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



<PAGE>



                       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

<PAGE>



                       CHUGACH ELECTRIC ASSOCIATION, INC.
                                 Balance Sheets

                                     Assets

<TABLE>
                                                          September 30, 1996  December 31, 1995
                                                               ------------   ------------
                                                                (Unaudited)
<S>                                                            <C>            <C> 
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
                                                               ------------   ------------



</TABLE>

See accompanying notes to unaudited financial statements.




                                        3

<PAGE>



                       CHUGACH ELECTRIC ASSOCIATION, INC.
                                 Balance Sheets

                            Liabilities and Equities
<TABLE>

                                                        September 30, 1996  December 31, 1995
                                                             ------------   ------------
                                                              (Unaudited)
<S>                                                         <C>               <C> 
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
                                                            ------------      ------------

</TABLE>



See accompanying notes to unaudited financial statements.



                                        4

<PAGE>



                       CHUGACH ELECTRIC ASSOCIATION, INC.

             Statements of Revenues, Expenses and Patronage Capital


<TABLE>

                                                              Three-months                     Nine-months
                                                           ended September 30               ended September 30

                                                           1996            1995             1996            1995
                                                      -------------    ------------    -------------    ------------

                                                               (Unaudited)                      (Unaudited)

<S>                                                   <C>              <C>             <C>              <C> 
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
                                                      -------------    ------------    -------------    ------------


</TABLE>



See accompanying notes to unaudited financial statements.





                                        5

<PAGE>



                       CHUGACH ELECTRIC ASSOCIATION, INC.
                            Statements of Cash Flows

<TABLE>
                                                                                        Nine-months ended September 30

                                                                                             1996            1995
                                                                                         ------------    ------------

                                                                                                 (Unaudited)
<S>                                                                                      <C>             <C> 
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
                                                                                         ------------    ------------


</TABLE>

See accompanying notes to unaudited financial statements.

                                        6

<PAGE>



                       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

<PAGE>



                     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

<PAGE>



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

<PAGE>



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

<PAGE>



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

<PAGE>



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

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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.




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<PAGE>



                                   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

<PAGE>


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


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