of its operations, and require management's most difficult, subjective,
or complex judgments, often as a result of the need to make estimates about
matters that are inherently uncertain. Most accounting policies are not
considered by management to be critical accounting policies. Several factors are
considered in determining whether or not a policy is critical in the preparation
of financial statements. These factors include, among other things, whether the
estimates are significant to the financial statements, the nature of the
estimates, the ability to readily validate the estimates with other information
including third parties or available prices, and sensitivity of the estimates to
changes in economic conditions and whether alternative accounting methods may be
utilized under GAAP. For all of these policies management cautions that future
events rarely develop exactly as forecast, and the best estimates routinely
require adjustment. Management has discussed the development and the selection
of critical accounting policies with Chugach's Audit Committee. The following
policies are considered to be critical accounting policies for the quarter ended
March 31, 2007.
19
Electric Utility Regulation
Chugach is subject to regulation by the RCA. The RCA sets the rates Chugach is
permitted to charge customers based on allowable costs. As a result, Chugach
applies Statement of Financial Accounting Standards (SFAS) No. 71, Accounting
for the Effects of Certain Types of Regulation (SFAS 71). Through the ratemaking
process, the regulators may require the inclusion of costs or revenues in
periods different than when they would be recognized by a non-regulated company.
This treatment may result in the deferral of expenses and the recording of
related regulatory assets based on anticipated future recovery through rates or
the deferral of gains or creation of liabilities and the recording of related
regulatory liabilities. The application of Statement No. 71 has a further effect
on Chugach's financial statements as a result of the estimates of allowable
costs used in the ratemaking process. These estimates may differ from those
actually incurred by the Company; therefore, the accounting estimates inherent
in specific costs such as depreciation and pension and post-retirement benefits
have less of a direct impact on Chugach's results of operations than they would
on a non-regulated company. As reflected in Note 1 of Item 8 "Financial
Statements and Supplementary Data" under "Deferred Charges and Credits" of our
Form 10-K for the fiscal year ended December 31, 2006, significant regulatory
assets and liabilities have been recorded. Management reviews the ultimate
recoverability of these regulatory assets and liabilities based on applicable
regulatory guidelines. However, adverse legislation and judicial or regulatory
actions could materially impact the amounts of such regulatory assets and
liabilities and could adversely impact Chugach's financial statements.
Allowance for Doubtful Accounts
We maintain an allowance for doubtful accounts for estimated losses resulting
from the inability of our customers to make required payments. We base our
estimates on the aging of our accounts receivable balances, historical bad debt
reserves, historical percent of retail revenue that has been deemed
uncollectible, changes in our collections process and regulatory requirements.
If the financial condition of our customers were to deteriorate resulting in an
impairment of their ability to make payments, additional allowances may be
required. If their financial condition improves, allowances may be reduced. Such
allowance changes could have a material effect on our consolidated financial
condition and results of operations.
Estimated Useful Life of Utility Plant
We determine the estimated useful life of utility plant based on a depreciation
study that is updated every three years and approved by the RCA. The annual
depreciation rates were calculated by the straight line average service life
method using the remaining life basis. The calculated accrual rates were based
on attained ages of plant in service and the estimated service life and net
salvage characteristics of each depreciable group. The service life and net
salvage estimates were based on statistical analyses of historical data
assembled from utility records, management's current plans and operating
policies, a field survey of the property in service, consideration of current
developments in the electric
20
industry, and a general knowledge of the life and salvage characteristics of
other electric properties. For major facilities, such as generating units,
probable retirement years were estimated and the life span procedure of
calculating depreciation was used to provide for the simultaneous retirement of
all associated property, surviving from various years of installation, at the
time of the retirement of the major investment. Certain general plant accounts
are amortized as a cost effective means of recording the cost of such assets to
the cost of operations. The last update was the 2002 depreciation study update
and those rates were approved and implemented effective January 1, 2005.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
Information required by this Item is contained in Note 6 to the "Notes to
Financial Statements" within Part I of this Form 10-Q.
OUTLOOK
In a letter dated January 9, 2007, HEA notified Chugach that HEA would not seek
to renew, extend or modify the current Agreement for Sale of Electric Power and
Energy (the Agreement) when the Agreement expires on December 31, 2013.
On April 18, 2007, the Board of Directors voted to amend the 2007 Operating and
Capital Budgets to include $7.5 million in capital spending for a new generation
facility.
ENVIRONMENTAL MATTERS
Compliance with Environmental Standards
Chugach's operations are subject to certain federal, state and local
environmental laws. 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.
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 our business, we manage our exposure
to these risks as described below. We do not engage in trading market
risk-sensitive instruments for speculative purposes.
21
Interest Rate Risk
The following table provides information regarding auction dates and rates in
2007 on the 2002 Series B Bonds. The maximum rate on the 2002 Series B bond is
15%.
Auction Date Interest Rate
------------ -------------
January 24, 2007 5.29%
February 21, 2007 5.29%
March 22, 2007 5.30%
April 18, 2007 5.25%
Chugach is exposed to market risk from changes in interest rates. A 100
basis-point change (up or down) would increase or decrease or interest expense
by approximately $844,500 based on $84,445,116 of variable rate debt outstanding
at March 31, 2007.
The following table provides information regarding cash flows for principal
payments on total debt by maturity date (dollars in thousands) as of March 31,
2007.
Fair
Total Debt(1) 2007 2008 2009 2010 2011 Thereafter Total Value
------------- ---- ---- ---- ---- ---- ---------- ----- -----
Fixed rate debt $ 1,500 $ 2,000 $ 2,000 $ 1,500 $150,000 $ 120,000 $277,000 $288,079
Average interest rate 5.50% 5.50% 5.50% 5.50% 6.55% 6.20% 6.37%
Annual interest
Expense $17,628 $17,518 $17,405 $17,297 $ 9,487 $ 620 $ 79,955
Variable rate debt $ 5,642 $ 7,241 $ 7,763 $ 8,297 $ 8,843 $ 43,159 $ 84,445 $ 84,445
Average interest rate 6.79% 5.54% 5.54% 5.54% 5.55% 6.45%
(1) Includes current portion
Commodity Price Risk
Chugach's gas contracts provide for adjustments to gas prices based on
fluctuations of certain commodity prices and indices. Because purchased power
costs are passed directly to our wholesale and retail customers through a fuel
surcharge mechanism, fluctuations in the price paid for gas pursuant to
long-term gas supply contracts does not normally impact margins.
22
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Controls and Procedures
As of the end of the period covered by this report, Chugach evaluated the
effectiveness of the design and operation of its disclosure controls and
procedures. Chugach's chief executive officer (CEO) and chief financial officer
(CFO) supervised and participated in this evaluation. Based on this evaluation,
Chugach's CEO and CFO each concluded that Chugach's disclosure controls and
procedures are effective in timely alerting them to material information
required to be included in its periodic reports to the SEC. The design of any
system of controls is based in part upon various assumptions about the
likelihood of future events, and there can be no assurance that any of Chugach's
plans, products, services or procedures will succeed in achieving their intended
goals under future conditions. In addition, there have been no significant
changes in Chugach's internal controls or in other factors known to management
that could significantly affect its internal controls subsequent to our most
recent evaluation.
Internal Control Over Financial Reporting
Chugach is in the process of implementing the requirements of Section 404 of the
Sarbanes-Oxley Act of 2002, which requires its management to assess the
effectiveness of its internal controls over financial reporting and include an
assertion in its annual report as to the effectiveness of our controls. In
addition, Chugach's independent registered public accounting firm, KPMG LLP,
will be required to attest to whether Chugach's assessment of the effectiveness
of our internal controls over financial reporting is fairly stated in all
material respects and separately report on whether it believes Chugach
maintained, in all material respects, effective internal controls over financial
reporting as of December 31, 2008. Chugach is in the process of performing the
system and process documentation, evaluation and testing required for management
to make this assessment and for KPMG LLP to provide its attestation report. This
process will continue to require significant amounts of management time and
resources. In the course of evaluation and testing, management may identify
deficiencies that will need to be addressed and remediated.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Information required by this Item is contained in Note 4 to the "Notes to
Financial Statements" within Part I of this Form 10-Q.
23
ITEM 1A. RISK FACTORS
There have been no material changes from the risk factors disclosed under "Risk
Factors" in Item 1.A. of our Form 10-K for the fiscal year ended December 31,
2006.
ITEM 2. UNREGISTERED SALES OF EQUITY 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
Chugach's annual membership meeting was held on April 26, 2007, and two new
board members were elected. Out of 28,797 votes, P.J. Hill received 9,535 votes
and Alex Gimarc received 8,800 votes and were elected to three-year terms.
The members approved the following amendments to the Bylaws:
o The deadlines for appointing members to member committees were
standardized.
o Clarified that the Board is able to engage the service of
consultants to advise it on various Association matters.
ITEM 5. OTHER INFORMATION
No other information to be reported.
ITEM 6. EXHIBITS
Bylaws of the Registrant (as amended April 26, 2007)
Certification of Principal Executive Officer pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002
Certification of Principal Financial Officer pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002
Certification of Principal Executive Officer pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002
Certification of Principal Financial Officer pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002
24
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this quarterly report to be signed on its behalf by
the undersigned thereunto duly authorized.
CHUGACH ELECTRIC ASSOCIATION, INC.
By: /s/ William R. Stewart
----------------------------------------
William R. Stewart
Chief Executive Officer
By: /s/ Michael R. Cunningham
----------------------------------------
Michael R. Cunningham
Chief Financial Officer
Date: May 14, 2007
25
EXHIBITS
Listed below are the exhibits, which are filed as part of this Report:
Exhibit Number Description
-------------- -----------
3.2 Bylaws of the Registrant (as amended April 26, 2007)
31.1 Certification of Principal Executive Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
31.2 Certification of Principal Financial Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
32.1 Certification of Principal Executive Officer pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
32.2 Certification of Principal Financial Officer pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
26