MEMORANDUM OF AGREEMENT

         The undersigned  parties agree to settle all claims except with respect
to NRDA issues that  Chugach  Electric  Association  (Chugach)  could  assert as
arising under its  insurance  policies with Admiral  Insurance  Company,  Alaska
National Insurance  Company,  Nationwide Mutual Insurance Company and Providence
Washington Insurance Company (insurers) in relation to Chugach's PRP obligations
at the  Standard  Steel  Superfund  site.  The  terms of the  settlement  are as
follows:
     1. On or before March 15, 1998,  the Insurers will bring current the Heller
Ehrman bills with interest running at 101/2% from 1-1-1998.  These bills include
$8,750.71  owed on  1990-91  billings  and  current  billings  in the  amount of
$7,496.40.
     2. On March 15, 1998 or thirty days after  Chugach  provides  the  Insurers
with  documentation  supporting its claim for payment,  whichever is later,  the
Insurers will pay 100% of the following: 50% of the partial consent decree costs
minus the scrap  removal  costs  ($433,611).  This amount will be  allocated  to
defense  costs.  The Insurers  will also pay 77.5% of the  remaining 50% partial
consent  decree  costs,  the scrap removal  costs,  the 1997 RD/RA and oversight
costs.  This 77.5% payment will be allocated to indemnity.  Interest will run at
the rate of 8% simple interest from the date this payment is due.
     3. On  12-1-98  and  12-1-99  or thirty  days after  Chugach  provides  the
Insurers with documentation supporting its claim for payment whichever is later,
the Insurers will pay 77.5% of the RD/RA and oversight  costs incurred since the
last payment.  These progress payments will be allocated to indemnity.  Interest
will run at the rate of 8% simple interest from the date a payment is due.
     4. On the earlier of EPA  certification of completion of remedial action or
1-1-2001,  assuming  documentation has been provided at least thirty days before
payment is due, the  Insurers  will pay 77.5% of the RD/RA and  oversight  costs
incurred  since the last payment.  The Insurers will also pay 90% of the present
value of Chugach's  likely  future  obligations  for O & M costs,  oversight and
defense costs.  This present value will be set by the PRP's  consultant.  If the
present  value of  Chugach's  share is set at less than  $100,000,  the Insurers
agree  to be  bound  by this  determination.  If this  amount  is set at or over
$100,000 and the parties cannot agree on the amount,


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the parties will try to agree on a single mutually acceptable  consultant to set
the present value of Chugach's future  obligations.  If the parties cannot agree
on a consultant,  each side will pick a consultant and the two consultants  will
pick a third consultant and all three  consultants will set the lump sum present
value  of  Chugach's  future  obligations.  The  decision  of two  of the  three
consultants  will be  binding.  The cost of a single  consultant,  or,  if three
consultants are used, the "swing"  consultant,  will be paid on a 50-50 basis by
Chugach and the Insurers. If three consultants are used, each party will pay the
full cost of the  consultant  it selected.  Interest  will run at the rate of 8%
from the date payment is due.
     5. The Insurers  will pay 90% of  reasonable  and  necessary  defense costs
going forward as of March 1, 1998 until EPA certification or 1-1-2001  whichever
is earlier, assuming prior thirty day documentation. Attorneys fees incurred for
January  and  February  of 1998 will be paid on a 100% basis  with the  Insurers
retaining  their  right to audit and  dispute  such bills and will be due within
thirty days of receipt of billing.
     6.  Chugach and  Providence  Washington  agree that the 1978 policy will be
treated as if it has  limits of $50,000  for  liability  on account of  property
damage for purposes of this  settlement but the parties agree that this will not
waive  Chugach's right to argue in any future claims that this policy had higher
limits.
     7. The parties agree that they will work  cooperatively  together to retain
as much  confidentiality as possible of this settlement while acknowledging that
Chugach has substantial disclosure obligations.
     8. Each insurer agrees,  that as to their own policies,  they will allocate
payments made under this settlement on a pro rata horizontal basis. The Insurers
do not  agree to  allocate  on a pro  rata  basis as  between  them.  Providence
Washington will not allocate horizontally to policies before 1-1-78.
     9.  All  NRDA  issues,   whether  related  to  defense  or  indemnification
obligations, are excluded from this settlement.
     10.  Heller  Ehrman will prepare the final  settlement  documents  with the
Insurers retaining their right to review and edit.

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DATED this 3rd day of February 1998.


 /s/ Gary Oehler                                    /s/ Richard Rizk
ANIC                                                For Nationwide Mutual

 /s/ Jerret E. Sale                                 /s/ James E. Horne
for Prov. Wash.                                   For Admiral Insurance Company

 /s/ Carol Johnson
for Chugach Electric Assoc, Inc.


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