FORM 10-Q
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

(Mark One)

   X     QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
                           SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended          June 30, 1997
                               ---------------------------------

                                            OR

                  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                           SECURITIES EXCHANGE ACT OF 1934

For the transition period from                                       to

Commission file number             33-42125

                       Chugach Electric Association, Inc.
             (Exact name of registrant as specified in its charter)

       Alaska                                                     92-0014224
 (State or other jurisdiction of                               (I.R.S. Employer
  incorporation or organization)                             Identification No.)

 5601 Minnesota Drive         Anchorage, Alaska                       99518
(Address of principal executive offices)                           (Zip Code)

                           (907) 563-7494
         (Registrant's telephone number, including area code)

                                         None
(Former name, former address and former fiscal year, if changed since 
                             last report)            
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days. Yes X . No .

                      APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock, as of the latest practicable date.

    CLASS                                         OUTSTANDING AT AUGUST 1, 1997

    NONE                                                     NONE



<PAGE>



                       CHUGACH ELECTRIC ASSOCIATION, INC.

                                      INDEX



Part I. Financial Information                                       Page Number


Balance Sheets, June 30, 1997 (Unaudited) and December 31, 1996               3

Statements of Revenues, Expenses and Patronage Capital, Three Months
    Ended June 30, 1997 and 1996 and Six Months Ended June 30, 1997
    and 1996 (Unaudited)                                                      5

Statements of Cash Flows, Six Months Ended June 30, 1997 and 1996
    (Unaudited)                                                               6

Notes to Financial Statements (Unaudited)                                     7

Management's Discussion and Analysis of Results of Operations and
    Financial Condition (Unaudited)                                           8


Part II.  Other Information

Item 1. Legal Proceedings                                                    11

Item 6. Exhibits and Reports on Form 8-K                                     13

Signatures                                                                   14





                                        2

<PAGE>



                       CHUGACH ELECTRIC ASSOCIATION, INC.
                                 Balance Sheets

                                     Assets

<TABLE>

                                                             June 30, 1997  December 31, 1996
                                                              ------------   ------------
                                                               (Unaudited)
<S>                                                           <C>            <C>  
Utility plant:

     Electric plant in service ............................   $619,525,839   $615,464,060

     Construction work in progress ........................     20,762,842     19,826,957
                                                              ------------   ------------

                                                               640,288,681    635,291,017

     Less accumulated depreciation ........................    223,977,082    215,411,223
                                                              ------------   ------------

                      Net utility plant ...................    416,311,599    419,879,794
                                                              ------------   ------------

Other property and investments, at cost:

     Nonutility property ..................................          3,550          3,550

     Investments in associated organizations ..............      7,626,275      7,647,189

     Restricted cash - margins from economy
        energy sales, all repurchase agreements ...........           --        1,599,239
                                                              ------------   ------------

                                                                 7,629,825      9,249,978
                                                              ------------   ------------

Current assets:

     Cash and cash equivalents ............................      2,935,857      5,419,819

     Cash - restricted construction funds .................      1,232,844      1,371,386

     Special deposits ....................................          89,232         89,232

     Accounts receivable, net .............................     12,774,100     15,369,883

     Materials and supplies, at average cost ..............     16,036,677     16,187,592

     Prepayments ..........................................      1,223,532        694,257

     Other current assets .................................        192,675        294,380
                                                              ------------   ------------

                    Total current assets ..................     34,484,917     39,426,549
                                                              ------------   ------------

Deferred charges ..........................................     14,308,117     13,932,109
                                                              ------------   ------------

                                                              $472,734,458   $482,488,430
                                                              ------------   ------------

</TABLE>



See accompanying notes to unaudited financial statements.


                                                       3

<PAGE>



                       CHUGACH ELECTRIC ASSOCIATION, INC.
                                 Balance Sheets

                            Liabilities and Equities

<TABLE>

                                                                  June 30, 1997 December 31, 1996
                                                                   ------------   ------------
                                                                   (Unaudited)
<S>                                                               <C>            <C> 
Equities and margins:

     Memberships ..............................................   $    834,913   $    812,748

     Patronage capital ........................................    104,205,721    100,685,517

     Other ....................................................      2,896,998      2,979,677
                                                                  ------------   ------------

                                                                   107,937,632    104,477,942
                                                                  ------------   ------------

Long-term obligations, excluding current installments:

     First mortgage bonds payable .............................    240,910,000    251,553,000

     CoBank bonds payable .....................................     56,227,479     56,352,847
                                                                  ------------   ------------

                                                                   297,137,479    307,905,847
                                                                  ------------   ------------

Current liabilities:

     Notes payable ............................................      8,000,000      2,750,000

     Current installments of long-term debt and
        capital leases ........................................      5,910,399      5,971,752

     Accounts payable .........................................      3,064,095      5,178,161

     Consumer deposits ........................................      1,048,599      1,066,906

     Accrued interest .........................................      6,878,541      7,076,388

     Salaries, wages and benefits .............................      3,682,300      3,583,422

     Fuel .....................................................      4,594,134      6,047,574

     Other ....................................................      2,765,315      5,012,191
                                                                  ------------   ------------

                   Total current liabilities ..................     35,943,383     36,686,394
                                                                  ------------   ------------

Deferred credits ..............................................     31,715,964     33,418,247
                                                                  ------------   ------------

                                                                  $472,734,458   $482,488,430
                                                                  ------------   ------------


</TABLE>


See accompanying notes to unaudited financial statements.


                                        4

<PAGE>



                       CHUGACH ELECTRIC ASSOCIATION, INC.

             Statements of Revenues, Expenses and Patronage Capital


<TABLE>

                                                  Three months ended June 30         Six months ended June 30
                                                 

                                                      1997             1996             1997             1996
                                                 -------------    -------------    -------------    -------------

                                                          (Unaudited)                       (Unaudited)
<S>                                              <C>              <C>              <C>              <C>   
Operating revenues ............................  $  31,111,608    $  31,244,744    $  69,621,947    $  66,342,456
                                                 -------------    -------------    -------------    -------------


Operating expenses:

     Production ...............................     11,205,134        8,315,461       21,048,662       16,698,051

     Purchased power ..........................      3,359,048        2,589,753        7,316,740        4,919,195

     Transmission .............................        824,501          703,488        1,754,180        1,586,694

     Distribution .............................      2,184,632        2,387,555        4,148,133        4,831,435

     Consumer accounts ........................      1,177,788        1,777,840        2,448,163        3,569,237

     Administrative, general and other ........      3,526,867        3,247,813        6,624,607        6,673,278

     Depreciation and amortization ............      5,278,641        5,202,482       10,550,444       10,237,550
                                                 -------------    -------------    -------------    -------------

             Total operating expenses .........     27,556,611       24,224,392       53,890,929       48,515,440
                                                 -------------    -------------    -------------    -------------

Interest:

     On long-term debt ........................      6,164,506        5,382,523       12,500,667       12,686,767

     Other ....................................        261,849          314,902          322,838          500,835

     Charged to construction - credit .........       (110,436)        (115,824)        (282,475)        (238,095)
                                                 -------------    -------------    -------------    -------------

             Net interest expense .............      6,315,919        5,581,601       12,541,030       12,949,507
                                                 -------------    -------------    -------------    -------------

             Net operating margins ............    (2,760,922)        1,438,751        3,189,988        4,877,509
                                                 -------------    -------------    -------------    -------------

Nonoperating margins:

     Interest income ..........................        189,201          219,982          337,828          391,144

     Other ....................................         16,137           37,944           94,736           54,490
                                                 -------------    -------------    -------------    -------------

             Total nonoperating margins .......        205,338          257,926          432,564          445,634
                                                 -------------    -------------    -------------    -------------

             Assignable margins ...............    (2,555,584)        1,696,677        3,622,552        5,323,143

Patronage capital at beginning of period ......    106,786,331       99,013,147      100,685,517       95,421,358

Retirement of capital credits and
   estate payments ............................        (25,026)         (49,084)        (102,348)         (83,761)
                                                 -------------    -------------    -------------    -------------

Patronage capital at end of period ............    $104,205,721    $ 100,660,740    $ 104,205,721    $ 100,660,740
                                                  -------------    -------------    -------------    -------------
                                                                                                                

</TABLE>



See accompanying notes to unaudited financial statements.




                                        

                                        5

<PAGE>


                       CHUGACH ELECTRIC ASSOCIATION, INC.
                             Statement of Cash Flows
<TABLE>

                                                                                     Six months ended June 30

                                                                                        1997            1996
                                                                                    ------------    ------------

                                                                                             (Unaudited)
<S>                                                                                <C>              <C>  
Cash flows from operating activities:

   Assignable margins ...........................................................   $  3,622,552    $  5,323,143
                                                                                    ------------    ------------

   Adjustments to  reconcile  assignable  margins to net cash used in  operating
       activities:

       Depreciation and amortization ............................................     10,550,444      10,237,550

       Changes in assets and liabilities:
       (Increase) decrease in assets:

         Accounts receivable ....................................................      2,595,783      3,301,815

         Prepayments ............................................................       (529,275)       (423,181)

         Materials and supplies .................................................        150,915      (1,602,987)

         Deferred charges .......................................................       (376,008)        386,420

         Other ..................................................................      1,839,486          (2,600)

     Increase (decrease) in liabilities:
         Accounts payable .......................................................     (2,114,066)     (3,384,236)

         Consumer deposits ......................................................        (18,307)        (46,284)

         Accrued interest .......................................................       (197,846)       (838,909)

         Deferred credits .......................................................     (1,702,283)     (8,152,406)

         Other ..................................................................     (3,601,441)      4,673,332
                                                                                    ------------    ------------

               Total adjustments ................................................      6,597,402       4,148,514
                                                                                    ------------    ------------

               Net cash provided by operating
                activities ......................................................     10,219,954       9,471,657

Cash flows from investing activities:
   Extension and replacement of plant ...........................................     (6,982,248)     (4,518,014)

   Investments in associated organizations ......................................         20,913          79,139
                                                                                    ------------    ------------

               Net cash used in investing activities ............................     (6,961,335)     (4,438,875)
                                                                                    ------------    ------------

Cash flows from financing activities:

   Short-term borrowings, net ...................................................      5,250,000      14,000,000

   Proceeds from long-term debt .................................................           --        21,500,000

   Repayments of long-term debt .................................................    (10,829,721)    (41,051,134)

   Retirement of patronage capital ..............................................       (102,348)        (83,761)

   Other ........................................................................        (60,512)        (42,172)
                                                                                    ------------    ------------

               Net cash used by financing activities ............................     (5,742,581)     (5,677,067)
                                                                                    ------------    ------------

               Net increase (decrease) in cash and
                 cash equivalents ...............................................     (2,483,962)       (644,285)

Cash and cash equivalents at beginning of period ................................      5,419,819       5,879,483
                                                                                    ------------    ------------

Cash and cash equivalents at end of period ......................................   $  2,935,857    $  5,235,198
                                                                                    ------------    ------------

</TABLE>


See accompanying notes to unaudited financial statements.


                                        6

<PAGE>




                       CHUGACH ELECTRIC ASSOCIATION, INC.
                          Notes to Financial Statements

                                  June 30, 1997

                                   (Unaudited)


1.   Presentation of Financial Information
     During  interim  periods,  Chugach  Electric  Association,  Inc.  (Chugach)
     follows  the  accounting  policies  set  forth  in  its  audited  financial
     statements  included in Form 10-K filed with the  Securities  and  Exchange
     Commission.  Users of interim financial information are encouraged to refer
     to  footnotes  contained  in Form 10-K  when  reviewing  interim  financial
     results.  Management  believes  that  the  accompanying  interim  financial
     statements reflect all adjustments which are necessary for a fair statement
     of the results of the interim period presented. All adjustments made in the
     accompanying interim financial statements are of a normal recurring nature.

     Certain  reclassifications  have been made to the 1996 financial statements
     to conform to the 1997 presentation.

2.   Lines of Credit
     Chugach  maintains a line of credit of $35 million with CoBank.  The CoBank
     line of credit  expires  August 1, 1998 but  contains  an annual  automatic
     renewal  clause.  At June 30,  1997,  $8.0  million was  outstanding  at an
     interest rate of 6.70%. In addition,  the Association has an annual line of
     credit of $50 million available at the National Rural Utilities Cooperative
     Finance  Corporation  (NRUCFC).  At June 30, 1997, there was no outstanding
     balance.  The NRUCFC line of credit expires October 1, 1997 but is expected
     to be renewed.




                                        7

<PAGE>



                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                                   (Unaudited)


RESULTS OF OPERATIONS

Current Year Quarter Versus Prior Year Quarter

Operating  revenues,  which  include  sales of  electric  energy to retail,
wholesale  and  economy  energy  customers  and  other  miscellaneous  revenues,
decreased  by .4% for the quarter  ended June 30, 1997 from the same  quarter in
1996. The decrease in revenues is largely  attributable to Chugach's decision to
request  a waiver  from  passing  through  increases  under  its fuel  surcharge
mechanism.  This  desision  was made in an  effort  to  maintain  overall  price
stability.  Chugach believes that the increases indicated for rates effective in
the third quarter of 1997 are the result of transitory  and unusual  occurrences
which have resulted in higher fuel prices and fuel consumption.  Chugach further
believes  that its  natural gas prices are  stabilizing  and will  decline  from
current levels in 1998. Subsequent to Chugach's waiver request,  AEG&T/MEA/Homer
filed  comments  with the APUC.  AEG&T/MEA/Homer  did not  object  to  Chugach's
request for waiver from the standard rate  adjustments  under the fuel surcharge
methodology,  however, their non-objection was subject to certain conditions not
acceptable  to  Chugach.  Chugach is  currently  formulating  its  response  for
submission  to the APUC.  It is not known at this time how the APUC will rule in
this  proceeding.  Based on the  uncertainty  with  respect to recovery of these
amounts,  Chugach has fully  reserved the amount  recorded in the fuel surcharge
balancing  account and has not  recorded  the fuel  surcharge  adjustments  as a
component  of revenue.  Chugach  continues  to evaluate the amount and timing of
recovery of these  uncollected fuel surcharge  amounts and may recover a portion
of such amounts in future periods.  The effect that the decision  regarding fuel
surcharges  had on  revenues  more  than  offset  higher  kWh  sales to  retail,
wholesale and economy energy customers.

Retail demand and energy rates did not change from the second quarter of 1996 to
the same period in 1997. As previously reported, demand and energy rates charged
to the two wholesale customer classes were increased,  effective in May 1996, on
an  interim-refundable  basis.  These  increases were slightly offset by refunds
granted pursuant to a Settlement  Agreement between Chugach and AEG&T/MEA/Homer.
This agreement was approved by the APUC in February 1997. The refunds of amounts
collected  under the  interim-refundable  rates were not  material to  Chugach's
financial position or results of operations.

Effective in February  1997,  the  wholesale  rate classes were split into three
classes as opposed to the  previous  two.  The classes  are now MEA,  Seward and
Homer  (previously  Seward was combined with MEA).  Wholesale  demand and energy
rates charged to MEA were decreased slightly effective February 1997. Demand and
energy rates to Homer and Seward did not change.

Pursuant to the aforementioned Settlement Agreement,  Chugach may be required to
grant a refund to  AEG&T/MEA/Homer  retroactive to January 1, 1997 (based on the
1996 test year filing). The amount of this potential refund is not known at this
time.



                                        8

<PAGE>



Higher fuel prices were the major cause for the increase in  production  expense
for the  quarter  ended  June 30,  1997  compared  to same  period  in 1996.  As
previously  reported,  Chugach has completed the transition  into Period 2 under
the long-term  fuel supply  contracts.  Fuel costs now result from  market-based
prices.  Purchased  power expense was higher for the quarter ended June 30, 1997
compared to the same period in 1996. This variance was  substantially due to the
system  operating  scenario  that  existed  during the  second  quarter of 1997.
Chugach  purchased power from AEG&T's Soldotna 1 plant to ensure  reliability on
the  Kenai  Peninsula.   Additionally,  all  hydroelectric  plant  outputs  were
significantly   lower  than  forecasted  levels  due  to  reduced  lake  levels.
Transmission  expense was also  higher for the quarter  ended June 30, 1997 from
the same period in 1996.  The  majority of this  increase  was caused by station
equipment  maintenance  activities being focused on distribution  substations in
1996  versus  transmission   substations  in  1997.  Consumer  accounts  expense
decreased for the quarter ended June 30, 1997. The majority of this decrease was
due to a lower level of common  information  services  costs being  allocated to
this function.

Interest on long-term  debt was higher for the quarter  ended June 30, 1997 from
the same  period in 1996.  This was  primarily  caused by the  reacquisition  of
Chugach's  Series A 2022  bonds.  As  previously  reported,  Chugach  reacquired
approximately  $36.0  million of the  Series A 2022  bonds  during the first and
second  quarters  of 1996.  The net cost of these  transactions  was  originally
charged to  expense.  Subsequently,  Chugach  determined  that these  costs were
recoverable  through  rates and  established  a  regulatory  asset that is being
amortized  to expense  over the life of the  replacement  debt.  Other  interest
expense  decreased  in the  current  period due to a lower  average  outstanding
balance on the short-term line of credit.

Current Year to Date Versus Prior Year to Date

Operating  revenues for the six-month  period ended June 30, 1997 increased
relative to the same period in 1996.  These higher  revenues  were due mostly to
higher kWh sales.  Rate impacts are outlined in the  quarter-to-date  comparison
section.

Production,   purchased  power,   transmission  and  consumer  accounts  expense
increased for the six-month  period ended June 30, 1997 for essentially the same
reasons outlined in the quarter-to-date comparison section. Distribution expense
decreased  during the period due mostly to lower  meter  expenses  caused by the
transfer  of  a  portion  of  the   connect/disconnect   activities  to  another
department.   The  aforementioned   focus  on  distribution   station  equipment
maintenance in 1996 versus transmission  maintenance in 1997 also contributed to
the lower overall  distribution  expense for the six-month period ended June 30,
1997.

Other interest expense  decreased for the six-months ended June 30, 1997 for the
same reason outlined above in the analysis of the quarter-to-quarter variance.

Financial Condition

Total  assets  declined by 2.0% from  December  31, 1996 to June 30,  1997.  The
decrease is due primarily to the lower balance in net utility plant.  This lower
balance was caused by the higher accumulated depreciation reserve resulting from
the  implementation  of higher  depreciation  rates  (the  phase-in  of  updated
depreciation  rates was completed in 1996).  Restricted cash from economy energy
margins was returned to customers as an offset to the fuel surcharge

                                        9

<PAGE>



mechanism, and the seasonal decline in accounts receivable also contributed
to the overall  decrease in total assets.  Notable changes to total  liabilities
include the decrease in First  Mortgage  bonds payable  resulting from the March
bond payment and the reacquisition of an additional $5.0 million of the Series A
2022 bonds during the second quarter of 1997. Other liabilities decreased due to
the return of the remaining portions of both the rate stabilization fund and the
submarine  cable reserve to customers.  As previously  reported,  Chugach made a
larger  than  normal  draw  on the  CoBank  line  of  credit  due  to  logistics
considerations  surrounding the payment of the March  semi-annual  bond payment.
This, combined with the $5.0 million reacquisition mentioned above, explains the
increase in the notes payable  balance at June 30, 1997.  This increase was more
than offset by the decreases in liabilities noted above.

Liquidity and Capital Resources

Chugach has satisfied its  operational and capital cash  requirements  primarily
through  internally  generated  funds, an annual $50 million line of credit from
National Rural  Utilities  Cooperative  Finance  Corporation  (NRUCFC) and a $35
million line of credit with CoBank.  At June 30, 1997,  Chugach had $8.0 million
outstanding  with CoBank which carried an interest rate of 6.70%.  There were no
amounts outstanding on the NRUCFC line at June 30, 1997.

Capital  construction  in 1997 is estimated at $19.8  million.  At June 30, 1997
approximately $7.0 million has been expended.  Capital improvement  expenditures
are expected to increase in the third quarter as the  construction  season began
in April and extends into October.

Chugach has negotiated a supplemental indenture (Third Supplemental Indenture of
Trust) with CoBank for up to $80 million in future bond financing. Chugach is in
the process of  finalizing an amendment to the Third  Supplemental  Indenture of
Trust (Seventh Supplemental  Indenture of Trust) that will eliminate the maximum
aggregate  amount of bonds the company may issue. At June 30, 1997,  Chugach had
bonds  in  the  amount  of  $56.5  million   outstanding  under  this  financing
arrangement.  The balance is  comprised  of a $1.5 million bond (CoBank 1) which
carries an interest  rate of 8.95%  maturing in 2002, a $10 million bond (CoBank
2) priced at 7.76% due in 2005,  a $21.5  million  bond  (CoBank  3),  currently
priced  at  6.70%  (repriced  monthly),  and a $23.5  million  bond  (CoBank  4)
currently  priced at 6.70% (also repriced  monthly).  Principal  payments on the
CoBank 3 and 4 bonds commence in 2003 and continue  through 2022.  Additionally,
Chugach has a similar  supplemental  indenture (Fifth Supplemental  Indenture of
Trust) in place with NRUCFC also for $80 million. At June 30, 1997 there were no
amounts outstanding under this financing arrangement.

As previously  reported,  Chugach has  reacquired  $44.3 million of its Series A
2022  bonds.  This  strategy  has been in response  to the  favorable  long-term
interest   rate   environment.   Chugach  will   continue  to  explore   similar
reacquisition  transactions if market conditions warrant such action. Except for
any further  reacquisitions of its bonds (and any similar future  refinancings),
Chugach does not anticipate issuance of additional long-term debt in 1997.

Chugach  management  continues  to expect  that cash flows from  operations  and
external  funding  sources will be sufficient to cover  operational  and capital
funding requirements in 1997 and

                                       10

<PAGE>



thereafter.

Chugach's  current ratios (total current assets divided by current  liabilities)
at December 31, 1996 and June 30, 1997 were as follows:

                                                     Current Ratio

                  December 31, 1996                      1.07
                  June 30, 1997                           .96

Outlook

The  competitive  marketplace  for the electric  utility  industry  continues to
evolve.  In  recognition of this,  Chugach is involved in national  benchmarking
studies to improve system operations,  has implemented  strategic alliances with
key suppliers and has made significant  progress in completing its new strategic
plan.

The latest step in the ongoing  process to be ready for  competition  took place
recently when Chugach  restructured its  organization.  Recognizing that the new
marketplace  will  probably  be  "unbundled"   along  the  functional  lines  of
generation,  transmission and distribution,  and retail services,  Chugach's new
organizational  structure  reflects these  functions.  Chugach now operates with
three  divisions:  Finance  and Energy  Supply,  Transmission  and  Distribution
Network Services and Retail  Services.  This structure will better allow Chugach
to compete in the rapidly changing electric utility industry.

Environmental Matters

Refer to Part II,  Item 1 for an update  on the  status  of the  Standard  Steel
Salvage Yard Site litigation.

PART II.  OTHER INFORMATION


Item 1. Legal Proceedings

Standard Steel Salvage Yard Site

As previously  reported in the 10-Q for the period ending March 31, 1997, a cost
recovery action was filed in Federal  District Court on December 27, 1991 by the
United States  against  Chugach and six other  Potentially  Responsible  Parties
(PRPs) seeking reimbursement of removal and response action costs (Past Response
Costs)  incurred  by US  EPA at the  Standard  Steel  and  Metals  Salvage  Yard
Superfund  Site in  Anchorage,  Alaska  (Site).  The six other PRPs named in the
action  are the  Alaska  Railroad,  Westinghouse  Electric  Corporation,  Sears,
Roebuck  and  Co.,  Montgomery  Ward  &  Co.,  J.C.  Penney  Company,  Inc.  and
Bridgestone/  Firestone,  Inc. In December,  1996, Chugach, the other named PRPs
and certain  federal agency PRPs (Federal  PRPs) entered into a Partial  Consent
Decree. Under the Partial Consent Decree,  Chugach and the other parties settled
claims for Past Response Costs as well as investigation and other costs incurred
with respect to the Site through December 1996. The Partial Consent

                                       11

<PAGE>



Decree,  however,  did not  settle  Chugach's  liability  for  future  costs  of
designing and performing the cleanup at the Site (Future Costs).

Although  the  Partial  Consent  Decree does not settle  Chugach's  or the other
private PRPs'  liability for Future Costs,  the Partial Consent Decree does bind
the Federal  PRPs and the Alaska  Railroad to pay an  aggregate  share of 64% of
Future  Costs.  Chugach and the five other  private PRPs have reached a separate
settlement to divide the remaining 36% of Future Costs among  themselves.  Under
that settlement,  Chugach's  percentage share of liability for Future Costs will
equal  14.89%.  The  private  PRPs'  agreement  to perform  remedial  design and
remedial action (RD/RA) at the Site will be memorialized in a new Consent Decree
(RD/RA Decree) that is being negotiated  between the private PRPs and the United
States.  The RD/RA  Decree  contains  the scope of work for the RD/RA as well as
settlement  terms,  including  EPA's  covenant  not to sue Chugach and the other
private PRPs for Future Costs once the RD/RA is completed.

The estimate of Future Costs of RD/RA at the Site,  as  determined  by Chugach's
consultants  based on cost  estimates  contained  in the FS report,  ranges from
$5,231,200  to  $6,619,800.  The  RD/RA  Decree  contains  a cost  estimate,  as
determined by EPA and including a 50% cost overrun  contingency,  of $8,400,000.
Chugach's share of these estimated RD/RA expenses would range from approximately
$778,926 to $985,688. These amounts are only estimates, however, and the actual,
full scope of the S/S cleanup at the Site will not be known,  and the  projected
costs associated with the remedy cannot be refined,  until EPA approves remedial
design documents.

Under the RD/RA Decree, Chugach and the other PRPs will be required to reimburse
the United States for EPA oversight costs and DOJ enforcement  costs relating to
the  RD/RA.  Those  costs  have been  estimated  by the  United  States to equal
approximately  $676,000.  Chugach's  share  of  these  estimated  oversight  and
enforcement  costs would equal $100,656.  In addition,  one of the private PRPs,
Montgomery Ward, recently filed for bankruptcy protection and likely will not be
executing  the RD/RA  Consent  Decree.  As a result,  Chugach  will be paying an
additional sum equal to Chugach's percentage share of Montgomery Ward's share of
Future Costs. This additional sum is estimated to be approximately $12,600 given
current  estimates of Future  Costs,  EPA  oversight  costs and DOJ  enforcement
costs.

Based on the above estimates, the total amount that may be paid by Chugach under
the RD/RA  Decree  ranges  from  approximately  $892,182  to  $1,098,944.  These
amounts,  particularly the projected EPA oversight costs, are only estimates and
are subject to change.  In addition,  the RD/RA Decree  contains  reservation of
rights allowing EPA to seek further  response actions and payments from the PRPs
under certain circumstances, including for costs associated with alleged natural
resource  damages.  At this time, no claims have been made pertaining to alleged
natural  resource damages and no prediction can be made whether EPA will request
activities through its reservation of rights under the RD/RA Decree. Finally, it
is uncertain whether Chugach and the other PRPs will enter into the RD/RA Decree
with EPA until negotiations are completed.

Four of Chugach's  insurance  carriers have agreed under a reservation of rights
to pay, and currently are paying,  Chugach's  costs of defense for the Site. The
carriers have reserved  their rights  regarding  indemnification  of Chugach for
response costs. Management believes that all

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past and future costs incurred for response, removal,  investigation and cleanup
of the Site would be fully  recoverable  in rates or covered  by  insurance  and
therefore  would have no impact on Chugach's  financial  condition or results of
operations.


Items 2, 3, 4 and 5

Not Applicable


Item 6. Exhibits and Reports on Form 8-K

     (a)  Exhibits:

          Bylaws of the Registrant (as amended April 30, 1997).

          Financial Data Schedule.

     (b)  Reports on Form 8-K:

          No reports on Form 8-K were filed for the quarter ended June 30, 1997.


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                                   SIGNATURES



Pursuant to the  requirements  of the  Securities  and Exchange Act of 1934, the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.



                       CHUGACH ELECTRIC ASSOCIATION, INC.



                                    By: /s/ Eugene N. Bjornstad
                                        Eugene N. Bjornstad 
                                          General Manager

                                    Date:   August 14, 1997



                                    By: /s/ Evan J. Griffith, Jr.
                                            Evan J. Griffith, Jr.
                                        Executive Manager, Finance & 
                                        Energy Supply

                                    Date:   August 14, 1997




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EXHIBITS

Listed below are the exhibits which are filed as part of this Report:


Exhibit
number                              Description                         Page **

3.2       Bylaws of the Registrant (as amended April 30, 1997).          16

27        Financial Data Schedule                                        **




**  Filed Electronically

                                       15

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