SEVENTH SUPPLEMENTAL INDENTURE OF TRUST

                (Modifying Terms of Third Supplemental Indenture
                Establishing First Mortgage Bonds, CoBank Series)


         THIS SEVENTH SUPPLEMENTAL INDENTURE OF TRUST, dated as of June 1, 1997,
is  amendatory  and  supplemental  to that  certain  Indenture  of  Trust  dated
September 15, 1991 (the "Original  Indenture"),  by and between CHUGACH ELECTRIC
ASSOCIATION,  INC., an Alaska electric cooperative (the "Company"), and SECURITY
PACIFIC  BANK  WASHINGTON,  N.A.,  a  national  banking  association,   recorded
September 25, 1991, under the following recording numbers:


      Recording District                     Recording Number, Book and Page
          Anchorage                           91-040327 (Book 2195, Page 178)
          Kenai                               91-7151  (Book 389, Page 637) 
          Palmer                              91-011276 (Book 663, Page 167)  
          Seward                              91-1051  (Book 62,251) 
          Valdez                              91-0738 (Book 114, Page 233)

         The Original  Indenture  was amended by those,  First,  Second,  Third,
Fourth, Fifth and Sixth Supplemental Indentures, dated as of March 17, 1993, May
19, 1994,  June 29, 1994,  March 1, 1995,  September 6, 1995, and April 3, 1996,
respectively, and recorded as follows:

SEVENTH SUPPLEMENTAL
INDENTURE OF TRUST - Page 1

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<TABLE>


 <S>         <C>              <C>                                   <C>    

 RECORDING   SUPPLEMENTAL     RECORDING NUMBER, BOOK AND             RECORDING DATE
 DISTRICT     INDENTURE                 PAGE
 Anchorage      First         93-014587 (Book 2394, Page 638)        March 30, 1993
                Second        94-036094 (Book 2656, Page 313)        May 23, 1994
                Third         94-046579 (Book 2678, Page 629)        July 11, 1994
                Fourth        95-015010 (Book 2772, Page 604)        March 31, 1995
                Fifth         96-006182 (Book 2886, Page 853)        February 12, 1996
                Sixth         96-028052 (Book 2936, Page 602)        June 10, 1996
   Kenai        First         94-3630 (Book 441, Page 841)           April 27, 1994
                Second        94-4844 (Book 444, Page 348)           May 31, 1994
                Third         94-6354 (Book 447, Page 238)           July 11, 1994
                Fourth        95-0383 (Book 461, Page 299)           April 10, 1995
                Fifth         96-1826 (Book 480, Page 485)           March 12, 1996
                Sixth         96-4713 (Book 486, Page 796)           June 18, 1996
  Palmer        First         94-6629 (Book 763, Page 279)           April 26, 1994
                Second        94-008794 (Book 768, Page 219)         May 27, 1994
                Third         94-011249 (Book 773, Page 460)         July 11, 1994
                Fourth        95-003739 (Book 800, Page 693)         April 4, 1995
                Fifth         96-003374 (Book 840, Page 390)         March 12, 1996
                Sixth         96-008674 (Book 852, Page 453)         June 18, 1996
  Seward        First         94-562 (Book 72, Page 239)             April 29, 1994
                Second        94-0832 (Book 72, Page 786)            June 2, 1994
                Third         94-1091 (Book 73, Page 283)            July 12, 1994
                Fourth        95-0392 (Book 76, Page 575)            April 4, 1995
                Fifth         96-0301 (Book 80, Page 589)            February 29, 1996
                Sixth         96-0853 (Book 81, Page 859)            June 19, 1996
  Valdez        First         94-0604 (Book 122, Page 677)           April 27, 1994
                Second        94-0767 (Book 122, Page 967)           May 31, 1994
                Third         94-0971 (Book 123, Page 269)           July 11, 1994
                Fourth        95-0383 (Book 126, Page 214)           April 10, 1995
                Fifth         96-0158 (Book 128, Page 435)           February 28, 1996
                Sixth         96-0550 (Book 129, Page 361)           June 19, 1996

</TABLE>


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INDENTURE OF TRUST - Page 2

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         The Original Indenture, as amended by the First, Second, Third, Fourth,
Fifth  and  Sixth  Supplemental  Indentures,   is  referred  to  herein  as  the
"Indenture."  All  capitalized  terms  used and not  otherwise  defined  in this
Seventh  Supplemental  Indenture shall have the meanings assigned to those terms
in the Indenture, except where the context clearly indicates otherwise.

         The Indenture secures payment of the principal of (and premium, if any)
and interest on the Outstanding  Secured Bonds (as defined in the Indenture) and
the performance of the covenants contained in such Outstanding Secured Bonds and
the Indenture.

         Pursuant to the Indenture, the Company did grant, bargain, sell, alien,
remise, release, convey, assign, transfer,  mortgage,  hypothecate,  pledge, set
over and confirm to Security  Pacific Bank  Washington,  N.A.,  as Trustee,  all
property,  rights,  privileges  and  franchises of the Company of every kind and
description,  real,  personal or mixed,  tangible and  intangible,  whether then
owned or thereafter  acquired by the Company,  except any Excepted  Property (as
defined in the  Indenture),  and  granted a security  interest  therein  for the
purposes therein expressed.

         The purpose of the First, Second,  Fourth, Fifth and Sixth Supplemental
Indenture  was to confirm the  Company's  intention  that certain real  property
(described in the respective  Supplemental  Indentures)  acquired by the Company
after  the  date of the  Original  Indenture  be  subjected  to the  lien of the
Indenture,  and to confirm  the  substitution  of  Seattle-First  National  Bank
(successor by merger to the original Trustee,  Security Pacific Bank Washington,
N.A.) as Trustee  under the  Indenture.  The  purpose of the Third  Supplemental
Indenture was to establish a new series of bonds to be designated First Mortgage
Bonds,  CoBank  Series,  to be  issued  to the  National  Bank for  Cooperatives
pursuant to the terms of a Credit Agreement between the Company and the National
Bank for  Cooperatives.  The National  Bank for  Cooperatives  was  subsequently
merged into CoBank, ACB ("CoBank"), which has thereby succeeded to the interests
of the  National  Bank for  Cooperatives  under such  Credit  Agreement  and all
outstanding CoBank Bonds.

         As a result of the acquisition by First Trust National  Association,  a
national banking association,  of the trust business of Bank of America NW, N.A.
(formerly  known  as   Seattle-First   National  Bank),   First  Trust  National
Association has succeeded to the interest of the Trustee under the Indenture.

         Contemporaneously   with   execution  of  this   Seventh   Supplemental
Indenture, the Company and CoBank have amended the terms of the Credit Agreement
between them to remove the limitation on the maximum aggregate  principal amount
that may be advanced by CoBank to the  Company  thereunder.  The purpose of this
Seventh  Supplemental  Indenture is to amend the terms of the Third Supplemental
Indenture establishing the First Mortgage Bonds, CoBank Series, to eliminate the
maximum aggregate amount of bonds of such series the Company may issue.



SEVENTH SUPPLEMENTAL
INDENTURE OF TRUST - Page 3

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Amendments.  The Third Supplemental Indenture of Trust dated June 29, 1994, is 
         hereby amended as follows:

         In Article 1 (General Provisions and Definitions), on page 3, the
                definition of "Maturity Date" is deleted in its entirety.

         On page 4, the  second  sentence  of Section  2.01  (Terms of the
                CoBank Bonds) is deleted in its entirety.

         In Section  2.01 (Terms of CoBank  Bonds),  clause (A)  (Variable
                Rate  Option) on page 5 is amended in its  entirety to read as
                follows:

                           (A) Variable Rate Option.  Except as provided  below,
                           the  unpaid  principal  balance of each  CoBank  Bond
                           shall bear  interest at a rate per annum equal to the
                           rate of interest  established  by CoBank on the first
                           Business Day of each week.  The rate  established  by
                           CoBank may not exceed CoBank's National Variable Rate
                           on that  day plus 1/4 of 1% per  annum  and  shall be
                           effective  until the first  Business  Day of the next
                           week.  Each change in the rate shall be applicable to
                           all balances subject to this Variable Rate Option and
                           information about the then current rate shall be made
                           available upon telephonic request.

         In Section  2.01  (Terms of CoBank  Bonds),  in clause (B) (Fixed
                Rate  Option)  on  page 5,  the  phrase  "five  (5)  days"  is
                substituted for the phrase "thirty (30) days".

         In Section  2.02 (Form of CoBank  Bonds),  on page 7, in the last
                sentence  of the  first  paragraph  of the text of the form of
                reverse of CoBank  Bonds,  the phrase  "limited  in  aggregate
                principal  amount to the Maximum  Amount (as defined below) at
                any one time outstanding" is deleted.

         In Section 2.02 (Form of CoBank Bonds) clause (A) (Variable  Rate
                Option)  on  page 8 is  amended  in its  entirety  to  read as
                follows:

                           (A) Variable Rate Option.  Except as provided  below,
                           the  unpaid  principal  balance of this  CoBank  Bond
                           shall bear  interest at a rate per annum equal to the
                           rate of interest  established  by CoBank on the first
                           Business Day of each week.  The rate  established  by
                           CoBank may not exceed CoBank's National Variable Rate
                           on that  day plus 1/4 of 1% per  annum  and  shall be
                           effective  until the first  Business  Day of the next
                           week.  Each change in the rate shall be applicable to
                           all balances subject to this Variable Rate Option and
                           information about the then current rate shall be made
                           available upon telephonic request.

SEVENTH SUPPLEMENTAL
INDENTURE OF TRUST - Page 4

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         In Section 2.02 (Form of CoBank Bonds), in clause (B) (Fixed Rate
                Option) on page 8, the phrase  "five (5) days" is  substituted
                for the phrase "thirty (30) days".

         In Section  2.02  (Form  of  CoBank  Bonds),   on  page  10,  the
                definition of "Maximum Amount" is deleted in its entirety.

         In Section 2.02 (Form of CoBank Bonds), on page 10, clause (B) of
                the  definition  of  "Redemption  Premium"  is  amended in its
                entirety to read as follows:

                           (B) the amount of interest  that CoBank would earn if
                           such portion were  reinvested for the remaining fixed
                           rate  period in U.S.  Treasury  obligations  having a
                           weighted  average  life  approximately  equal  to the
                           weighted average life of the balance being prepaid.

         All references  to the  National  Bank for  Cooperatives  shall be
                deemed to be references to CoBank, ACB, successor by merger to
                the National Bank for Cooperatives.

Ratification.  Except  as  expressly   amended  by  this  Seventh   Supplemental
         Indenture,  the Indenture is in all respects ratified and confirmed and
         all the terms,  provisions and conditions of the Indenture shall remain
         in full force and effect, and this Seventh Supplemental Indenture shall
         be deemed to be a part of the Indenture.

Counterparts. This Seventh Supplemental  Indenture may be executed in any number
         of counterparts,  each of such  counterparts  shall for all purposes be
         deemed to be an  original,  and all such  counterparts  shall  together
         constitute but one and the same instrument.

Execution Date. Although  this  Seventh  Supplemental  Indenture  is  dated for
         convenience  and for the purpose of reference  as of June 1, 1997, the
         actual date or dates of execution by the Company and by the Trustee are
         as indicated by their respective acknowledgments hereto annexed.




SEVENTH SUPPLEMENTAL
INDENTURE OF TRUST - Page 5

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                                            CHUGACH ELECTRIC ASSOCIATION, INC.,
                                            an Alaska electric cooperative


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



                                            FIRST TRUST NATIONAL ASSOCIATION,
                                            a national banking association


                                             By     /s/ Michael A. Jones
                                              Title:   Assistant Vice President



                                            CoBank, ACB,
                                            a _____________________________


                                             By   /s/ John B. McFarlane
                                                Title:   Vice President



SEVENTH SUPPLEMENTAL
INDENTURE OF TRUST - Page 6

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STATE OF ALASKA                             )
                                            ) ss.
THIRD JUDICIAL DISTRICT                     )

         The foregoing  instrument was acknowledged  before me this 11 th day of
July,  1997, by Eugene N.  Bjornstad,  the General  Manager of CHUGACH  ELECTRIC
ASSOCIATION, INC., an Alaska electric cooperative, on behalf of the cooperative.


                                                      /s/ Denise R. Withers
                                                     (Signature of person taking
                                                     the acknowledgment), Notary
                                                     Public  in and for  Alaska.
                                                     My    commission    expires
                                                     4/8/99.
                                                              (seal)



STATE OF WASHINGTON                                  )
                                                     ) ss.
COUNTY OF KING                                       )

         I certify  that I know or have  satisfactory  evidence  that Michael A.
Jones, is the person who appeared before me, and said person  acknowledged  that
he signed this instrument,  on oath stated that he was authorized to execute the
instrument  and  acknowledged  it as the Assistant Vice President of FIRST TRUST
NATIONAL ASSOCIATION, to be the free and voluntary act and deed of said national
banking association, for the uses and purposes therein mentioned.

         Given under my hand and official seal this 25th day of August, 1997.


                                               /s/ Linda E. Houston
                                            Print name: Linda E. Houston
                                        NOTARY PUBLIC in and for the State of
                                        Washington, residing at Federal Way, WA
                                          My appointment expires 9/26/98
                                          My commission expires 9/26/98.


(seal)




SEVENTH SUPPLEMENTAL
INDENTURE OF TRUST - Page 7

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STATE OF COLORADO                   )
                                    ) ss.
COUNTY OF ARAPAHOE                  )

         I  certify  that I know  or have  satisfactory  evidence  that  John B.
McFarlane,  is the person who appeared  before me, and said person  acknowledged
that he signed this instrument, on oath stated that he was authorized to execute
the instrument and  acknowledged it as the Vice President of COBANK,  ACB, to be
the  free  and  voluntary  act and  deed of said  association,  for the uses and
purposes therein mentioned.

         Given under my hand and official seal this 28th day of July, 1997.


                                                  /s/ Kendra M. Bullock
                                                     Kendra M. Bullock
                                                     NOTARY  PUBLIC  in and  for
                                                     the   State  of   Colorado,
                                                     residing at 5799 S. Orleans
                                                     St,  Aurora,  CO  80015  My
                                                     appointment expires
                                                     5/7/2000.

(seal)


SEVENTH SUPPLEMENTAL
INDENTURE OF TRUST - Page 8

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