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                     March 31, 1999
                               ----------------------------------

                                                        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 MAY 1, 1999

                  NONE                                         NONE



<PAGE>



                                        CHUGACH ELECTRIC ASSOCIATION, INC.

                                                     INDEX


                                                                     Page Number

CAUTION REGARDING FORWARD-LOOKING STATEMENTS                                   3

PART I FINANCIAL INFORMATION

Item 1.  Financial Statements                                                  3

Balance Sheets, March 31, 1999 (Unaudited) and December 31, 1998               4

Statements of Revenues, Expenses and Patronage Capital, Three Months Ended
   March 31, 1999 and 1998  (Unaudited)                                        6

Statements of Cash Flows, Three Months Ended March 31, 1999 and 1998
   (Unaudited)                                                                 7

Notes to Financial Statements (Unaudited)                                      8

Item 2.  Management's Discussion and Analysis of Results of Operations and
Financial Condition (Unaudited)                                                9

Item 3.  Quantitative and Qualitative Disclosures About Market Risk           14

PART II OTHER INFORMATION

Item 1.  Legal Proceedings                                                    15

Item 2.  Changes in Securities and Use of Proceeds                            16

Item 3.  Defaults Upon Senior Securities                                      16

Item 4.  Submission of Matters to a Vote of Security Holders                  16

Item 5.  Other Information                                                    16

Item 6.  Exhibits and reports on Form 8-K                                     20

Signatures                                                                    21

Exhibits                                                                      22




                                                       2

<PAGE>




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.
Chugach Electric  Association,  Inc. (Chugach or the Association)  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 affect of those  events or  circumstances  on any of the  forward-looking
statements contained in this report.


                                           PART I FINANCIAL INFORMATION

Item 1.  Financial Statements

The  unaudited  financial  statements of Chugach for the quarter ended March 31,
1999 follow:




                                                       3

<PAGE>



                                        CHUGACH ELECTRIC ASSOCIATION, INC.
                                                  Balance Sheets

                                                      Assets

<TABLE>


                                 March 31, 1999                December 31, 1998
                                 --------------                -----------------
                                   (Unaudited)
<S>                                 <C>                             <C>

Utility plant:

     Electric plant in service    $ 622,256,622                    $ 620,216,818

     Construction work in progress   24,875,332                       30,405,736
                                   ------------                     ------------

                                    647,131,954                      650,622,554

     Less accumulated depreciation  233,153,441                      233,981,397
                                   ------------                     ------------

                 Net utility plant  413,978,513                      416,641,157
                                   ------------                     ------------

Other property and investments, at cost:

     Nonutility property                   3,550                           3,550

Investments in associated organizations8,357,281                       8,356,364
                                   ------------                     ------------

                                      8,360,831                        8,359,914
                                   ------------                     ------------

Current assets:

     Cash and cash equivalents        7,748,553                        2,312,574

     Cash - restricted construction fund286,669                          177,366

     Special deposits                   121,163                          121,164

     Accounts receivable, net        12,881,051                       17,243,266

     Materials and supplies, at avera17,121,734                       15,963,434

     Prepayments                      1,230,842                          917,381

     Other current assets               456,003                          349,030
                                  -------------                    -------------
                 Total current assets39,846,015                       37,084,215
                                   ------------                     ------------

Deferred charges                     22,740,024                       19,006,164
                                   ------------                     ------------

                                  $ 484,925,383                    $ 481,091,450
                                   ------------                     ------------





</TABLE>



See accompanying notes to unaudited financial statements.





                                                       4

<PAGE>



                                        CHUGACH ELECTRIC ASSOCIATION, INC.
                                                  Balance Sheets

                                             Liabilities and Equities

<TABLE>

                                   March 31, 1999              December 31, 1998
                                   --------------              -----------------
                                     (Unaudited)
<S>                                   <C>                      <C>

Equities and margins:

     Memberships                     $    921,963                  $     911,253

     Patronage capital                116,435,644                    109,622,996

     Other                              3,774,162                      3,489,047
                                     ------------                  -------------

                                      121,131,769                    114,023,296
                                     ------------                   ------------

Long-term obligations, excluding current installments:

     First mortgage bonds payable     194,139,000                    235,101,000

     National Bank for Cooperatives bonds
       payable                        113,167,339                     70,816,699
                                     ------------                   ------------

                                      307,306,339                    305,917,699
                                     ------------                   ------------

Current liabilities:

     Notes payable                      7,500,000                              -

     Current installments of long-term d6,359,323                      6,088,802

     Accounts payable                   6,744,992                      8,838,757

     Consumer deposits                  1,016,138                        993,616

     Accrued interest                   1,335,065                      6,722,325

     Salaries, wages and benefits       3,640,910                      3,755,837

     Fuel                               4,610,575                      5,362,713

     Other                                750,780                      1,318,947
                                    -------------                   ------------

          Total current liabilities    31,957,783                     33,080,997
                                     ------------                   ------------

Deferred credits                       24,529,492                     28,069,458
                                     ------------                   ------------

                                    $ 484,925,383                  $ 481,091,450
                                     ------------                   ------------
</TABLE>






See accompanying notes to unaudited financial statements.


                                                       5

<PAGE>



                                        CHUGACH ELECTRIC ASSOCIATION, INC.

                          Statements of Revenues, Expenses and Patronage Capital

<TABLE>

                                             Three months ended March 31

                                         1999                           1998
                                         ----                           ----

                                                    (Unaudited)

<S>                                   <C>                             

Operating revenues                 $  39,424,237                   $  39,024,214
                                    ------------                    ------------

Operating expenses:

     Production                       10,763,127                      11,845,378

     Purchased power                   1,868,522                       2,237,195

     Transmission                        672,493                         620,854

     Distribution                      2,014,368                       2,162,668

     Consumer accounts                 1,028,746                         988,879

     Sales expense                       347,238                          99,358

     Administrative, general and other 4,755,495                       3,844,636

     Depreciation and amortization     5,171,884                       5,722,186
                                    ------------                    ------------

             Total operating expenses 26,621,873                      27,521,154
                                    ------------                    ------------

Interest:

     On long-term debt                 5,925,943                       6,379,258

     Other                               210,070                          26,447

     Charged to construction - credit    (4,605)                       (179,765)
                                   -------------                    ------------

             Net interest expense      6,131,408                       6,225,940
                                    ------------                    ------------

             Net operating margins     6,670,956                       5,277,120
                                    ------------                    ------------


Nonoperating margins:

     Interest income                     146,350                         185,344

     Other                                 8,985                         299,005
                                   -------------                    ------------

             Total nonoperating margins  155,335                         484,349
                                    ------------                    ------------

             Assignable margins        6,826,291                       5,761,469

Patronage capital at beginning of per109,622,996                     104,800,092

Retirement of capital credits and
   estate payments                      (13,643)                        (31,917)
                                   -------------                   -------------

Patronage capital at end of period $ 116,435,644                   $ 110,529,644
                                    ------------                    ------------
</TABLE>



See accompanying notes to unaudited financial statements.

                                                       6

<PAGE>




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

                                                                             Three months ended March 31

                                                                                   1999                         1998
                                                                                   ----                         ----

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

Cash flows from operating activities:

   Assignable margins                                                          $   6,826,291              $   5,761,469
                                                                                ------------               ------------

   Adjustments to reconcile  assignable  margins to net cash provided  (used) by
     operating activities:

       Depreciation and amortization                                               5,171,884                  5,722,186

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

         Accounts receivable                                                       4,362,215                  6,631,691

         Prepayments                                                                (313,461)                  (961,577)

         Materials and supplies                                                   (1,158,300)                    20,711

         Deferred charges                                                         (3,733,860)                (1,091,769)

         Other                                                                      (216,277)                   (88,962)

     Increase (decrease) in liabilities:
         Accounts payable                                                         (2,093,765)                (2,263,492)

         Consumer deposits                                                            22,522                    (77,532)

         Accrued interest                                                         (5,387,259)                (5,550,755)

         Deferred credits                                                         (3,539,965)                  (334,920)

         Other                                                                    (1,435,233)                (4,454,169)
                                                                                ------------               ------------

               Total adjustments                                                  (8,321,499)                (2,448,588)
                                                                                -------------              -------------

               Net cash provided (used) by
                 operating activities                                            (1,495,208)                  3,312,881

Cash flows from investing activities:
   Extension and replacement of plant                                             (2,509,240)                (2,306,289)

   Investments in associated organizations                                              (917)                  (139,452)
                                                                               -------------              -------------

               Net cash used in investing activities                              (2,510,157)                (2,445,741)
                                                                                -------------              -------------

Cash flows from financing activities:

   Short-term borrowings, net                                                      7,500,000                  8,500,000

   Proceeds from long-term debt                                                   42,500,000                          -

   Repayments of long-term debt                                                  (40,840,838)                (5,780,399)

   Retirement of patronage capital                                                   (13,643)                   (31,917)

   Other                                                                             295,825                      6,196
                                                                                ------------              -------------

               Net cash provided by                                                9,441,344                  2,693,880
                                                                                ------------               ------------
                 financing activities

               Net increase in cash
                 and cash equivalents                                              5,435,979                  3,561,020

Cash and cash equivalents at beginning of period                                   2,312,574                  5,224,529
                                                                                 -----------                -----------

Cash and cash equivalents at end of period                                      $  7,748,553               $  8,785,549
                                                                                 -----------                -----------

</TABLE>

See accompanying notes to unaudited financial statements.

                                                       7

<PAGE>




                                        CHUGACH ELECTRIC ASSOCIATION, INC.

                                           Notes to Financial Statements

                                                  March 31, 1999

                                                   (Unaudited)


1.   Presentation of Financial Information
     During interim periods,  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 the footnotes  contained in Chugach's 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 1998 financial statements
     to conform to the 1999 presentation.

2.   Lines of Credit
     Chugach  maintains a line of credit of $35 million with  National  Bank for
     Cooperatives (CoBank). The CoBank line of credit expires August 1, 1999 but
     carries an annual automatic  renewal clause. At March 31, 1999 there was no
     outstanding  balance on this line of credit.  In addition,  the Association
     has an annual line of credit of $50 million available at the National Rural
     Utilities Cooperative Finance Corporation (NRUCFC). At March 31, 1999, $7.5
     million  was  outstanding  on this line of credit  at an  interest  rate of
     5.90%. The NRUCFC line of credit expires October 14, 2002.

3.   Change in Accounting Policy
     Effective   January  1998,   Chugach  changed  its  accounting  policy  for
     depreciation of general plant (excluding buildings,  leasehold improvements
     and vehicles).  Under the new vintage group method the assets are amortized
     over  their  service  lives  and  retired  as a  group  at  the  end of the
     amortization period. The amortization periods were developed as part of the
     recent  depreciation  study update.  At January 1, 1998, the affected asset
     group  made up 2.8% of  Electric  Plant in  Service.  In  conjunction  with
     adoption  of  the  new   depreciation   methodology,   Chugach   wrote  off
     approximately  $19  million of plant  considered  to be fully  depreciated.
     Depreciation  expense for the  affected  asset  groups is  estimated  to be
     $700,000 lower annually.  Buildings,  leasehold  improvements  and vehicles
     will continue to be depreciated  over their estimated useful lives based on
     rates developed in periodic depreciation studies.




                                                       8

<PAGE>



Item 2.  Management's Discussion and Analysis of Financial Condition and 
                              Results of Operations

                                   (Unaudited)


Reference  is made to the  information  contained  under  the  caption  "CAUTION
REGARDING FORWARD-LOOKING STATEMENTS" at the beginning of this Report. Reference
is also made to the  information  contained in Item 5 of Part II with respect to
the Matanuska Electric Association, Inc. (MEA) proposal.

For certain information concerning a Treasury rate-lock transaction entered into
by Chugach in March 1999,  reference is made to information  appearing under the
caption "Additional  Information Regarding Treasury Rate-Lock" in Item 5 of Part
II of this report.

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, increased by 1.0%
for the quarter ended March 31, 1999 over the same quarter in 1998. The increase
in  revenues  is  primarily  attributable  to higher kWh sales to retail and the
three wholesale customer classes.  The increase in revenue also was attributable
to lower fuel and purchased power costs.

Retail and the wholesale demand and energy rates of Homer Electric  Association,
Inc.  (HEA) did not change from the first  quarter of 1998 to the same period in
1999.  Wholesale demand and energy rates charged to MEA declined 0.20% effective
November  1998.  Wholesale  demand and energy rates  charged to Seward  declined
approximately 15%. In 1998, Chugach and the City of Seward signed a new ten-year
power sales agreement. The new power sales agreement,  which is currently before
the Alaska Public Utilities  Commission (APUC) under docket U-98-70,  contains a
provision  that allows  Chugach to interrupt  Seward at certain times during the
year.  A hearing  was held in March 1999 and a final  decision  from the APUC is
pending.  The APUC has already  approved the  contract on an  interim-refundable
basis.  As a result of this new power sales  agreement,  revenues  derived  from
sales to Seward will decline about $350,000 annually.

Pursuant to a Settlement Agreement with AEG&T/MEA/Homer, 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).   A  provision  for  wholesale  rate  refund  of
approximately  $980,000  and  $993,000  was  recorded at  December  31, 1997 and
December 1998,  respectively,  to accommodate  certain rate  adjustment  clauses
contained in the Settlement Agreement.  Year-to-date March 1999 provisions total
approximately  $295,000.  Determination  of the final refund amounts awaits APUC
approval  of the 1996  test year rate  filing, which was filed  with the APUC in
April 1999.

Lower fuel prices were the primary reason for the decrease in production expense
for the  quarter  ended  March 31,  1999  compared  to the same  period in 1998.
Purchased power expense

                                                       9

<PAGE>



was lower for the quarter  ended  March 31, 1999  compared to the same period in
1998 as a result of a  substantial  decrease in purchases  from Soldotna Unit #1
due to decreased  economy  energy sales and  favorable  fuel prices during first
quarter 1999  compared to the same period last year.  Transmission  expenses for
quarter ended March 31, 1999 were higher compared to 1998 as a result of a shift
in load dispatch labor from a distribution focus in 1998 to a transmission focus
in 1999.  In  addition,  the  wheeling  charge for  Eklutna  power that had been
treated  as a  production  expense  in  first  quarter  1998  was  treated  as a
transmission expense in first quarter 1999. These variances were slightly offset
by lower  transmission  line  clearing  costs for quarter  ended March 31, 1999,
compared  to the same  period  last year.  Distribution  costs were lower in the
first quarter of 1999 compared to 1998. This was a result of reduced  substation
maintenance  costs due to the  adoption  of a  reliability-centered  maintenance
program.  Consumer  accounts and sales  expense  increased for the quarter ended
March 31,  1999.  This was  primarily  due to  increased  customer  service  and
advertising  costs related to the addition of new business ventures in the first
quarter of 1999.  Administrative,  general and other expenses  increased for the
three-month  period ended March 31, 1999. This increase was substantially due to
the costs associated with the unsolicited acquisition proposal by MEA referenced
in  Item  5 of  Part  II  and  the  amortization  of the  costs  related  to the
implementation  of  Year  2000  (Y2K)  compliant  financial  software  that  was
completed in 1998.

Depreciation  expense was lower for the quarter ended March 31, 1999 compared to
the same period in 1998 due to an  adjustment  done in the first quarter of 1999
as a result of the  unitization of a capital project that was completed in 1997.
Interest  expense  decreased  in the current  period due to the  refinancing  of
long-term debt during the first quarter of 1999.

Other  nonoperating  margins  were lower for the  quarter  ended  March 31, 1999
compared  to the same  period  in 1998.  This  difference  was due to  patronage
capital credits received from CoBank in the first quarter of 1998.

Financial Condition

Total  assets  increased by 0.8% from  December 31, 1998 to March 31, 1999.  The
increase was due primarily to an increase in cash from short-term borrowings and
deferred   charges.   The  increase  in  deferred  charges  is  attributable  to
refinancing  activities  associated with the purchase of the Series A 1991 First
Mortgage bonds.  These increases were partially offset by the retirement of $4.2
million of fully depreciated generation plant in the first quarter. A decline in
accounts receivable was caused by the payment of wholesale power bills that were
accrued but not paid at December 31, 1998.  Notable changes to total liabilities
include  the  decrease in first  mortgage  bonds  resulting  from the March bond
payment and Chugach's purchase of first mortgage bonds.  Offsetting the decrease
in first  mortgage  bonds was the  increase in CoBank bonds  resulting  from the
issuance of CoBank 6 in the amount of $42.5  million on March 30, 1999.  Accrued
interest also decreased due to the March semi-annual bond payment.

Liquidity and Capital Resources

Chugach has satisfied its  operational and capital cash  requirements  primarily
through  internally  generated  funds, an annual $50 million line of credit from
NRUCFC and a $35 million  line of credit with CoBank.  At March 31, 1999,  there
was no balance outstanding with CoBank; $7.5

                                                       10

<PAGE>



million was  outstanding  on the NRUCFC line at March 31, 1999 which  carried an
interest rate of 5.90%.

Capital  construction  in 1999 is estimated at $33.9 million.  At March 31, 1999
approximately $3.78 million has been expended.  Capital improvement expenditures
are  expected  to  increase  in the  upcoming  second and third  quarters as the
construction season begins in April and extends into October.

In  1998  Chugach  negotiated  a  supplemental   indenture  (Third  Supplemental
Indenture  of Trust) with CoBank  that  previously  allowed up to $80 million in
future bond financing.  Chugach finalized an amendment to the Third Supplemental
Indenture of Trust (Seventh Supplemental Indenture of Trust) that eliminated the
maximum aggregate amount of bonds the Company may issue under the agreement.  At
March 31, 1999,  Chugach had bonds in the amount of $113.6  million  outstanding
under this  financing  arrangement.  The balance is comprised of a $1.01 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), priced at 5.60%, a $23.5 million bond (CoBank 4) priced at 5.60% and
a $15  million  bond  (CoBank  5)  priced  at 5.60%  due in 2002,  2007 and 2012
respectively.  On March 30, 1999 a $42.5 million bond (CoBank 6) was issued with
a variable  interest rate currently priced at 5.65%.  CoBank 6 matures March 15,
2002.  Principal  payments  on the  CoBank  3 and 4 bonds  commence  in 2003 and
continue   through  2022.   Additionally,   Chugach  has  negotiated  a  similar
supplemental  indenture (Fifth Supplemental  Indenture of Trust) with NRUCFC for
$80  million.  At March 31,  1999 there were no amounts  outstanding  under this
financing arrangement.

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 1999 and thereafter.

YEAR 2000

Readiness Information

Chugach  has  recognized  the  need  to  investigate,  test  and  remediate,  if
necessary,  the critical  systems and  equipment  under its control  which could
cause power and business  disruptions in conjunction  with what are collectively
called  Y2K  dates.  Chugach  has an  active  program  underway  that  should be
completed by the summer of 1999.

Chugach  expects to fund its Y2K project  internally and estimates it will incur
between  $9 and  $11  million  of  incremental  costs  through  March  1,  2000,
associated  with  making  the  necessary  modifications  identified  to  date to
applications and embedded devices.  This projection  includes  contingencies and
replacement  systems  that  may be  required.  Chugach  has  incurred  costs  of
approximately $8.8 million for Y2K projects through March 31, 1999, all of which
has been capitalized.

Chugach's Y2K Project is divided into three primary  phases.  The first phase is
"inventory and assessment" during which applications (both internally  developed
and  vendor  supplied)  and  devices  (in the  generation  plants,  substations,
telecommunications and facilities) are identified

                                                       11

<PAGE>



and  criticality to the business is determined.  The second phase,  "testing and
remediation"  occurs during the replacement or remediation of the systems and/or
devices. The final phase is "contingency  planning" during which specific backup
plans will be developed  for all  "mission-critical"  applications,  devices and
systems.  Chugach  is  also  participating  in the  Y2K  activities  of  several
organizations  including the North American Electric Reliability Council (NERC),
Electric  Power  Research  Institute  (EPRI)  and the  National  Rural  Electric
Cooperative Association (NRECA) who are developing a network to verify the risks
and costs nationally, in the State and at Chugach.

Chugach's Y2K readiness program is divided along functional lines (real time and
business  systems) and each area is at a different  point of completion.  System
testing at Chugach's  four power plants is underway and will be complete by June
1999. In the  transmission  and  distribution  area,  inventory  and  assessment
activities  are underway for the  Supervisory  and Control and Data  Acquisition
(SCADA)  system,  telecommunication,  relaying  and  system  protection  assets.
Testing and remediation are scheduled to be completed in June, 1999. Testing and
remediation is between 73% and 89% complete for each of these systems.

Chugach  business  systems Y2K  readiness  activities  were complete by year-end
1998. General Ledger, Accounts Payable, Payroll,  Materials Management,  Project
Costing and Human Resources subsystems to the Financial  Information System were
converted  by the end of 1998.  Additionally,  the Customer  Billing  System was
updated to be Year 2000 compliant.  The total cost of these conversions was $8.7
million. Remaining, non-critical financial subsystems needing to be converted in
1999 are the Budget Preparation subsystem (to be completed by September 1, 1999)
and Fixed Assets system.  We are also updating our Work  Management  subsystems.
Finally,  all the hardware  connected to Chugach's  business  systems  area-wide
network have been tested and found to be Y2K ready.

The business systems team is currently developing contingency plans in the event
of any failure. These plans will be complete by August 1999.

The Purchasing Department asked every vendor for a statement regarding their Y2K
readiness.  All  responses  were due by the end of April  1999.  Review  of each
individual  vendor's response is in progress.  If after review, it is determined
that the vendor will not be Y2K compliant by year-end, Chugach will determine if
it will continue its relationship  with that vendor.  This task is currently 25%
complete.

It is Chugach's  goal that all Y2K readiness  projects be complete by the summer
of 1999 and no Chugach  customers  lose power for an extended  time due to a Y2K
problem.  Based on the  progress  to date,  Chugach  believes  the goals will be
achieved.

Contingency  planning is in progress and currently 35% complete.  The reasonably
worst case scenario has not been determined at this time.  Although  contingency
planning is by its nature speculative,  the Y2K contingency plan will reduce the
risk of material impacts on Chugach's operations due to Y2K problems.


                                                       12

<PAGE>



OUTLOOK

Nationwide,  the electric utility industry is entering a period of unprecedented
competition.  Electric  utilities  in  Alaska  will  not be  immune  from  these
competitive  forces.  Chugach  has taken  several  steps to be more  effectively
positioned to meet the challenge of a competitive market for electricity.

Chugach  participates  in  national  benchmarking  projects  to  improve  system
operations.  The most  recent  studies  have  focused  on  mailroom  operations,
remittance  processing,  new service  connections,  system reliability and power
production.  As a result of these  studies,  Chugach has been able to make these
processes  more  efficient  which has led to lower  costs.  The  Association  is
committed to continue  reviewing  all areas of its  operations  and to serve its
customers in a way that maintains high reliability  while containing the cost of
electricity.

In  addition  to  participation  in  benchmarking  studies,   Chugach  has  also
implemented  strategic  alliances in the purchasing and warehousing areas. These
alliances  are  designed to improve  efficiency  and thus,  contribute  to lower
operating  costs.  In 1997,  Chugach  was able to lower  inventory  unit  costs,
increase  inventory turns and decrease  project cost by furnishing  materials to
contractors  as a direct  result  of these  strategic  alliances.  Chugach  will
continue to explore other areas for strategic alliance opportunities.

During 1998,  Chugach updated its strategic plan. In this plan,  priority issues
are identified  that are critical to the Company's  success.  Updated key result
area targets were developed that track the most important  measures of Chugach's
performance.

Chugach has been active at the State  Legislature  in support of the  customer's
right to choose their electric power supplier.  Virtually all Alaskan  utilities
have opposed  Chugach's  efforts to develop  competition  and are  attempting to
create exclusive service territories.  At this time no bill relating to customer
choice has moved out of  legislative  committee.  Thus,  it is not  possible  to
predict the outcome of this legislative process.

In 1997 Chugach made  organizational  changes in  preparation  for  competition.
Recognizing  that the new  marketplace  will probably be  "unbundled"  along the
functional  lines of  generation,  transmission  and  distribution,  and  retail
services, Chugach's organizational structure reflects these functions. Operating
with three divisions:  Finance and Energy Supply,  Transmission and Distribution
Network  Services,  and Retail Services,  Chugach has positioned  itself to meet
competition in the electric industry.  Chugach's Marketing  Department continues
to operate a key account  program for larger  customers  and is  developing  new
services to enhance existing customers' satisfaction.

Chugach  commenced  operation as an internet  service provider (ISP) in February
1999.  Also  in  1999,  Chugach  began  selling  spare  microwave  bandwidth  to
industrial customers.

Chugach  has  three  collective  bargaining  agreements  with the International 
Brotherhood of Electrical Workers (IBEW)  that are currently open 
for negotiation. Although each of the contracts had an expiration date of 
January 31,  1998,  the parties  have  agreed that the  contracts  shall
continue in effect until new contracts are put in place.  If the parties  cannot
agree on the terms of new agreements, all outstanding issues will

                                                       13

<PAGE>



be decided through  binding  interest  arbitration.  The IBEW cannot strike and
Chugach cannot lockout under the continuing agreement.

ENVIRONMENTAL MATTERS

Compliance with Environmental Standards

Chugach's   operations  are  subject  to  certain   federal,   state  and  local
environmental  laws  that  Chugach  monitors  to  ensure  compliance.  The costs
associated with environmental compliance are included as a component of both the
operating and capital budget  processes.  Chugach  accrues for costs  associated
with  environmental  remediation  obligations  when such costs are  probable and
reasonably estimable.

Environmental Matters

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

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 its business,  Chugach  manages its
exposure to these risks as described  below.  Chugach does not engage in trading
market  risk  sensitive  instruments  for  speculative  purposes,  nor  are  any
derivative instruments outstanding at March 31, 1999.

Chugach  does not hold or issue  derivative  financial  instruments  for trading
purposes.  Chugach uses derivative financial  instruments to manage its exposure
to  fluctuations  in  interest  rates.  Neither  the  aggregate  value  of these
financial  instruments  nor the  market  risk posed by them is  material  to the
Company.

Interest  rate risk - As of March 31, 1999,  except for CoBank 6 which carries a
variable  interest rate that is  periodically  repriced,  Chugach's  outstanding
borrowings  were  at  fixed  interest   rates.   The  following  table  provides
information  regarding cash flows and related weighted average interest rates by
expected maturity dates for Chugach's debt obligations (dollars in thousands):

<TABLE>
                                                                                                                              Fair
                                 1999        2000         2001         2002          2003       Thereafter        Total       Value
                                 ----        ----         ----         ----          ----       ----------        -----       ------
<S>                               <C>        <C>           <C>         <C>          <C>           <C>             <C>        <C>

Long-term debt,
including current portion     $   143      $6,372        $6,430      $52,910       $5,907        $241,904        $313,666   $340,895

</TABLE>


Commodity  price risk - Chugach's gas contracts  provide for  adjustments to gas
prices based on fluctuations of certain commodity prices and indices.  Purchased
power costs are passed  directly to  Chugach's  wholesale  and retail  customers
through a fuel  surcharge,  therefore,  fluctuations  in the price  paid for gas
pursuant to long-term gas supply contracts does not normally impact margins. The
fuel surcharge  mechanism  mitigates the commodity  price risk related to market
fluctuations in the price of purchased power.

                                                       14







                                                       15

<PAGE>



                            PART II OTHER INFORMATION


Item 1.  Legal Proceedings

Standard Steel Salvage Yard Site (the Site)

The  full   investigation   and  cleanup  (remedial  action)  of  the  Site  was
substantially  completed as of September 30, 1998. A relatively  minor amount of
additional  Site work and  additional  reporting  will be  performed  in 1999 to
complete the remedial action. Although the costs of the 1999 work as well as the
total  oversight  costs of EPA and other  federal  agencies  are not yet  known,
Chugach has  pre-funded  these costs and, based on estimates for 1999, it is not
anticipated that Chugach will be required to make any further payments  relating
to the remedial action at the Site.

Four of Chugach's  insurance  carriers have been paying,  under a reservation of
rights,  Chugach's  costs of defense for the Site.  By  agreement  dated May 15,
1998,  these four  insurance  carriers  agreed to pay the  majority of Chugach's
costs relating to the Site,  including  investigation and remedial action costs,
EPA oversight costs and attorneys'  fees. This  settlement  preserves  Chugach's
potential  claim for natural  resource  damages and is  anticipated to result in
Chugach  paying no more than  $500,000 for all Site costs.  Management  believes
that the latter amount would be fully  recoverable in rates and therefore  would
have no impact on Chugach's financial condition or results of operations.

Matanuska Electric Association, Inc. v. Chugach Electric Association, Inc. 
U-98-180

Reference is made to Item 5 (Other  Information) with respect to the unsolicited
acquisition proposal by MEA. On December 2, 1998, MEA filed a complaint with the
APUC.  In the  Matter  of the  Formal  Complaint  filed  by  MATANUSKA  ELECTRIC
ASSOCIATION,  INC. Against CHUGACH ELECTRIC  ASSOCIATION,  INC.,  U-98-180.  MEA
alleges that Chugach has engaged in "unreasonable  management  practices" in the
management of the Series A Bonds.  The complaint asks the APUC to issue an order
instituting  an  investigation  into the  reasonableness  and  propriety  of the
continuing  decision  of Chugach not to defease  such  Bonds,  which order would
include  convening a public  hearing to take  evidence  as to whether  Chugach's
decision  not to  defease  said Bonds  constitutes  an  unreasonable  management
decision,  and awarding MEA such additional relief as the APUC may find just and
equitable. Chugach has filed an answer denying the material allegations of MEA's
complaint,  asserting  that  its  management  of the  Series  A Bonds  has  been
reasonable and sound,  and contending that defeasance of such Bonds would not be
a prudent  course of action.  The answer also  asserts  that the APUC should not
open an investigation on the grounds that MEA's allegations do not implicate the
kinds  of  management  decision  into  which it is  appropriate  for the APUC to
inquire.  MEA has filed a reply to Chugach's answer,  which Chugach has moved to
strike on the basis that such reply  asserts  new claims  going  beyond the core
allegations in the complaint  relating to Chugach's  decision not to defease the
Series A Bonds and  relies  on new  factual  allegations  not  contained  in the
complaint.  Each party has filed additional  motions  regarding the pleadings of
the other party.


                                                       16

<PAGE>



To date,  the APUC has not taken any action in this matter  except to convene an
informal  status  conference  on  April  30,  1999.  If the APUC  authorizes  an
investigation,  Chugach will vigorously defend its financial management. Because
of the preliminary nature of the case, Chugach has not been able to estimate the
costs of its participation in the case should the case proceed.

Item 2.  Changes in 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

Not applicable

Item 5.  Other Information

Additional Information Regarding Treasury Rate-Lock

On March 17, 1999,  Chugach entered into a Treasury  rate-lock  transaction with
Lehman Brothers  Financial  Products Inc.  (Lehman  Brothers) for the purpose of
taking  advantage of favorable  current market interest rates in anticipation of
refinancing  Chugach's  Series A Bonds Due 2022 on their  first call date (March
15,  2002).  Under the  Treasury  rate-lock  contract,  Chugach  will  receive a
lump-sum  payment from Lehman Brothers on March 15, 2002, if the yield on 10- or
30-year  Treasury bonds as of  mid-February,  2002,  exceeds a specified  target
level (5.653% and 5.838%,  respectively).  Conversely,  Chugach will on the same
date be required to make a payment to Lehman  Brothers.  If the yield on the 10-
or 30-year Treasury bonds falls below its stated target yield. The amount of the
payment will increase as the difference  between the actual yield and the target
yield  increases.  For each basis point  (0.01% per annum) by which the yield on
10-year or 30-year Treasury bonds deviates from the stated target level, Chugach
will receive (if the Treasury  yield  exceeds the target  yield) or make (if the
Treasury  yield falls short of the target  yield) a payment equal to the product
obtained by multiplying (i) the amount of deviation  (expressed in basis points)
by (ii) the  changes  in the  prices  of $196  million  (in the case of  10-year
Treasury bonds) and $18.7 million (in the case of the 30-year Treasury bonds) of
Treasury  bonds,  given a one  basis  point  change in their  respective  yields
(determined with reference to the Bloomberg  Financial Market's Government Yield
Analysis  Page).  In this  way,  Chugach  intends  that  higher  interest  costs
resulting  from  increases  in market  interest  rates prior to  refinancing  of
Chugach's  long-term debt would be mitigated by a lump-sum,  up-front payment to
Chugach at the time of the refinancing.

Unsolicited Acquisition Proposal by Matanuska Electric Association, Inc.

In October 1998, MEA,  Chugach's  largest wholesale  customer,  presented to the
Board of  Directors  of Chugach  (the Board) an  unsolicited  proposal  (the MEA
Proposal) to acquire

                                                       17

<PAGE>



substantially  all of  Chugach's  assets  in  exchange  for  the  assumption  of
Chugach's  liabilities.  Although MEA has not  provided  many details of the MEA
Proposal,  it has stated that the generation and transmission  assets of Chugach
would be  transferred  to a subsidiary of MEA, the assets  comprising  Chugach's
distribution  system would be transferred to MEA itself,  and Chugach's  members
would  become  members  of MEA.  MEA has also  stated  that,  at the time of the
acquisition, it would borrow enough money to defease (i.e. to purchase a pool of
U.S.  government  or  U.S.  government-backed  securities  that  would  generate
sufficient  cash  flow  to make  scheduled  debt  service  payments  during  the
remaining life of the defeased  obligations) or refinance Chugach's  outstanding
Series  A  Bonds  and to  repay  Chugach's  outstanding  CoBank  bonds  plus  an
additional $42.5 million that would be distributed in cash to the members of the
post-acquisition  MEA. On November 2, 1998, citing  uncertainty over whether MEA
would be successful in its bid to acquire  Chugach's  assets,  Standard & Poor's
Rating  Service  placed  its  single "A" rating on the Series A Bonds on "Credit
Watch with developing  implications",  meaning the rating may be raised, lowered
or affirmed.

After  evaluating  information  provided by MEA and analyses of the MEA Proposal
presented by Chugach's staff and independent financial advisors, on November 12,
1998,  the  Board  rejected  the MEA  Proposal.  Thereafter,  MEA  withdrew  the
provision of the MEA Proposal which  contemplated that the Board of Directors of
MEA,  following the  consummation  of the MEA Proposal,  would include  minority
representation  from among the members of the Board.  MEA also stated that MEA's
future  communications on this matter would be directed to Chugach's  membership
rather than the Board or Chugach's staff and MEA began circulating  petitions to
gather a  sufficient  number of  signatures  from  Chugach's  members to force a
special  meeting of  Chugach's  members for the purpose of  considering  the MEA
Proposal.  Under the Alaska  Electric  &  Telephone  Cooperative  Act, a special
meeting of the members of Chugach may be called by 10% of Chugach's members.

On April 28, 1999, MEA delivered  documents to Chugach which MEA stated,  in its
transmittal letter,  constituted  petitions  requesting a special meeting of the
members of Chugach  for the purpose  identified  in the  petitions.  The form of
petition used by MEA in soliciting sufficient signatures from Chugach members to
meet the 10% test referred to above states that the petition  requests a special
meeting of the members of Chugach to be held at the  earliest  possible  date to
consider  and vote upon the sale of all or  substantially  all of the  assets of
Chugach to a wholly-owned subsidiary of MEA; that a summary of the proposed sale
was printed on the back of the petition; and that the official ballot to be used
in conjunction with the special meeting shall set forth the terms and conditions
of the sale as  specified by the Board of Directors of MEA. The form of official
ballot that MEA intends to seek to have  Chugach  send to its members has not to
date been furnished to Chugach.  The summary of the proposed sale printed on the
back of the petition reads (in relevant part) as follows:




                                                       18

<PAGE>



                                    "Summary of Proposed Sale of the Assets of
                                        Chugach Electric Association, Inc.

     1. Chugach Electric Association,  Inc. (CEA) will sell all of its assets to
a wholly owned subsidiary of Matanuska Electric  Association,  Inc. (MEA), which
will pay for these assets by assuming all of CEA's liabilities,  including CEA's
responsibility to pay capital credits to its members.

     2. Concurrently  with the sale of CEA's assets,  MEA's subsidiary will sell
all  of the  distribution  assets  it  acquires  from  CEA to  MEA.  As  partial
consideration   for  the  purchase  of  these   assets,   MEA  will  assume  the
responsibility to pay the capital credits of CEA's former members.

     3. All of CEA's current members will be eligible to become members of MEA.

     4.  All  terms  and  conditions  of the  proposed  sale are  contingent  on
compliance  with all  statutory  and  regulatory  requirements  of the  State of
Alaska, including approval of the Alaska Public Utilities Commission."

In response to MEA's  April 28,  1999 letter and  enclosures  referred to above,
Chugach  advised  MEA on April 29,  1999 that,  in light of the  pendency  of an
advisory  vote of MEA's  members  on the MEA  proposal  scheduled  for that day,
Chugach  did not think it would be  prudent  to incur any costs or  utilize  any
resources in connection  with the documents  delivered to Chugach.  In addition,
Chugach advised MEA that: (i) whatever the outcome of the MEA members'  advisory
vote,  and  whatever  MEA  decided to do in light of it, it  remained  Chugach's
position  that the MEA  proposal  is  fundamentally  flawed  and not in the best
interests of Chugach members;  and (ii) as discussed below, it remains Chugach's
position that the proposed  acquisition  cannot legally be accomplished  without
the approval of Chugach's Board of Directors.  In addition,  Chugach advised MEA
that,  while  Chugach does not agree that MEA or any other member of Chugach has
the ability to dictate ballot language,  it was necessary for MEA to provide its
specific  proposed ballot  language as well as the information  that Chugach had
requested about the MEA proposal in earlier correspondence, in order for Chugach
to make  decisions  on  whether to call a special  meeting,  and if so, on other
issues  related to such a meeting.  In addition,  Chugach  notified MEA that the
petitions  were being held by Chugach's  contractor  for signature  verification
action if and when such  action  became  appropriate  and that,  if and when the
signatures were verified, the petitions would be treated as having been received
by Chugach on April 28, 1999.

At the annual meeting of members of Chugach held on April 29, 1999, the members,
among other things,  approved an amendment to the bylaws of Chugach which limits
the  amount  of time in which  petitions  may be  gathered  for the  purpose  of
requesting a special meeting of members.  Under this amendment,  such signatures
must be  collected  within one  consecutive  90 calendar day time period and the
Board of  Directors  shall  establish  such  policies  as may be  necessary  and
convenient to ensure  compliance with this limit. The amended text of the bylaws
of  Chugach,  reflecting  this  amendment  as well as certain  other  amendments
approved by members at the April 29, 1999 meeting, is filed as Exhibit 3 (ii) of
this report and is incorporated herein by reference.

                                                       19

<PAGE>




According  to  information  publicly  released by MEA, at its annual  meeting of
members held on April 29, 1999,  its members voted in favor of "the MEA Board of
Directors continuing to prepare MEA for deregulation and competition through the
acquisition of Chugach" by a vote of 4,915 to 3,485,  or 59% to 41%, and members
also voted 5,776 to 2,472,  or 70% to 30%, in favor of increasing  the number of
directors  on MEA's  Board  through a  districting  process if MEA  successfully
acquires Chugach.  Both of these votes were stated on the ballot to be advisory.
The MEA annual  meeting  was  recessed  pending  the  outcome of an  election on
whether to recall the Board of MEA,  in  accordance  with a ruling of the Alaska
Supreme Court.

Alaska law  prohibits  Chugach from  disposing of a  substantial  portion of its
assets  unless the  disposition  is  approved  by a majority  of the  members of
Chugach and by at least  two-thirds  of those  actually  voting on the proposal,
except  that the Board  may  authorize  Chugach  to sell its  assets to  another
cooperative  if the  transaction is approved by a majority of those voting in an
election in which a much  smaller  percentage  of the  membership  votes and the
purchaser  expressly  agrees to assume  Chugach's  obligations  under collective
bargaining  agreements.  MEA has taken  the  position  that the  Board  would be
compelled  to  approve  the sale of  Chugach's  assets to MEA if  two-thirds  of
Chugach's  members  voting at a special  meeting  of the  members  approved  the
transaction and those voting in favor of the transaction  constituted a majority
of all of the members.  Chugach believes that,  although member approval clearly
is a  prerequisite  to any sale to MEA, no such sale could  legally occur unless
the Board also approves the sale in the exercise of its independent judgment.

It is unclear whether a special  meeting of Chugach's  members will be called to
consider the MEA  Proposal,  whether  Chugach's  members  would  approve the MEA
Proposal by a  supermajority  vote if it were submitted at a special  meeting of
members,  what legal effect (if any)  approval by a  supermajority  of Chugach's
members  would have in light of the  rejection of the MEA Proposal by the Board,
and whether any acquisition - even if approved by Chugach - would be approved by
the APUC. It is,  therefore,  not possible to determine at this time the outcome
of the MEA Proposal.  However, in view of numerous uncertainties associated with
the consummation of the MEA Proposal, including those referred to above, Chugach
believes that there is not a material  likelihood  that the MEA Proposal will be
consummated.  Accordingly, while Chugach has publicly stated its belief that the
consummation of the MEA Proposal (including the additional  borrowing that would
be associated therewith) would adversely affect the financial condition, results
of  operations,  capital  resources and  liquidity of Chugach,  Chugach does not
believe that there is a material likelihood that these consequences will occur.

On May 6, 1999, MEA responded, by letter, to Chugach's letter of April 29, 1999.
MEA's letter stated (among other things) that:  (i) MEA considers its members to
have  advised  it that  it  should  continue  its  efforts  to  prepare  MEA for
deregulation and competition through the acquisition of Chugach; (ii) MEA agrees
to  Chugach's  suggestion  to hold in  abeyance  until after May 25,  1999,  the
counting of the petitions turned in by MEA, under Chugach's  assurance that they
would be treated as having  been  received by Chugach on April 28,  1999;  (iii)
following  the  recall  election  relating  to the MEA Board,  MEA will  present
Chugach with additional  information requested by Chugach on the special meeting
of Chugach's  members  being sought by MEA; and (iv) MEA suggests that the Board
of MEA and Chugach  engage in dialogue with regard to a possible  combination of
the two organizations on a non-adversarial basis.

                                                       20

<PAGE>




Item 6. Exhibits and Reports on Form 8-K

     (a) Exhibits:

         Bylaws of the Registrant (as amended April 29, 1999).

         Confirmation for U.S. dollar Treasury rate-lock transaction to be 
         subject to 1992 Master Agreement, dated March 17, 1999, between Lehman 
         Brothers Financial Products Inc.and Chugach Electric Association, Inc

         Closing  documents  dated March 30, 1999 First  Mortgage  Bond,  CoBank
         Series   (CoBank-6),   Due  March  15,  2002   pursuant  to  the  Third
         Supplemental Indenture of Trust

         Financial Data Schedule

     (b) Reports on Form 8-K:

         No reports on Form 8-K were filed for the quarter ended March 31, 1999.


                                                       21

<PAGE>



                                                    SIGNATURES



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



                       CHUGACH ELECTRIC ASSOCIATION, INC.



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


                                    Date:    May 13, 1999



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


                                    Date:    May 13, 1999



                                                       22

<PAGE>


EXHIBITS

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


Exhibit
number                                      Description                     Page



3 (ii)            Bylaws of the Registrant (as amended April 29, 1999).       23

10.68             Confirmation for U.S. dollar Treasury rate-lock             39
                  transaction to be subject to 1992 Master Agreement, 
                  dated March 17, 1999 between Lehman Brothers Financial 
                  Products Inc. and Chugach Electric Association, Inc.

10.69             Closing documents dated March 30, 1999 First Mortgage       43
                  Bond,CoBank Series (CoBank-6), Due March 15, 2002 pursuant 
                  to the Third Supplemental Indenture of Trust

    27            Financial Data Schedule                                     **


**  Filed Electronically



                                                       23