----

----

|                                                   |                                                                                                                 |
|--------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------|
| **UNITED STATES**                                      |
| **SECURITIES AND EXCHANGE COMMISSION**                 |
| **Washington, D.C. 20549**                             |
|                                                   |                                                                                                                 |
|                                                   |
|                                                   |
| **FORM 10-Q**                                          |
|                                                   |                                                                                                                 |
|                                                   |
|                                                   |                                                                                                                 |
| **x**                                                  | **QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE                        SECURITIES EXHANGE ACT OF 1934**   |
|                                                   |                                                                                                                 |
| **For the quarterly period ended March 31, 2009**      |
|                                                   |                                                                                                                 |
| **OR**                                                 |
|                                                   |                                                                                                                 |
| **o**                                                  | **TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE                        SECURITIES EXCHANGE ACT OF 1934** |
|                                                   |                                                                                                                 |
|                                                   |
|                                                   |
| **Commission file number 33-42125**                    |
|                                                   |
| **CHUGACH ELECTRIC ASSOCIATION, INC.**                 |
| (Exact name of registrant as specifies in its charter) |
|                                                   |
|                                                   |
|   |                                                                                   |   |                                    |   |
|--------|----------------------------------------------------------------------------------------|--------|-----------------------------------------|--------|
|   | **State of Alaska**                                                                    |   | **92-0014224**                          |   |
|   |                                                                                        |   |                                         |   |
|   | (State or other jurisdiction of                         incorporation or organization) |   | (I.R.S. Employer 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) |
|                                                                               |
|                                                                               |
|                      |                        |
|---------------------------|-----------------------------|
| Large accelerated filer o | Accelerated filer o         |
| Non-accelerated filer x   | Smaller reporting company o |

----

----

**CHUGACH ELECTRIC ASSOCIATION, 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, 2009 and December 31, 2008                                 |   | 3      |
|                                             |         |                                                                                        |   |   |
|                                             |              | Statements of Operations - Three months ended March 31, 2009 and March 31, 2008             |   | 5      |
|                                             |         |                                                                                        |   |   |
|                                             |              | Statements of Cash Flows - Three Months Ended March 31, 2009 and March 31, 2008             |   | 6      |
|                                             |         |                                                                                        |   |   |
|                                             |              | Notes to Financial Statements                                                               |   | 7      |
|                                             |         |                                                                                        |   |   |
|                                             | **Item 2.**  | Management’s Discussion and Analysis of Financial Condition and Results of Operations |   | 15     |
|                                             |         |                                                                                        |   |   |
|                                             | **Item 3.**  | Quantitative and Qualitative Disclosures About Market Risk                                  |   | 26     |
|                                             |         |                                                                                        |   |   |
|                                             | **Item 4.**  | Controls and Procedures                                                                     |   | 27     |
|                                             |         |                                                                                        |   |   |
| **Part II. Other Information**                   |         |                                                                                        |
|                                             |         |                                                                                        |
|                                             | **Item 1.**  | Legal Proceedings                                                                           |   | 27     |
|                                             |         |                                                                                        |   |   |
|                                             | **Item 1A.** | Risk Factors                                                                                |   | 27     |
|                                             |         |                                                                                        |   |   |
|                                             | **Item 2.**  | Unregistered Sales of Equity Securities and Use of Proceeds                                 |   | 28     |
|                                             |         |                                                                                        |   |   |
|                                             | **Item 3.**  | Defaults Upon Senior Securities                                                             |   | 28     |
|                                             |         |                                                                                        |   |   |
|                                             | **Item 4.**  | Submission of Matters to a Vote of Security Holders                                         |   | 28     |
|                                             |         |                                                                                        |   |   |
|                                             | **Item 5.**  | Other Information                                                                           |   | 28     |
|                                             |         |                                                                                        |   |   |
|                                             | **Item 6.**  | Exhibits                                                                                    |   | 28     |
|                                             |         |                                                                                        |   |   |
|                                                  |         | Signatures                                                                                  |   | 29     |
|                                             |         |                                                                                        |   |   |
|                                                  |         | Exhibits                                                                                    |   | 30     |

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. It is suggested these statements are read in conjunction with our audited financial statements for the year ended December 31, 2008, filed as part of our annual report on Form 10-K. 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, 2009, follow.

2

----

**Chugach Electric Association, Inc.            Balance Sheets            (Unaudited)**

|                                     |   |           |         |              |   |         |   |
|------------------------------------------|--------|----------------|--------------|-------------------|--------|--------------|--------|
| Assets                                   |   | March 31, 2009 |         | December 31, 2008 |   |
|                                     |   |           |         |              |   |
|                                     |   |           |         |              |   |         |   |
| Utility Plant:                           |   |           |         |              |   |         |   |
| Electric Plant in service                |   | $              | 825,158,504  |              | $      | 821,462,475  |   |
| Construction work in progress            |   |           | 21,842,957   |              |   | 25,151,072   |   |
|                                     |   |           |         |              |   |         |   |
| Total utility plant                      |   |           | 847,001,461  |              |   | 846,613,547  |   |
| Less accumulated depreciation            |   |           | (397,109,632 | )                 |   | (389,002,139 | )      |
|                                     |   |           |         |              |   |         |   |
| Net utility plant                        |   |           | 449,891,829  |              |   | 457,611,408  |   |
|                                     |   |           |         |              |   |         |   |
| Other property and investments, at cost: |   |           |         |              |   |         |   |
| Nonutility property                      |   |           | 24,461       |              |   | 24,461       |   |
| Investments in associated organizations  |   |           | 12,177,590   |              |   | 12,177,769   |   |
| Special Funds                            |   |           | 259,921      |              |   | 264,427      |   |
|                                     |   |           |         |              |   |         |   |
| Total other property and investments     |   |           | 12,461,972   |              |   | 12,466,657   |   |
|                                     |   |           |         |              |   |         |   |
| Current assets:                          |   |           |         |              |   |         |   |
| Cash and cash equivalents                |   |           | 12,529,795   |              |   | 7,491,302    |   |
| Special deposits                         |   |           | 124,140      |              |   | 114,930      |   |
| Fuel cost under-recovery                 |   |           | 0            |              |   | 11,788,078   |   |
| Accounts receivable, net                 |   |           | 37,511,659   |              |   | 33,019,372   |   |
| Materials and supplies                   |   |           | 29,644,081   |              |   | 28,806,641   |   |
| Prepayments                              |   |           | 2,031,403    |              |   | 1,544,025    |   |
| Other current assets                     |   |           | 397,862      |              |   | 272,357      |   |
|                                     |   |           |         |              |   |         |   |
| Total current assets                     |   |           | 82,238,940   |              |   | 83,036,705   |   |
|                                     |   |           |         |              |   |         |   |
| Deferred charges, net                    |   |           | 22,880,322   |              |   | 23,577,199   |   |
|                                     |   |           |         |              |   |         |   |
|                                     |   |           |         |              |   |         |   |
| Total assets                             |   | $              | 567,473,063  |              | $      | 576,691,969  |   |
|                                     |   |           |         |              |   |         |   |

See accompanying notes to financial statements.

3

----

**Chugach Electric Association, Inc.            Balance Sheets (continued)            (Unaudited)**

|                                                                              |   |           |        |              |   |        |   |
|-----------------------------------------------------------------------------------|--------|----------------|-------------|-------------------|--------|-------------|--------|
| Liabilities, Equities and Margins                                                 |   | March 31, 2009 |        | December 31, 2008 |   |
|                                                                              |   |           |        |              |   |
|                                                                              |   |           |        |              |   |        |   |
| Equities and margins:                                                             |   |           |        |              |   |        |   |
| Memberships                                                                       |   | $              | 1,399,373   |              | $      | 1,390,413   |   |
| Patronage capital                                                                 |   |           | 145,982,881 |              |   | 142,009,998 |   |
| Other                                                                             |   |           | 10,341,131  |              |   | 10,366,588  |   |
|                                                                              |   |           |        |              |   |        |   |
| Total equities and margins                                                        |   |           | 157,723,385 |              |   | 153,766,999 |   |
|                                                                              |   |           |        |              |   |        |   |
| Long-term obligations, excluding current installments:                            |   |           |        |              |   |        |   |
| Bonds payable                                                                     |   |           | 270,000,000 |              |   | 270,000,000 |   |
| National Bank for Cooperatives                                                    |   |           | 39,889,357  |              |   | 41,419,847  |   |
| National Rural Utilities Cooperative Finance Corporation promissory notes payable |   |           | 0           |              |   | 42,963,659  |   |
|                                                                              |   |           |        |              |   |        |   |
| Total long-term obligations                                                       |   |           | 309,889,357 |              |   | 354,383,506 |   |
|                                                                              |   |           |        |              |   |        |   |
| Current liabilities:                                                              |   |           |        |              |   |        |   |
| Current installments of long-term obligations                                     |   |           | 4,507,106   |              |   | 4,403,653   |   |
| Commercial Paper                                                                  |   |           | 45,503,000  |              |   | 0           |   |
| Promissory notes payable                                                          |   |           | 1,860,000   |              |   | 2,860,000   |   |
| Short-term obligations                                                            |   |           | 0           |              |   | 7,500,000   |   |
| Accounts payable                                                                  |   |           | 4,585,583   |              |   | 6,999,140   |   |
| Consumer deposits                                                                 |   |           | 2,398,064   |              |   | 2,410,980   |   |
| Fuel cost over-recovery                                                           |   |           | 366,463     |              |   | 0           |   |
| Accrued interest                                                                  |   |           | 1,781,169   |              |   | 6,158,927   |   |
| Salaries, wages and benefits                                                      |   |           | 5,297,943   |              |   | 5,481,621   |   |
| Fuel                                                                              |   |           | 30,184,055  |              |   | 28,494,211  |   |
| Other liabilities                                                                 |   |           | 1,858,424   |              |   | 1,666,521   |   |
|                                                                              |   |           |        |              |   |        |   |
| Total current liabilities                                                         |   |           | 98,341,807  |              |   | 65,975,053  |   |
|                                                                              |   |           |        |              |   |        |   |
| Deferred compensation                                                             |   |           | 259,921     |              |   | 264,427     |   |
| Deferred liabilities                                                              |   |           | 1,258,593   |              |   | 2,301,984   |   |
|                                                                              |   |           |        |              |   |        |   |
|                                                                              |   |           |        |              |   |        |   |
| Total liabilities, equities and margins                                           |   | $              | 567,473,063 |              | $      | 576,691,969 |   |
|                                                                              |   |           |        |              |   |        |   |

See accompanying notes to financial statements.

4

----

**Chugach Electric Association, Inc.            Statements of Operations            (Unaudited)**

|                                           |   |                        |       |     |   |       |   |
|------------------------------------------------|--------|-----------------------------|------------|----------|--------|------------|--------|
|                                           |   | Three months ended March 31 |       |
|                                           |   |                        |       |     |   |
|                                           |   | **2009**                    |       | **2008** |   |
|                                           |   |                        |       |     |   |
|                                           |   |                        |       |     |   |       |   |
| Operating revenues                             |   | $                           | 83,417,070 |     | $      | 71,871,288 |   |
|                                           |   |                        |       |     |   |       |   |
| Operating expenses:                            |   |                        |       |     |   |       |   |
| Fuel                                           |   |                        | 40,227,308 |     |   | 32,086,549 |   |
| Production                                     |   |                        | 4,386,881  |     |   | 3,769,323  |   |
| Purchased power                                |   |                        | 11,185,527 |     |   | 7,601,324  |   |
| Transmission                                   |   |                        | 1,362,606  |     |   | 1,330,778  |   |
| Distribution                                   |   |                        | 2,813,223  |     |   | 2,767,903  |   |
| Consumer accounts                              |   |                        | 1,222,709  |     |   | 1,352,118  |   |
| Administrative, general and other              |   |                        | 5,078,505  |     |   | 5,047,021  |   |
| Depreciation and amortization                  |   |                        | 7,967,754  |     |   | 7,380,319  |   |
|                                           |   |                        |       |     |   |       |   |
| Total operating expenses                       |   |                        | 74,244,513 |     |   | 61,335,335 |   |
|                                           |   |                        |       |     |   |       |   |
| Interest on long-term debt                     |   |                        | 5,073,072  |     |   | 5,675,210  |   |
| Other                                          |   |                        | 354,370    |     |   | 71,622     |   |
| Charged to construction                        |   |                        | (121,412   | )        |   | (116,094   | )      |
|                                           |   |                        |       |     |   |       |   |
| Net interest expenses                          |   |                        | 5,306,030  |     |   | 5,630,738  |   |
|                                           |   |                        |       |     |   |       |   |
| Net operating margins                          |   |                        | 3,866,527  |     |   | 4,905,215  |   |
|                                           |   |                        |       |     |   |       |   |
| Nonoperating margins:                          |   |                        |       |     |   |       |   |
| Interest income                                |   |                        | 79,847     |     |   | 117,588    |   |
| Capital credits, patronage dividends and other |   |                        | 31,854     |     |   | 34,004     |   |
|                                           |   |                        |       |     |   |       |   |
| Total nonoperating margins                     |   |                        | 111,701    |     |   | 151,592    |   |
|                                           |   |                        |       |     |   |       |   |
|                                           |   |                        |       |     |   |       |   |
| Assignable margins                             |   | $                           | 3,978,228  |     | $      | 5,056,807  |   |
|                                           |   |                        |       |     |   |       |   |

See accompanying notes to financial statements.

5

----

**Chugach Electric Association, Inc.            Statements of Cash Flows            (Unaudited)**

|                                                                                                    |   |                        |        |   |   |        |   |
|---------------------------------------------------------------------------------------------------------|--------|-----------------------------|-------------|--------|--------|-------------|--------|
|                                                                                                    |   | Three months ended March 31 |        |
|                                                                                                    |   | 2009                        |        | 2008   |   |
|                                                                                                    |   |                        |        |   |   |
| Cash flows from operating activities:                                                                   |   |                        |        |   |   |        |   |
| Assignable margins                                                                                      |   | $                           | 3,978,228   |   | $      | 5,056,807   |   |
|                                                                                                    |   |                        |        |   |   |        |   |
|                                                                                                    |   |                        |        |   |   |        |   |
| Adjustments to reconcile assignable margins to net cash provided activities:                            |   |                        |        |   |   |        |   |
| Depreciation and amortization                                                                           |   |                        | 9,161,792   |   |   | 8,632,257   |   |
| Capitalized interest                                                                                    |   |                        | (151,992    | )      |   | (150,302    | )      |
| Other                                                                                                   |   |                        | 0           |   |   | 162         |   |
|                                                                                                    |   |                        |        |   |   |        |   |
| Changes in assets and liabilities:                                                                      |   |                        |        |   |   |        |   |
| (Increase) decrease in assets:                                                                          |   |                        |        |   |   |        |   |
| Accounts receivable                                                                                     |   |                        | (4,492,287  | )      |   | 4,461,844   |   |
| Fuel cost under-recovery                                                                                |   |                        | 11,788,078  |   |   | (1,729,941  | )      |
| Materials and supplies                                                                                  |   |                        | (837,440    | )      |   | (2,371,795  | )      |
| Prepayments                                                                                             |   |                        | (487,377    | )      |   | (350,090    | )      |
| Other assets                                                                                            |   |                        | (134,537    | )      |   | (113,982    | )      |
| Deferred charges                                                                                        |   |                        | (238,257    | )      |   | (376,261    | )      |
| Increase (decrease) in liabilities:                                                                     |   |                        |        |   |   |        |   |
| Accounts payable                                                                                        |   |                        | (235,579    | )      |   | (2,161,140  | )      |
| Consumer deposits                                                                                       |   |                        | (12,916     | )      |   | 16,331      |   |
| Fuel cost over-recovery                                                                                 |   |                        | 366,463     |   |   | (1,596,010  | )      |
| Accrued interest                                                                                        |   |                        | (4,377,758  | )      |   | (4,369,384  | )      |
| Salaries, wages and benefits                                                                            |   |                        | (183,678    | )      |   | (64,819     | )      |
| Fuel                                                                                                    |   |                        | 1,689,844   |   |   | (207,158    | )      |
| Other liabilities                                                                                       |   |                        | 297,300     |   |   | 309,234     |   |
| Deferred liabilities                                                                                    |   |                        | (7,353      | )      |   | 4,099       |   |
|                                                                                                    |   |                        |        |   |   |        |   |
| **Net cash provided by operating activities**                                                           |   |                        | 16,122,531  |   |   | 4,989,852   |   |
|                                                                                                    |   |                        |        |   |   |        |   |
|                                                                                                    |   |                        |        |   |   |        |   |
| Investing activities:                                                                                   |   |                        |        |   |   |        |   |
| Extension and replacement of plant                                                                      |   |                        | (2,533,066  | )      |   | (3,988,911  | )      |
|                                                                                                    |   |                        |        |   |   |        |   |
| **Net cash used for investing activities**                                                              |   |                        | (2,533,066  | )      |   | (3,988,911  | )      |
|                                                                                                    |   |                        |        |   |   |        |   |
|                                                                                                    |   |                        |        |   |   |        |   |
| Cash flows from financing activities:                                                                   |   |                        |        |   |   |        |   |
| Payments of notes payable                                                                               |   |                        | (1,000,000  | )      |   | 0           |   |
| Repayments of long-term obligations                                                                     |   |                        | (44,390,696 | )      |   | (36,850,460 | )      |
| Proceeds from short-term borrowing                                                                      |   |                        | 45,503,000  |   |   | 35,213,659  |   |
| Repayments of short-term borrowing                                                                      |   |                        | (7,500,000  | )      |   | 0           |   |
| Memberships and donations received (refunded)                                                           |   |                        | (16,497     | )      |   | (81,323     | )      |
| Retirement of patronage capital and estate payments                                                     |   |                        | (110,741    | )      |   | (1,334,075  | )      |
| Net refunds on consumer advances for construction                                                       |   |                        | (1,036,038  | )      |   | (426,133    | )      |
|                                                                                                    |   |                        |        |   |   |        |   |
| **Net cash used for financing activities**                                                              |   |                        | (8,550,972  | )      |   | (3,478,332  | )      |
|                                                                                                    |   |                        |        |   |   |        |   |
|                                                                                                    |   |                        |        |   |   |        |   |
| Net increase (decrease) in cash and cash equivalents                                                    |   |                        | 5,038,493   |   |   | (2,477,391  | )      |
|                                                                                                    |   |                        |        |   |   |        |   |
| Cash and cash equivalents at beginning of period                                                        |   | $                           | 7,491,302   |   | $      | 6,209,936   |   |
|                                                                                                    |   |                        |        |   |   |        |   |
| Cash and cash equivalents at end of period                                                              |   | $                           | 12,529,795  |   | $      | 3,732,545   |   |
|                                                                                                    |   |                        |        |   |   |        |   |
|                                                                                                    |   |                        |        |   |   |        |   |
| Supplemental disclosure of non-cash investing and financing activities                                  |   |                        |        |   |   |        |   |
| Retirement of plant                                                                                     |   | $                           | 14,685      |   | $      | 16,917      |   |
| Extension and replacement of plant included in accounts payable                                         |   | $                           | 516,511     |   | $      | 277,894     |   |
| Supplemental disclosure of cash flow information - interest expense paid, excluding amounts capitalized |   | $                           | 9,286,674   |   | $      | 9,603,008   |   |
|                                                                                                    |   |                        |        |   |   |        |   |

See accompanying notes to financial statements.

6

----

**Chugach Electric Association, Inc.            Notes to Financial Statements            March 31, 2009 and 2008**

|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                      |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------|
| **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, 2008, 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 for three of its wholesale customers, Matanuska Electric Association, Inc. (MEA), Homer Electric Association, Inc. (HEA), and the City of Seward (Seward). Chugach’s retail and wholesale 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. Estimates include allowance for doubtful accounts, deferred charges and credits, unbilled revenue and the estimated                        useful life of utility plant. Actual results could differ from those estimates.                                                                                                                                                                                                                                                                                                                                                                                                                                        |

7

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**Chugach Electric Association, Inc.            Notes to Financial Statements            March 31, 2009 and 2008**

|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |           |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------|
|   | *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 No.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 reduced 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 and for the three month periods ended March 31, 2009 and 2008 was in compliance with that provision. In addition, Chugach collects sales tax and is assessed gross receipts and excise taxes which are presented on a net basis in accordance with Emerging Issues Task Force (EITF) No. 06-3 “*How                        Taxes Collected from Customers and Remitted to Governmental Authorities Should Be Presented in the Income Statement*.”                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |           |
| **3.** | **REGULATORY MATTERS**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |           |
|   | *Natural Gas Contract Submittal*                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |           |
|   | On May 12, 2009, Chugach submitted a new long-term natural gas supply contract to the RCA. The new contract will provide gas beginning in 2010 and terminating December 31, 2016. The total amount of gas under the contract is estimated to be 66 billion cubic feet (BCF). Approval of the contract by the RCA is condition precedent for the effectiveness of the contract, and will ensure, in advance, that costs incurred                        under the contract can be recovered from Chugach’s customers.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |           |
| **4.** | **LINES OF CREDIT**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |           |
|   | Chugach maintains a $7.5 million line of credit with CoBank. On October 22, 2008, the Board of Directors approved a resolution to renew this line of credit. The line of credit was also renewed by CoBank, extending the expiration date to October 31, 2009, and is subject to annual renewal at the discretion of the parties. Chugach had a balance of $7.5 million on this line of credit at December 31, 2008. On February 27,                        2009, Chugach repaid $4.5 million and on March 3, 2009, paid off the outstanding balance. On March 16, 2009, Chugach borrowed an additional $6.0 million but repaid the outstanding balance by making payments on March 18 and March 23, 2009, therefore there was no outstanding balance at March 31, 2009. At December 31, 2008, the outstanding balance on this line of credit was $7.5 million. In April of 2009, Chugach had additional line of credit activity, however, in the same                        month Chugach repaid the outstanding balance on this line of credit. |

8

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**Chugach Electric Association, Inc.            Notes to Financial Statements            March 31, 2009 and 2008**

|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | The CoBank Master Loan Agreement requires Chugach to establish and collect electric rates reasonably expected to yield margins for interest equal to at least 1.10 times interest expense, to achieve a funded debt to operating cash flow ratio not greater than 8 to 1 and achieve an equity to total capitalization ratio greater than 22%. The borrowing rate is calculated using the CoBank Base Rate on the first business day                        of the week plus 3%. The borrowing rate at March 31, 2009 and December 31, 2008 was 2.31% and 1.30%, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   | In addition, Chugach had an annual line of credit of $50 million available with NRUCFC until October 9, 2008, when Chugach reduced this line of credit to $45 million. On December 22, 2008, this line of credit was increased to $75 million, however, pursuant to the terms of the Amendment To Revolving Line of Credit Agreement with NRUCFC, this line of credit shall be permanently reduced to $50 million upon the earlier                        of January 1, 2010 or the date Chugach pays down this line of credit to an outstanding balance of not more than $50 million. In January of 2009 Chugach had additional line of credit activity and had a balance of $38 million on January 30, 2009, when we repaid $30.0 million on this line of credit by issuing commercial paper under our Commercial Paper program. Consequently, effective January 30, 2009, Chugach’s borrowing limit on its NRUCFC line of credit was                        permanently reduced to $50 million. In February of 2009 Chugach repaid the remaining balance on this line of credit by issuing commercial paper, therefore there was no outstanding balance at March 31, 2009. At December 31, 2008, the outstanding balance on this line of credit was $43.0 million. The borrowing rate is calculated using the total rate per annum as may be fixed by NRUCFC and will not exceed the Prevailing Prime Rate, plus one percent per annum. At March 31,                        2009 and December 31, 2008, the borrowing rate was 4.25% and 5.25%, respectively. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   | The NRUCFC Revolving Line Of Credit Agreement requires that Chugach, for each 12-month period, for a period of at least five consecutive days, pay down the entire outstanding principal balance. The NRUCFC line of credit expires October 14, 2012. Repayment of this line of credit is due on January 1, 2010.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   | The CoBank and NRUCFC lines of credit are immediately available for unconditional borrowing.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| **5.** | **NOTES PAYABLE**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   | In December of 2008, Chugach acquired property near its Anchorage headquarters for, among other purposes, construction of an additional electrical generation facility. The total purchase price of the property was $4,860,000 which included a $75,000 non refundable earnest money payment, a $1,925,000 down payment and a $2,860,000 promissory note bearing interest at six percent per annum payable in two installments. A                        payment of $1,000,000 was made in March of 2009 and the final payment of $1,860,000 plus accrued interest is due no later than June 30, 2009. Chugach has the right to prepay any amount of the note in full at any time without penalty. The promissory note is secured by a deed of trust on the property.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |

9

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**Chugach Electric Association, Inc.            Notes to Financial Statements            March 31, 2009 and 2008**

|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **6.** | **FINANCING**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   | Over the next five years Chugach anticipates incurring significant capital expenditures due to the construction of a gas fired generation unit, on-going capital needs and the refinancing of $150 million of 2001 Series A Bonds that is due March 15, 2011, and $120 million of 2002 Series A Bonds due February 1, 2012. In March of 2008 we issued a Request For Proposal (RFP) for a three to five year interim finance                        facility. Commercial paper will be issued under this requested facility and will act as a bridge until Chugach converts Commercial Paper balances to long term debt in 2010 and to refinance the 2011 and 2012 Series A bonds. The commercial paper program is backed by a $300 million Unsecured Credit Agreement between NRUCFC, KeyBank, CoBank and US Bank. At closing, the Credit Agreement was priced with an all-in drawn spread of London Interbank Offered Rate (LIBOR) plus 60                        basis points, along with a 17.5 basis points facility fee. The credit agreement was executed on October 10, 2008, and expires on October 10, 2011, however, at this time, management intends to renew this agreement although the terms may be different. On January 30, 2009, Chugach issued $36.0 million of commercial paper to repay its NRUCFC line of credit. On February 5, 2009, Chugach issued $10.0 million of commercial paper to repay the balance of its NRUCFC line of                        credit. On March 2, 2009, Chugach repaid $0.5 million of commercial paper. At March 31, 2009, Chugach had $45.5 million of commercial paper outstanding. Our commercial paper can be repriced between one and two hundred and seventy days. The following table provides information regarding average commercial paper balances outstanding (dollars in millions), as well as corresponding weighted average interest rates: |

|          |   |                                       |   |                                                      |
|---------------|--------|--------------------------------------------|--------|-----------------------------------------------------------|
| **Month**     |   | **Average                        Balance** |   | **Weighted Average                        Interest Rate** |
|          |   |                                       |   |                                                      |
| January 2009  |   | 36.0                                       |   | 1.17                                                      |
| February 2009 |   | 44.6                                       |   | 1.48                                                      |
| March 2009    |   | 46.6                                       |   | 1.19                                                      |

|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **7.** | **LEGAL PROCEEDINGS**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   | Chugach has certain litigation matters and pending claims that arise in the ordinary course of Chugach’s business. In the opinion of management, no individual matter or the matters in the aggregate is likely to have a material adverse effect on Chugach’s results of operations, financial condition or liquidity.                                                                                                                                                                     |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| **8.** | **RECENT ACCOUNTING PRONOUNCEMENTS**                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   | FSP FAS 107-1 and APB 25-1 *“Interim Disclosures about Fair Value of Financial Instruments”*                                                                                                                                                                                                                                                                                                                                                                                                |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   | In April 2009, the Financial Accounting Standards Board (FASB) issued FASB Staff Position (FSP) FAS 107-1 and APB 25-1, *“Interim Disclosures about Fair Value of Financial Instruments.”* This FSP applies to all financial instruments within the scope of SFAS No. 107, “Disclosures about Fair Value of Financial Instruments,” held by publicly traded companies, as defined by APB Opinion No.                        28, “Interim Financial Reporting.” This |

10

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**Chugach Electric Association, Inc.            Notes to Financial Statements            March 31, 2009 and 2008**

|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | FSP expands the reporting of fair value disclosures required by SFAS No. 107 to include interim reporting. This FSP also amends APB Opinion No. 28 to require those disclosures in summarized financial information of interim reports. FSP FAS 107-1 and APB 25-1 is effective for interim periods ending after June 15, 2009, with early adoption permitted for periods ending after March 15, 2009. Chugach began application of                        FSP FAS 107-1 and APB 25-1 to fair value disclosures on January 1, 2009, which did not have a material effect on our results of operations, financial position, and cash flows.                                                                                                                                                                                                                                                                                          |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   | FSP FAS 115-2 and FAS 124-2 *“Recognition and Presentation of Other-Than-Temporary Impairments”*                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   | In April 2009, the FASB issued FSP FAS 115-2 and FAS 124-2, “Recognition and Presentation of Other-Than-Temporary Impairments.” FSP FAS 115-2 and FAS 124-2 applies to debt securities classified as available-for-sale and held-to-maturity that are subject to other-than-temporary impairment guidance within specific parameters. This FSP amends current U.S. GAAP guidance on other-than-temporary impairment of                        debt securities to make the guidance more operational and to improve the presentation and disclosure of those impairments in the financial statements. FSP FAS 115-2 and FAS 124-2 is effective for interim and annual reporting periods ending after June 15, 2009. Chugach will begin application of FSP FAS 115-2 and FAS 124-2 on April 1, 2009, which we do not expect will have a material effect on our results of operations, financial position, and cash flows. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   | FSP FAS 157-4 *“Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly”*                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   | In April 2009, the FASB issued FSP FAS 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions.” FSP FAS 157-4 applies to all assets and liabilities within the scope of accounting pronouncements that require or permit fair value measurement. FSP FAS 157-4 is effective for interim and annual reporting periods                        ending after June 15, 2009. Chugach will begin application of FSP FAS 157-4 on April 1, 2009, which we do not expect will have a material effect on our results of operations, financial position, and cash flows.                                                                                                                                                                                                                                                       |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| **9.** | **FAIR VALUES OF ASSETS AND LIABILITIES**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   | On January 1, 2008, Chugach adopted the provisions of SFAS No. 157, Fair Value Measurements. SFAS No. 157 defines fair value, establishes a consistent framework for measuring fair value and expands disclosure requirements for fair value measurements. On January 1, 2009, Chugach adopted certain provisions of SFAS No. 157 relating to nonfinancial assets and liabilities that are not recognized or disclosed at fair value                        in the financial statements on a recurring basis, at least annually. The adoption of these specific provisions of SFAS No. 157 relating to nonfinancial assets and liabilities did not have a material impact on our results of operations, financial position, and cash flows.                                                                                                                                                                                         |

11

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**Chugach Electric Association, Inc.            Notes to Financial Statements            March 31, 2009 and 2008**

|   |                                                                                                                                                                                                                                                                                                                                                                                                                   |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | Fair Value Hierarchy                                                                                                                                                                                                                                                                                                                                                                                                   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   | In accordance with SFAS No. 157 Chugach groups its financial assets and liabilities measured at fair value in three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value. These levels are:                                                                                                                                 |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   | Level 1 – Valuation is based upon quoted prices for identical instruments traded in active exchange markets, such as the New York Stock Exchange. Level 1 also includes U.S. Treasury and federal agency securities, which are traded by dealers or brokers in active markets. Valuations are obtained from readily available pricing sources for market transactions involving identical assets or liabilities. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   | Level 2 – Valuation is based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market.                                                                                                                           |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   | Level 3 – Valuation is generated from model-based techniques that use significant assumptions not observable in the market. These unobservable assumptions reflect Chugach’s estimates of assumptions that market participants would use in pricing the asset or liability. Valuation techniques include use of option pricing models, discounted cash flow models and similar techniques.                 |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   | The table below presents the balance of Chugach’s non-qualified deferred compensation plan assets measured at fair value on a recurring basis.                                                                                                                                                                                                                                                                   |

|   |      |    |   |      |   |    |   |   |   |   |   |
|--------|-----------|---------|--------|-----------|--------|---------|--------|--------|--------|--------|--------|
| Total  |      | Level 1 |   | Level 2   |   | Level 3 |   |
|   | $ 259,921 |    |   | $ 259,921 |   |    | $ 0    |   |   | $ 0    |   |

|   |                                                                                                                                          |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------|
|   | Chugach had no Level 2 or Level 3 assets or liabilities measured at fair value on a recurring basis.                                          |
|   |                                                                                                                                          |
|   | Fair Value of Long-Term Obligations                                                                                                           |
|   |                                                                                                                                          |
|   | The estimated fair values (in thousands) of the long-term obligations included in the financial statements at March 31, 2009, are as follows: |

|                                                   |   |           |      |       |   |      |   |
|--------------------------------------------------------|--------|----------------|-----------|------------|--------|-----------|--------|
|                                                   |   | Carrying Value |      | Fair Value |   |
|                                                   |   |           |      |       |   |
| Long-term obligations (including current installments) |   |           | $ 361,759 |       |   | $ 377,841 |   |

|   |                                                                                                                                                                                                                                                                                                               |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | Fair value estimates are dependent upon subjective assumptions and involve significant uncertainties resulting in variability in estimates with changes in assumptions. The fair value of long-term debt has been determined using discounted future cash flows at borrowing rates currently available to Chugach. |

12

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**Chugach Electric Association, Inc.            Notes to Financial Statements            March 31, 2009 and 2008**

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **10.** | **ENVIRONMENTAL MATTERS**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|    | The Clean Air Act and Environmental Protection Agency (EPA) regulations under the act (the “Clean Air Act”) establish ambient air quality standards and limit the emission of many air pollutants. Some Clean Air Act programs that regulate electric utilities, notably the Title IV “acid rain” requirements, do not apply to facilities located in Alaska. In 2008 the EPA vacated regulations to limit                        mercury emissions from fossil-fired steam-electric generating facilities.                                                                                                                                                                                                    |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|    | New Clean Air Act regulations impacting electric utilities may result from future events or may result from new regulatory programs that may be established to address problems such as global warming. While we cannot predict whether any new regulation would occur or its limitation, it is possible that new laws or regulations could increase our capital and operating costs. We have obtained or applied for all Clean Air                        Act permits currently required for the operation of our generating facilities.                                                                                                                                                                                              |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|    | In March 2007, Chugach conducted emissions testing at the Bernice Lake Power Plant which indicated that two of the gas turbines at the facility were exceeding the New Source Performance Standards (NSPS) emission limit for nitrogen oxides (NOx). Chugach voluntarily limited the power output of these turbines to ensure interim compliance with the NSPS regulations until a water injection system to control NOx emissions                        from the turbines was installed and operational. With the water injection system, Chugach is able to fully utilize the power output from these turbines while complying with the NSPS regulations.                                                                           |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|    | The Alaska Department of Conservation (ADEC) issued a Notice of Violation (NOV) on March 26, 2008, regarding the NSPS NOx emission limit exceedances. Chugach entered into a settlement with ADEC regarding the NOV for the past NSPS non-compliance. Chugach and the ADEC signed the settlement agreement on February 18, 2009. As part of the settlement, Chugach paid a civil penalty of $112,161 to ADEC on April 3, 2009,                        bringing the issue to a close.                                                                                                                                                                                                                                                   |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|    | Chugach is subject to numerous other environmental statutes including the Clean Water Act, the Resource Conservation and Recovery Act, the Toxic Substances Control Act, the Endangered Species Act, and the Comprehensive Environmental Response, Compensation and Liability Act and to the regulations implementing these statutes. We do not believe that compliance with these statutes and regulations to date has had a                        material impact on our financial condition or results of operation. However, new laws or regulations, implementation of final regulations or changes in or new interpretations of these laws or regulations could result in significant additional capital or operating expenses. |

13

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**Chugach Electric Association, Inc.            Notes to Financial Statements            March 31, 2009 and 2008**

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **11.** | **GENERATION COMMITMENTS**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|    | Chugach is in the process of developing a gas-fired generation plant on land currently owned by Chugach near its Anchorage headquarters. The Southcentral Power Plant (SPP) will be developed jointly with Anchorage Municipal Light & Power (AML&P). Chugach and AML&P signed Participation, Operation and Maintenance (O&M) and Lease Agreements (Agreements) for this project on August 28, 2008. On November 17,                        2008, Chugach executed a gas turbine purchase agreement for the purchase of three gas turbines with an option for a fourth turbine with General Electric Packaged Power (GEPP). The option to purchase a fourth turbine expired on January 31, 2009. Chugach made a payment of $5.1 million in 2008 and is expected to make progress and milestone payments of $23.5 million and $22.8 million in 2009 and 2010, respectively, pursuant to its purchase agreement with GEPP. In December of                        2008, Chugach purchased land adjacent to its Anchorage headquarters. This land will be used as a project laydown area and to relocate materials and equipment previously located on the site of the new power plant. Chugach is currently preparing purchase documentation for engineering, procurement and construction services to be awarded in 2009. On April 22, 2009, Chugach’s Board of Directors authorized the Chief Executive Officer to enter into an Owner’s                        Engineer Services Contract for the SPP. Chugach executed an Owner’s Engineer Services Contract on May 12, 2009. |

14

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|   |        |                                                                                            |
|--------|-------------|-------------------------------------------------------------------------------------------------|
|   | **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**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   | Assignable margins decreased by $1.1 million, or 21.3%, during the first quarter of 2009 compared to the same quarter in 2008.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   | Operating revenues, which include sales of electric energy to retail, wholesale and economy energy customers and other miscellaneous revenues, increased $11.5 million, or 16.1%, in the first quarter of 2009 compared to the same quarter in 2008. This increase was due to higher fuel and purchased power expense recovered through the fuel and purchased power surcharge process.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   | Overall, retail revenue increased in the first quarter of 2009 compared to the same quarter in 2008. Base revenue decreased due to lower retail kWh sales caused by a change in consumer consumption patterns, as well as base rates charged to retail customers decreased in the second quarter of 2008, as a result of Chugach’s 2005 Test Year Rate Case. This base revenue decrease was more than offset by fuel and                        purchased power expense recovered through the fuel and purchased power surcharge process due in part to higher fuel prices in the first quarter of 2009 compared to the same period in 2008.                                                                                                                                                                                                                                                                                                                                                                    |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   | Wholesale revenue increased in the first quarter of 2009 compared to the same quarter in 2008. Base revenue increased due in part to the base rate increase charged to wholesale customers in the second quarter of 2008 as a result of Chugach’s 2005 Test Year Rate Case, which was somewhat offset by a decrease in wholesale kWh sales primarily due to lower commercial sales to HEA. Fuel and purchased power expense                        recovered through the fuel and purchased power surcharge process increased due primarily to higher fuel prices in the first quarter of 2009 compared to the same period in 2008. Economy energy revenue decreased during the first quarter of 2009 compared to the same quarter in 2008 due to decreased sales to Golden Valley Electric Association, Inc. (GVEA) because it was more economic for GVEA to generate their own power than to purchase from Chugach is the first quarter of                        2009 compared to the first quarter of 2008. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   | Based on the results of fixed and variable cost recovery established in Chugach’s last rate case, wholesale sales to HEA, MEA and Seward contributed approximately $8.1 million to Chugach’s fixed costs for the quarter ended March 31, 2009 and $7.2 million for the quarter ended March 31, 2008.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |

15

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|   |                                                                                                                                                                                     |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | 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, 2009 and 2008: |

|                |   |   |                    |     |   |                             |       |   |          |     |   |   |   |       |   |   |     |   |   |     |       |   |   |     |   |   |     |   |   |     |   |
|---------------------|--------|--------|-------------------------|----------|--------|----------------------------------|------------|--------|---------------|----------|--------|--------|--------|------------|--------|--------|----------|--------|--------|----------|------------|--------|--------|----------|--------|--------|----------|--------|--------|----------|--------|
|                |   |   |                    |     |   |                             |       |   |          |     |   |   |   |       |   |   |     |   |   |     |       |   |
|                |   |   | Base Rate Sales Revenue |     |   | Fuel and Purchased Power Revenue |       |   | Total Revenue |     |
|                |   |   |                    |     |   |                             |       |   |          |     |
|                |   |   | 2009                    |     | 2008   |                             | % Variance |   |          | 2009     |   | 2008   |   | % Variance |   |   | 2009     |   | 2008   |     | % Variance |   |
|                |   |   |                    |     |   |                             |       |   |          |     |   |   |   |       |   |   |     |   |   |     |       |   |
|                |   |   |                    |     |   |                             |       |   |          |     |   |   |   |       |   |   |     |   |   |     |       |   |
|                |   |   |                    |     |   |                             |       |   |          |     |   |   |   |       |   |   |     |   |   |     |       |   |
| **Retail**          |   |   |                    |     |   |                             |       |   |          |     |   |   |   |       |   |   |     |   |   |     |       |   |   |     |   |   |     |   |   |     |   |
| Residential         |   |   | $                       | 12.8     |   | $                                | 13.2       |   |          | (3.0     | %)     |   | $      | 12.1       |   | $      | 8.5      |   |   | 42.4     | %          |   | $      | 24.9     |   | $      | 21.7     |   |   | 14.7     | %      |
| Small Commercial    |   |   | $                       | 2.3      |   | $                                | 2.3        |   |          | 0.0      | %      |   | $      | 2.4        |   | $      | 1.7      |   |   | 41.2     | %          |   | $      | 4.7      |   | $      | 4.0      |   |   | 17.5     | %      |
| Large Commercial    |   |   | $                       | 6.9      |   | $                                | 7.3        |   |          | (5.5     | %)     |   | $      | 9.7        |   | $      | 7.1      |   |   | 36.6     | %          |   | $      | 16.6     |   | $      | 14.4     |   |   | 15.3     | %      |
| Lighting            |   |   | $                       | 0.3      |   | $                                | 0.3        |   |          | 0.0      | %      |   | $      | 0.1        |   | $      | 0.0      |   |   | 100.0    | %          |   | $      | 0.4      |   | $      | 0.3      |   |   | 33.3     | %      |
| **Total Retail**    |   |   | **$**                   | **22.3** |   | **$**                            | **23.1**   |   |          | **(3.5** | **%)** |   | **$**  | **24.3**   |   | **$**  | **17.3** |   |   | **40.5** | **%**      |   | **$**  | **46.6** |   | **$**  | **40.4** |   |   | **15.3** | **%**  |
|                |   |   |                    |     |   |                             |       |   |          |     |   |   |   |       |   |   |     |   |   |     |       |   |   |     |   |   |     |   |   |     |   |
| **Wholesale**       |   |   |                    |     |   |                             |       |   |          |     |   |   |   |       |   |   |     |   |   |     |       |   |   |     |   |   |     |   |   |     |   |
| HEA                 |   |   | $                       | 2.9      |   | $                                | 2.7        |   |          | 7.4      | %      |   | $      | 9.2        |   | $      | 6.5      |   |   | 41.5     | %          |   | $      | 12.1     |   | $      | 9.2      |   |   | 31.5     | %      |
| MEA                 |   |   | $                       | 6.4      |   | $                                | 5.7        |   |          | 12.3     | %      |   | $      | 15.1       |   | $      | 9.9      |   |   | 52.5     | %          |   | $      | 21.5     |   | $      | 15.6     |   |   | 37.8     | %      |
| SES                 |   |   | $                       | 0.3      |   | $                                | 0.2        |   |          | 50.0     | %      |   | $      | 1.1        |   | $      | 0.9      |   |   | 22.2     | %          |   | $      | 1.4      |   | $      | 1.1      |   |   | 27.3     | %      |
| **Total Wholesale** |   |   | **$**                   | **9.6**  |   | **$**                            | **8.6**    |   |          | **11.6** | **%**  |   | **$**  | **25.4**   |   | **$**  | **17.3** |   |   | **46.8** | **%**      |   | **$**  | **35.0** |   | **$**  | **25.9** |   |   | **35.1** | **%**  |
|                |   |   |                    |     |   |                             |       |   |          |     |   |   |   |       |   |   |     |   |   |     |       |   |   |     |   |   |     |   |   |     |   |
| **Economy Sales**   |   |   | $                       | 0.2      |   | $                                | 1.3        |   |          | (84.6    | %)     |   | $      | 1.0        |   | $      | 3.6      |   |   | (72.2    | %)         |   | $      | 1.2      |   | $      | 4.9      |   |   | (75.5    | %)     |
| **Miscellaneous**   |   |   | $                       | 0.6      |   | $                                | 0.7        |   |          | (14.3    | %)     |   | $      | 0.0        |   | $      | 0.0      |   |   | 0.0      | %          |   | $      | 0.6      |   | $      | 0.7      |   |   | (14.3    | %)     |
|                |   |   |                    |     |   |                             |       |   |          |     |   |   |   |       |   |   |     |   |   |     |       |   |   |     |   |   |     |   |   |     |   |
| **Total Revenue**   |   |   | **$**                   | **32.7** |   | **$**                            | **33.7**   |   |          | **(3.0** | **%)** |   | **$**  | **50.7**   |   | **$**  | **38.2** |   |   | **32.7** | **%**      |   | **$**  | **83.4** |   | **$**  | **71.9** |   |   | **16.0** | **%**  |

|   |                                                                     |
|--------|--------------------------------------------------------------------------|
|   | The following table summarizes kWh sales for the quarter ended March 31: |

|           |   |                                |        |                                |   |        |   |
|----------------|--------|-------------------------------------|-------------|-------------------------------------|--------|-------------|--------|
| **Customer**   |   | **2009                        kWh** |        | **2008                        kWh** |   |
|           |   |                                |        |                                |   |
|           |   |                                |        |                                |   |        |   |
| Retail         |   |                                | 326,439,417 |                                |   | 330,411,495 |   |
| Wholesale      |   |                                | 351,962,600 |                                |   | 356,785,025 |   |
| Economy Energy |   |                                | 13,744,300  |                                |   | 72,596,700  |   |
|           |   |                                |        |                                |   |        |   |
|           |   |                                |        |                                |   |        |   |
| **Total**      |   |                                | 692,146,317 |                                |   | 759,793,220 |   |
|           |   |                                |        |                                |   |        |   |

|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | Base rates charged to retail and wholesale customers in the first quarter of 2009 include base rate changes, which were effective June 1, 2008, as a result of Chugach’s 2005 Test Year Rate Case. Base rates charged to retail customers decreased 4.8 percent and base rates charged to wholesale customers HEA, MEA and SES increased 13.0 percent, 10.5 percent and 9.6 percent, respectively, in the first quarter of                        2009 compared to the first quarter of 2008.                                                                      |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|   | Total operating expenses increased $12.9 million, or 21.1%, in the first quarter of 2009 over the same quarter in 2008.                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|   | Fuel expense increased $8.1 million, or 25.4%, in the first quarter of 2009 compared to the same quarter in 2008, due to an increase in fuel price. In the first quarter of 2009, Chugach used 7,033,375 MCF of fuel at an average effective price of $6.77 per MCF, which includes 1,087,798 MCF of fuel that is recorded as purchased power expense. In the first quarter of 2008, Chugach used 8,030,140 MCF of fuel at an                        average effective price of $4.59 per MCF, which includes 1,039,168 MCF of fuel that is recorded as purchased power. |

16

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|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | Production expense increased $617.6 thousand, or 16.4%, in the first quarter of 2009 compared to the same quarter in 2008 due primarily to expenses associated with the Cooper Lake Unit 2 and Beluga Unit 5 inspections in 2009, expenditures associated with the water treatment system at the Bernice Lake Power Plant and equipment associated with volcano preparedness.                                                                                                                                                                                                                           |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   | Purchased power expense, which includes the cost of 1,087,798 MCF of fuel associated with purchases from the Nikiski Cogeneration plant, increased $3.6 million, or 47.2%, in the first quarter of 2009 compared to the same quarter in 2008 due to an increase in the price, primarily associated with the price of fuel. In the first quarter of 2009, Chugach purchased 126,701 MWh of energy at an average effective price of                        8.52 cents per kWh. In the first quarter of 2008, Chugach purchased 128,715 MWh of energy at an average effective price of 5.61 cents per kWh. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   | Transmission expense did not materially change in the first quarter of 2009 compared to the same quarter in 2008.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   | Distribution expense did not materially change in the first quarter of 2009 compared to the same quarter in 2008.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   | Consumer accounts decreased $129.4 thousand, or 9.6%, in the first quarter of 2009 compared to the same quarter in 2008 due primarily to a decrease in labor associated with meter reading and customer records and collection.                                                                                                                                                                                                                                                                                                                                                                         |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   | Administrative, general and other expenses did not materially change in the first quarter of 2009 compared to the same quarter in 2008.                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   | Depreciation and amortization expense increased $587.4 thousand, or 8.0%, in the first quarter of 2009 compared to the same quarter in 2008. The increase was due in part to a change in depreciation rates, effective in the second quarter of 2008 as a result of Chugach’s 2005 Test Year Rate Case, as well as the continued closeout of construction projects.                                                                                                                                                                                                                               |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   | Interest on long-term debt decreased $602.1 thousand, or 10.6%, in the first quarter of 2009 compared to the same quarter of 2008. The decrease was related to the use of our NRUCFC line of credit to redeem the outstanding principal amount of the 2002 Series B Bonds on March 20, 2008, resulting in a shift from long-term to short-term interest expense, lower interest rates in the first quarter of 2009 compared to the                        same period in 2008 and continued principal payments on our CoBank debt.                                                                      |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   | Other interest expense increased $282.7 thousand, due in part to the use of the NRUCFC line of credit described above and for general working capital which wasn’t repaid until February 19, 2009. This increase is net of the affect of a decrease in interest rates on our CoBank line of credit in the first quarter of 2009 compared to the same quarter in 2008.                                                                                                                                                                                                                             |

17

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|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | Interest charged to construction did not materially change in the first quarter of 2009 compared to the same quarter in 2008.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   | Non-operating margins decreased $39.9 thousand, or 26.3%, in the first quarter of 2009 compared to the same quarter in 2008. The decrease is due to lower interest income due primarily to lower interest rates in the first quarter of 2009 compared to the same period in 2008.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   | **Financial Condition**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   | *Assets*                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   | Total assets decreased $9.2 million, or 1.6%, from December 31, 2008 to March 31, 2009. Net utility plant decreased $7.7 million, or 1.7%, primarily due to depreciation expense in excess of extension and replacement of plant. Fuel cost recovery decreased $11.8 million, or 100%, due to the collection of the prior quarter’s fuel and purchased power costs recovered through the fuel surcharge process. Deferred                        charges decreased $696.9 thousand, or 3.0%, due primarily to the first quarter amortization of deferred charges.                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   | These decreases were offset by increases in cash and cash equivalents, accounts receivable, materials and supplies, prepayments and other current assets. Cash and cash equivalents increased $5.0 million, or 67.3%, due primarily to the receipt of one wholesale customer’s payment for electric service on the last day of March. Accounts receivable increased $4.5 million, or 13.6%, due primarily to an increase in                        the fuel component of consumer’s invoices. Materials and supplies increased $837.4 thousand, or 2.9% due mainly to the purchase of materials committed to planned distribution projects. Prepayments increased $487.4 thousand, or 31.6%, due primarily to the annual renewal of insurance for 2009 and other current assets increased $125.5 thousand, or 46.1% due primarily to an increase in the receivable associated with our NRUCFC capital term certificates, which is                        received semi-annually.                                                     |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   | *Liabilities*                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   | Total liabilities, equities and margins decreased $9.2 million, or 1.6%, from December 31, 2008 to March 31, 2009. The decrease includes a $1.0 million, or 35.0%, decrease in promissory notes payable caused by the first installment payment on the note associated with the property Chugach acquired for construction of an additional electrical generation facility. The decrease also includes a $7.5 million, or 100%                        decrease in short-term obligations due to the payment of the outstanding balance on the CoBank line of credit. Accounts payable decreased $2.4 million, or 34.5%, due to the payment of invoices that were accrued but not paid at December 31, 2008. Accrued interest decreased $4.4 million, or 71.1%, from December 31, 2008, due to the semi-annual interest payments on the 2001 and 2002 Series A Bonds in the first quarter of 2009. Deferred liabilities also decreased $1.0                        million, or 45.3%, caused by a decrease in customer advances for construction. |

18

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|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | These decreases were offset by a $4.0 million, or 2.6%, increase in total equities and margins due to the margins generated in the first quarter of 2009. Total long-term obligations and current installments of long-term debt also increased $1.1 million, or 0.3%, due primarily to commercial paper transactions in excess of principal payments made on CoBank 2, 3, 4 and 5 in the first quarter of 2009. Fuel cost                        over-recovery increased $366.5 thousand, or 100%, due to the over-collection of the prior quarter’s fuel and purchased power costs recovered through the fuel surcharge process, which created a payable instead of a receivable at March 31, 2009. Fuel payable also increased $1.7 million, or 5.9%, caused primarily by an increase in fuel prices. Other liabilities increased $191.9 thousand, or 11.5%, from December 31, 2008, due primarily to an increase in the municipal                        underground ordinance payable, which was offset by a decrease in gross receipts payable due to the payment of Chugach’s annual gross receipts tax and a decrease in patronage capital payable due to the payment of the 2008 retirement of patronage capital in the first quarter of 2009. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   | **LIQUIDITY AND CAPITAL RESOURCES**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   | **Summary**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   | We ended the first quarter of 2009 with $12.5 million of cash and cash equivalents, up from $7.5 million at December 31, 2008. We utilized the $57.5 million in lines of credit that we maintain with CoBank and NRUCFC in the first quarter of 2009, however, there was no outstanding balance on these lines of credit at March 31, 2009. Thus, our available borrowing capacity under these lines at March 31, 2009, was $57.5                        million. We issued commercial paper in the first quarter of 2009 and had $45.5 million of commercial paper outstanding at March 31, 2009, thus our available borrowing capacity under our commercial paper program at March 31, 2009, was $254.5 million.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   | Cash equivalents consist of all highly liquid debt instruments with a maturity of three months or less when purchased and an Overnight Repurchase Agreement with First National Bank Alaska (FNBA).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   | **Cash Flows**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   | The following table summarizes our cash flows from operating, investing and financing activities for the quarters ended March 31, 2009 and 2008.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |

|                                             |   |   |       |   |   |       |   |
|--------------------------------------------------|--------|--------|------------|--------|--------|------------|--------|
|                                             |   | 2009   |       | 2008   |   |
|                                             |   |   |       |   |   |
| Total cash provided by (used in):                |   |   |       |   |   |       |   |
|                                             |   |   |       |   |   |       |   |
| Operating activities                             |   |   | 16,122,531 |   |   | 4,989,852  |   |
| Investing activities                             |   |   | (2,533,066 | )      |   | (3,988,911 | )      |
| Financing activities                             |   |   | (8,550,972 | )      |   | (3,478,332 | )      |
|                                             |   |   |       |   |   |       |   |
| Increase (decrease) in cash and cash equivalents |   |   | 5,038,493  |   |   | (2,477,391 | )      |

19

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|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | *Operating Activities*                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   | Cash provided by operating activities was $16.1 million for the quarter ended March 31, 2009, compared with $5.0 million for the quarter ended March 31, 2008. A decrease in assignable margins was offset by increased depreciation expense and changes in operating assets and liabilities. Assignable margins decreased to $4.0 million in the first quarter of 2009, compared with $5.1 million in the first quarter of 2008.                        The changes in operating assets and liabilities were due primarily to changes in accounts receivable, fuel cost under-recovery, materials and supplies, accounts payable, fuel cost over-recovery and fuel payable. The accounts receivable change was primarily due to an increase in the fuel component of consumer’s invoices due to higher fuel prices while the change in fuel cost under-recovery was due to the collection of fuel and purchased power costs recovered through                        the fuel surcharge process. The change in materials and supplies was primarily due to the change in inventory needed for the upcoming construction season. The change in accounts payable was primarily due to a decrease in construction activity while the change in fuel cost over-recovery was due to the over-collection of fuel and purchased power costs recovered through the fuel surcharge process. The fuel payable change was due to increased fuel expense. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   | *Investing Activities*                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   | Cash used in investing activities was $2.5 million for the quarter ended March 31, 2009, compared with $4.0 million for the quarter ended March 31, 2008. The change in cash used in investing activities for the quarter ended March 31, 2009, compared with the quarter ended March 31, 2008, was due primarily to the level of construction activity in the first quarter of 2009 compared to the same period in 2008. Capital                        construction for 2009 is estimated at $72.1 million. Capital improvement expenditures are expected to increase during the second quarter as the construction season begins.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   | *Financing Activities*                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   | Cash used in financing activities was $8.6 million for the quarter ended March 31, 2009, compared to $3.5 million for the quarter ended March 31, 2008. The change in cash used in financing activities for the quarter ended March 31, 2009, compared with the quarter ended March 31, 2008, was primarily due to the use of short-term borrowings to pay long-term debt in 2008 compared to the reclassification of long-term debt                        to current portion in 2009, as well as the payment of short term borrowings in the first three months of 2009 compared to the same period in 2008. The change was also due to the payment of the 2008 retirement of patronage capital in the first quarter of 2009, which was less than the payment of the 2007 retirement of patronage capital in the first quarter of 2008. The change was also due to a payment on the promissory note associated with a land purchase and a decrease in                        customer advances for construction.                                                                                                                                                                                                                                                                                                                                                                                                                                   |

20

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|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | **Sources of Liquidity**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   | Chugach has satisfied its operational and capital cash requirements primarily through internally generated funds, an annual $7.5 million line of credit with CoBank, a $50 million line of credit from NRUCFC and a $300 million commercial paper program. We issued $45.5 million of our available commercial paper in order to pay the outstanding balance of our NRUCFC line of credit which was used to redeem our 2002 Series B                        Bonds in March of 2008 and for general working capital. At March 31, 2009, there was no outstanding balance on our CoBank or NRUCFC lines of credit and $45.5 million of commercial paper outstanding. Thus, at March 31, 2009, our available borrowing capacity under these lines of credit was $57.5 million and our available commercial paper capacity was $254.5 million. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   | In April of 2009, Chugach had additional activity on our CoBank line of credit, however, Chugach paid the outstanding balance on this line of credit.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   | 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, 2009, Chugach had the following promissory notes outstanding with this facility:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |

|                                       |   |                                         |       |                                                        |   |                                     |   |                                               |   |   |   |              |   |
|--------------------------------------------|--------|----------------------------------------------|------------|-------------------------------------------------------------|--------|------------------------------------------|--------|----------------------------------------------------|--------|--------|--------|-------------------|--------|
| **Promissory                        Note** |   | **Principal                        Balance** |       | **Interest Rate at                        March. 31, 2008** |   | **Maturity                        Date** |   | **Principal                        Payment Dates** |   |
|                                       |   |                                         |       |                                                        |   |                                     |   |                                               |   |
| CoBank 2                                   |   | $                                            | 3,000,000  |                                                        |   | 5.50%                                    |   |                                               | 2010   |   |   | 2005 – 2010 |   |
| CoBank 3                                   |   |                                         | 17,677,513 |                                                        |   | 2.31%                                    |   |                                               | 2022   |   |   | 2003 – 2022 |   |
| CoBank 4                                   |   |                                         | 20,086,132 |                                                        |   | 2.31%                                    |   |                                               | 2022   |   |   | 2003 – 2022 |   |
| CoBank 5                                   |   |                                         | 3,632,818  |                                                        |   | 2.31%                                    |   |                                               | 2012   |   |   | 2007 – 2012 |   |
|                                       |   |                                         |       |                                                        |   |                                     |   |                                               |   |   |   |              |   |
| Total                                      |   | $                                            | 44,396,463 |                                                        |   |                                     |   |                                               |   |   |   |              |   |
|                                       |   |                                         |       |                                                        |   |                                     |   |                                               |   |   |   |              |   |

|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | Over the next five years Chugach anticipates incurring significant capital expenditures due to the construction of a gas fired generation unit, on-going capital needs and refinancing of certain existing debt. In March of 2008 we issued a Request For Proposal (RFP) for a three to five year interim finance facility. Commercial paper will be issued under this requested facility and will act as a bridge until Chugach                        converts Commercial Paper balances to long term debt in 2010 and to refinance the 2011 and 2012 Series A bonds. The commercial paper program is backed by a $300 million Unsecured Credit Agreement between NRUCFC, KeyBank, CoBank and US Bank. At closing, the Credit Agreement was priced with an all-in drawn spread of London Interbank Offered Rate (LIBOR) plus 60 basis points, along with a 17.5 basis points facility fee. The credit agreement was executed on October 10, 2008,                        and expires on October 10, 2011. Chugach began issuing short-term Commercial Paper in the first quarter of 2009. |

21

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|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | Chugach management continues to expect that cash flows from operations and external funding sources, including additional commercial paper borrowings, will be sufficient to cover operational, financing and capital funding requirements in 2009 and thereafter.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|   | **CRITICAL ACCOUNTING POLICIES**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|   | Chugach’s 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 effect results of operations and reported amounts of assets and liabilities in the financial statements. 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, 2009. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|   | **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 SFAS No. 71, “*Accounting for the Effects of Certain Types of Regulation” (SFAS No.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 SFAS 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. 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                                                                                                                                                                                                                                                                                                                                    |

22

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|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | judicial or regulatory actions could materially impact the amounts of such regulatory assets and liabilities and could adversely impact Chugach’s financial statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   | **Unbilled revenue**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   | Chugach calculates unbilled retail revenue at the end of each month to ensure the recognition of a full month’s revenue. Chugach estimates calendar-month unbilled sales based on billing cycle sales, billing cycle read dates, weather and hours of darkness to produce an estimate of calendar sales. This estimate of calendar sales is then calibrated to deliveries measured at Chugach distribution substations, net of                        losses. Until September of 2008, calendar unbilled revenue was determined by multiplying kWh sales by an average rate. Beginning in September of 2008, Chugach fully implemented an unbilled estimate based on respective billing class determinants to produce an estimate of calendar month revenue. Chugach accrued $9,158,744 and $7,164,370 of unbilled retail revenue at March 31, 2009 and 2008, respectively. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   | **Allowance for Doubtful Accounts**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   | Chugach maintains 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, 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.                                                                                                       |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   | **RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   | Information required by this Item is contained in Note 8 to the “Notes to Financial Statements” within Part I of this Form 10-Q.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   | **OUTLOOK**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   | An “evolving landscape” can best describe the environment Chugach will operate in during 2009 and beyond. Procuring a new, highly efficient power generation facility, natural gas contracts, low cost financing and replacement revenue sources for wholesale customer loads that will be leaving in 2014, all while controlling operating expenses to minimize adverse customer rate impacts, are some of the                        challenges facing Chugach in the near and intermediate term.                                                                                                                                                                                                                                                                                                                                                                   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   | These issues, along with emerging energy issues and plans at the state level, will shape how Chugach proceeds into the future.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   | Chugach has partnered with AML&P to construct and jointly own a new 183 megawatt natural gas fired power plant. Chugach will own and take 70% of the new plant’s output                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |

23

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|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | and AML&P will own and take the remaining 30%. The plant is scheduled to be placed into service in 2013. Currently, major components have been ordered and construction plans are moving forward. Chugach’s interim financing for the plant will come from its’ established lines of credit and a commercial paper borrowing program that was established via a commercial paper $300 million unsecured credit                        agreement in 2008. Given the recent volatility in the bond and commercial paper market, close attention will be given to the timing and type of permanent financing Chugach obtains for the new plant and other capital additions.                                                                                                                                                                                                                                           |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   | Chugach will explore all potential sources of long term financing to include federal, state, private placement and the public markets to obtain the lowest cost financing available for the 2011 and 2012 maturing long-term debt refinancing and requirements for new, long-term financing for our capital additions that are expected to begin in 2010.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   | On May 12, 2009, Chugach submitted a new long-term natural gas supply contract to the RCA. The new contract will provide gas beginning in 2010 and terminating December 31, 2016. The total amount of gas under the contract is estimated to be 66 BCF. Approval of the contract by the RCA is condition precedent for the effectiveness of the contract, and will ensure, in advance, that costs incurred under the contract can be                        recovered from Chugach’s customers.                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   | Notification by HEA and MEA that neither organization will be on the Chugach system in the current contractual arrangement post 2014 will result in a loss of approximately 50% of Chugach’s power sales load and approximately 40% of its’ annual sales revenue. While financial management plan scenarios indicate Chugach can sustain its’ operations and meet its’ financial covenants in the event                        these two customers leave the system, considerably high rate increases will be required of the remaining customers. Consequently, Chugach will be pursuing replacement sources of revenue through potential new firm power sales agreements and revised transmission wheeling and ancillary services tariff revisions. Successful implementation of new power sales agreements and revised tariffs will mitigate anticipated rate increases in the 2014 and 2015 timeframe. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   | A recently released State of Alaska Energy Plan released by Alaska’s Governor called for a migration to alternative fuel sources for one half of the state by 2025. This is in concert with Chugach’s conceptual goal to move from a “90 – 10” (90% natural gas fuel source – 10% alternative fuel source) generation mix to a “10 – 90” generation mix. Chugach’s                        challenge in the coming years will be to find low cost, highly efficient generation projects that fulfill this goal.                                                                                                                                                                                                                                                                                                                                                         |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   | On March 5, 2009, the governor of Alaska transmitted a bill to the Alaska State Legislature that creates the Greater Railbelt Energy and Transmission Corporation. In the Governor’s transmittal letter, she identified the purpose of the corporation was to “plan for the financing, acquisition, construction, ownership, and operation of necessary electric power generation and transmission assets and services                        that would be necessary to provide the Railbelt with adequate, reliable, safe, and stable electric power and transmission services at the lowest feasible long-term cost.” The legislation (HB 182 and                                                                                                                                                                                                                                                             |

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|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | SB 143) was introduced in both the House and Senate special committees on energy and is being held in committee until the 2010 legislative session. In the interim, the six Railbelt utility governing bodies have agreed to form a special task force to further discuss the legislation and make recommendations to the state administration and the legislative committees this fall.                                                                                                                                                                                                                                                                     |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   | **ENVIRONMENTAL MATTERS**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   | **Compliance with Environmental Standards**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   | The Clean Air Act and Environmental Protection Agency (EPA) regulations under the act (the “Clean Air Act”) establish ambient air quality standards and limit the emission of many air pollutants. Some Clean Air Act programs that regulate electric utilities, notably the Title IV “acid rain” requirements, do not apply to facilities located in Alaska. In 2008 the EPA vacated regulations to limit                        mercury emissions from fossil-fired steam-electric generating facilities.                                                                                                                          |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   | New Clean Air Act regulations impacting electric utilities may result from future events or may result from new regulatory programs that may be established to address problems such as global warming. While we cannot predict whether any new regulation would occur or its limitation, it is possible that new laws or regulations could increase our capital and operating costs. We have obtained or applied for all Clean Air                        Act permits currently required for the operation of our generating facilities.                                                                                                                    |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   | In March 2007, Chugach conducted emissions testing at the Bernice Lake Power Plant which indicated that two of the gas turbines at the facility were exceeding the New Source Performance Standards (NSPS) emission limit for nitrogen oxides (NOx). Chugach voluntarily limited the power output of these turbines to ensure interim compliance with the NSPS regulations until a water injection system to control NOx emissions                        from the turbines was installed and operational. With the water injection system, Chugach is able to fully utilize the power output from these turbines while complying with the NSPS regulations. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   | The Alaska Department of Conservation (ADEC) issued a Notice of Violation (NOV) on March 26, 2008, regarding the NSPS NOx emission limit exceedances. Chugach entered into a settlement with ADEC regarding the NOV for the past NSPS non-compliance. Chugach and the ADEC signed the settlement agreement on February 18, 2009. As part of the settlement, Chugach paid a civil penalty of $112,161 to ADEC on April 3, 2009,                        bringing the issue to a close.                                                                                                                                                                         |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   | Chugach is subject to numerous other environmental statutes including the Clean Water Act, the Resource Conservation and Recovery Act, the Toxic Substances Control Act, the Endangered Species Act, and the Comprehensive Environmental Response, Compensation and Liability Act and to the regulations implementing these statutes. We do not believe that compliance with these statutes and regulations to date has had a                        material impact on our financial condition or results of operation. However, new laws or regulations, implementation of final regulations or changes in or new interpretations of                       |

25

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|   |                                                                                                                                                                                                                                                                                                                                                                |                                                           |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------|
|   | these laws or regulations could result in significant additional capital or operating expenses.                                                                                                                                                                                                                                                                     |
|   |                                                                                                                                                                                                                                                                                                                                                                |
|   | **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. |
|   |                                                                                                                                                                                                                                                                                                                                                                |
|   | **Interest Rate Risk**                                                                                                                                                                                                                                                                                                                                              |
|   |                                                                                                                                                                                                                                                                                                                                                                |
|   | The following table provides information regarding cash flows for principal payments on total debt by maturity date (dollars in thousands) as of March 31, 2009.                                                                                                                                                                                                    |

|                    |   |     |   |     |   |     |   |     |    |     |   |           |   |      |   |                                  |   |   |   |   |    |   |   |    |   |
|-------------------------|--------|----------|--------|----------|--------|----------|--------|----------|---------|----------|--------|----------------|--------|-----------|--------|---------------------------------------|--------|--------|--------|--------|---------|--------|--------|---------|--------|
| **Total Debt1**         |   | **2009** |   | **2010** |   | **2011** |   | **2012** |    | **2013** |   | **Thereafter** |   | **Total** |   | **Fair                        Value** |   |
|                         |   |     |   |     |   |     |   |     |    |     |   |           |   |      |   |                                  |   |
|                    |   |     |   |     |   |     |   |     |    |     |   |           |   |      |   |                                  |   |   |   |   |    |   |   |    |   |
| **Fixed rate debt**     |   | $        | 3,360  |     | $      | 1,500    |   | $        | 150,000 |     | $      | 120,000        |   | $         | 0      |                                  | $      | 0      |   | $      | 274,860 |   | $      | 290,942 |   |
|                    |   |     |   |     |   |     |   |     |    |     |   |           |   |      |   |                                  |   |   |   |   |    |   |   |    |   |
| Average interest rate   |   |     | 5.78   | %        |   | 5.50     | %      |     | 6.55    | %        |   | 6.20           | %      |      | 0.00   | %                                     |   | 0.00   | %      |   | 6.38    | %      |   |    |   |
|                    |   |     |   |     |   |     |   |     |    |     |   |           |   |      |   |                                  |   |   |   |   |    |   |   |    |   |
| Annual interest expense |   | $        | 13,112 |     | $      | 17,297   |   | $        | 9,487   |     | $      | 620            |   | $         | 0      |                                  | $      | 0      |   |   |    |   |   |    |   |
|                    |   |     |   |     |   |     |   |     |    |     |   |           |   |      |   |                                  |   |   |   |   |    |   |   |    |   |
| **Variable rate debt**  |   | $        | 46,980 |     | $      | 2,618    |   | $        | 2,852   |     | $      | 2,694          |   | $         | 2,076  |                                  | $      | 29,680 |   | $      | 86,899  |   | $      | 86,899  |   |
|                    |   |     |   |     |   |     |   |     |    |     |   |           |   |      |   |                                  |   |   |   |   |    |   |   |    |   |
| Average interest rate   |   |     | 1.02   | %        |   | 2.16     | %      |     | 2.16    | %        |   | 2.16           | %      |      | 2.16   | %                                     |   | 2.16   | %      |   | 1.54    | %      |   |    |   |

|   |   |                     |
|--------|--------|--------------------------|
|   | **1**  | Includes current portion |

|   |                                                                                                                                                                                                                                                                                                                                                                                        |   |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|   | Chugach is exposed to market risk from changes in interest rates. A 100 basis-point change (up or down) would increase or decrease our interest expense by approximately $868,995 based on $86,899,463 of variable rate debt outstanding at March 31, 2009.                                                                                                                                 |
|   |                                                                                                                                                                                                                                                                                                                                                                                        |
|   | **Commodity Price Risk**                                                                                                                                                                                                                                                                                                                                                                    |
|   |                                                                                                                                                                                                                                                                                                                                                                                        |
|   | Chugach’s gas contracts provide for adjustments to gas prices based on fluctuations of certain commodity prices and indices. Because fuel and 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. |

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|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                        |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------|
|   | **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 CEO and Chief Financial Officer (CFO) supervised and participated in this evaluation. Based on this evaluation, Chugach’s CEO and CFO each concluded that as of the end of the period covered by this report, 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. In addition, there have been no changes in Chugach’s internal controls over financial reporting or in other factors known to management during the most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect its internal controls over financial reporting. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   | **PART II. OTHER INFORMATION**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   | **ITEM 1.**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | **LEGAL PROCEEDINGS**       |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                        |
|   | Information required by this Item is contained in Note 7 to the “Notes to Financial Statements” within Part I of this Form 10-Q.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   | **ITEM 1A.**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | **RISK FACTORS**            |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                        |
|   | *Fuel Supply*                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   | In 2008, 91% of our power was generated from gas, which included power generated at Nikiski. Our primary suppliers of natural gas are the Beluga River Field Producers and Marathon, of which we collectively have approximately 83 BCF of gas remaining. In 2008 Chugach used approximately 31 BCF of natural gas. We estimate that our contract gas with Marathon will run-out by mid-2010. We estimate that our contract gas with                        the Beluga River Producers will run-out in 2011.                                                                                                                                                                                                                                                                                                                                                                                                          |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   | On May 13, 2009, Chugach submitted a new long-term natural gas supply contract to the RCA. The new contract will provide gas beginning in 2010 and terminating December 31, 2016. The total amount of gas under the contract is estimated to be 66 BCF. Approval of the contract by the RCA is condition precedent for the effectiveness of the contract, and will ensure in advance that costs incurred under the contract can be                        passed through and recovered from Chugach’s customers.                                                                                                                                                                                                                                                                                                                                                                                                |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   | The fuel and purchased power surcharge process allows Chugach to recover its current fuel and purchased power costs with minimal regulatory lag. To the extent the regulated fuel recovery process does not provide for the timely recovery of fuel expenses, Chugach could experience a material negative impact on its cash flows.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |

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|   |                                                                                                                                                 |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | **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** |
|   |                                                                                                                                                 |   |
|   | None.                                                                                                                                                |   |
|   |                                                                                                                                                 |   |
|   | **ITEM 5.**                                                                                                                                          | **OTHER INFORMATION** |
|   |                                                                                                                                                 |
|   | None.                                                                                                                                                |   |
|   |                                                                                                                                                 |   |
|   | **ITEM 6.**                                                                                                                                          | **EXHIBITS** |
|   |                                                                                                                                                 |
|   | Bylaws of the Registrant as amended April 28, 2009. Incorporated by reference from Exhibit 3.2 to the Registrant’s Form 8-K filed May 5, 2009. |
|   |                                                                                                                                                 |
|   | 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.                                              |

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**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/ Bradley W. Evans      |
|                               |              | Bradley W. Evans          |
|                               |              | Chief Executive Officer   |
|                               |              |                      |
|                               | By:          | /s/ Michael R. Cunningham |
|                               |              | Michael R. Cunningham     |
|                               |              | Chief Financial Officer   |
|                               |              |                      |
|                               | Date:   | May 14, 2009              |

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**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 28, 2009. Incorporated by reference from Exhibit 3.2 to the Registrant’s Form 8-K filed May 5, 2009. |
|                 |   |                                                                                                                                                 |
| 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                                               |

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