No. S0040D

                                   CoBANK, ACB

                            LINE OF CREDIT AMENDMENT

         THIS AMENDMENT is entered into as of the 13th day of September 2000, by
and between CoBANK, ACB ("CoBank") and CHUGACH ELECTRIC  ASSOCIATION,  INC. (the
"Borrower").

         WHEREAS,  CoBank  and the  Borrower  desire  to  amend  Line of  Credit
Agreement  No.  S0040  dated  May 5,  1993  (such  agreement,  as may have  been
previously amended, shall hereinafter be referred to as the "Agreement");

         NOW, THEREFORE, for valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties agree as follows:

1.       Section 4 of the Agreement is amended and restated to read as follows:

         SECTION 4.

         (A)  Interest.  The  Borrower  agrees  to pay  interest  on the  unpaid
principal  balance of each loan in accordance  with one or more of the following
interest rate options, as selected by the Borrower:

     (1)  Variable  Rate  Option.  At a rate per annum equal at all times to the
rate of interest  established  by CoBank on the first Business Day of each week.
The rate established by CoBank may not exceed CoBank's  "National Variable Rate"
(as  hereinafter  defined)  on that day and shall be  effective  until the first
Business Day of the next week.  Each change in the rate shall be  applicable  to
all balances subject to this option and information  about the then current rate
shall be made  available  upon  telephonic  request.  For purposes  hereof,  the
"National  Variable Rate" shall mean the rate of interest  established by CoBank
from time to time as its  National  Variable  Rate,  which Rate is  intended  by
CoBank to be a reference  rate and not its lowest rate.  The  National  Variable
Rate will change on the date  established by CoBank as the effective date of any
change therein and CoBank agrees to notify the Borrower  promptly after any such
change.

                  (2) Fixed Rate Option.  At a fixed rate per annum to be quoted
by CoBank in its sole discretion in each instance.  Under this option, rates may
be fixed on such  balances and for such periods as may be agreeable to CoBank in
its sole discretion in each instance.

The Borrower shall select the  applicable  rate option at the time it requests a
loan hereunder and may, on any Business Day, elect to convert  balances  bearing
interest at the  variable  rate option to the fixed rate  option.  In  addition,
prior to the expiration of any fixed rate period,  the Borrower may,  subject to
Section 12(A) of the MLA,  repay any fixed rate balance,  convert any fixed rate
balance  to the  variable  rate  option,  or re-fix the rate at a new rate to be
quoted by CoBank.  Upon the  expiration  of any fixed rate period,  the Borrower
may,  subject to the terms  hereof,  re-fix the rate or convert  the rate to the
variable  rate  option.  In the  absence of any such  election,  interest  shall
automatically  accrue at the variable rate option.  All  elections  provided for
herein shall be made  telephonically or in writing and must be received by 12:00
Noon Borrower's local time. Interest shall be calculated on the actual number of
days each loan is outstanding on the basis of a year  consisting of 360 days and
shall be payable monthly in arrears by the 20th day of the following month.

         (B) Default Rate.  Notwithstanding  the foregoing,  (i) if prior to the
maturity of the loans the Borrower fails to make any payment to CoBank when due,
then at CoBank's option in each instance,  such payment shall bear interest from
the date due to the  date  paid at 4% per  annum in  excess  of the  rate(s)  of
interest that would  otherwise be in effect on that loan under the terms of this
Agreement;  and (ii)  after the  maturity  of any loan  (whether  as a result of
acceleration or otherwise), the unpaid principal balance of such loan (including
without limitation,  principal, interest, fees and expenses) shall automatically
bear  interest at 4% per annum in excess of the  rate(s) of interest  that would
otherwise  be in  effect on that loan  under  the  terms of the  Agreement.  All
interest  provided for herein shall be payable on demand and shall be calculated
on the basis of a year consisting of 360 days.

         (C) Broken Funding  Surcharge.  The Borrower  agrees to pay to CoBank a
surcharge  in the amount set forth below in the event the  Borrower:  (1) repays
any fixed rate balance  prior to the last day of its fixed rate period  (whether
such payment is made voluntarily or by reason of acceleration or otherwise); (2)
fails to borrow any fixed rate balance on the date  scheduled  therefor;  or (3)
converts  any fixed rate balance to another  fixed rate or to the variable  rate
option  prior  to the last  day of the  fixed  rate  period  applicable  to such
balance.  The  surcharge  shall be in an  amount  equal  to the sum of:  (a) the
present value of any funding losses imputed by CoBank to have been incurred as a
result of such  payment,  conversion  or  failure;  plus (b) a yield of 1/2 of 1
percent of the amount prepaid,  converted or not borrowed.  Such surcharge shall
be calculated in accordance with  methodology  established by CoBank,  a copy of
which will be made available upon request.

2.     To the extent  not inconsistent  herewith, all other terms and conditions
       of the Agreement shall remain in full force and effect.

         IN WITNESS  WHEREOF,  the  parties  have caused  this  Amendment  to be
executed by their duly authorized officers as of the date shown above.

CoBANK, ACB                                   CHUGACH ELECTRIC ASSOCIATION, INC.


By:  /s/Elaine Phillips                              By:  /s/Eugene N. Bjornstad

Title: Asst. Corporate Secretary                     Title: General Manager