Document:

Ceramics Process Systems
                      2000 Stock Incentive Plan

          Adopted by the Board of Directors January 22, 1999

1. Purpose

The purpose of this 1999 Stock Incentive Plan (the "Plan") of
Ceramics Process Systems Corporation, a Delaware corporation (the
"Company"), is to advance the interests of the Company's stockholders by
enhancing the Company's ability to attract, retain and motivate persons
who make (or are expected to make) important contributions to the
Company by providing such persons with equity ownership opportunities
and performance-based incentives and thereby better aligning the
interests of such persons with those of the Company's stockholders.
Except where the context otherwise requires, the term "Company" shall
include any of the Company's present or future subsidiary corporations
of as defined in Section 424(f) of the Internal Revenue Code of 1986, as
amended, and any regulations promulgated thereunder (the "Code") and any
other business venture (including, without limitation, joint venture or
limited liability company) in which the Company has a significant
interest, as determined by the Board of Directors of the Company (the
"Board").

2. Eligibility

All of the Company's employees, officers, directors, consultants
and advisors (and any individuals who have accepted an offer for
employment) are eligible to be granted options, restricted stock awards,
or other stock-based awards (each, an "Award") under the Plan.  Each
person who has been granted an Award under the Plan shall be deemed a
"Participant".

3. Administration, Delegation

(1) Administration by Board of Directors.  The Plan will be
administered by the Board.  The Board shall have authority to grant
Awards and to adopt, amend and repeal such administrative rules,
guidelines and practices relating to the Plan as it shall deem
advisable.  The Board may correct any defect, supply any omission or
reconcile any inconsistency in the Plan or any Award in the manner and
to the extent it shall deem expedient to carry the Plan into effect and
it shall be the sole and final judge of such expediency.  All decisions
by the Board shall be made in the Board's sole discretion and shall be
final and binding on all persons having or claiming any interest in the
Plan or in any Award.  No director or person acting pursuant to the
authority delegated by the Board shall be liable for any action or
determination relating to or under the Plan made in good faith.

(2) Delegation to Executive Officers.  To the extent permitted
by applicable law, the Board may delegate to one or more executive
officers of the Company the power to make Awards and exercise such other
powers under the Plan as the Board may determine, provided that the
Board shall fix the maximum number of shares subject to Awards and the
maximum number of shares for any one Participant to be made by such
executive officers.

(3) Appointment of Committees.  To the extent permitted by
applicable law, the Board may delegate any or all of its powers under
the Plan to one or more committees or subcommittees of the Board (a
"Committee").  All references in the Plan to the "Board" shall mean the
Board or a Committee of the Board or the executive officer referred to
in Section 3(b) to the extent that the Board's powers or authority under
the Plan have been delegated to such Committee or executive officer.

4. Stock Available for Awards

(1) Number of Shares.  Subject to adjustment under Section 8,
Awards may be made under the Plan for up to 1,250,000 shares of common
stock, $0.01 par value per share, of the Company (the "Common Stock").
If any Award expires or is terminated, surrendered or canceled without
having been fully exercised or is forfeited in whole or in part or
results in any Common Stock not being issued, the unused Common Stock
covered by such Award shall again be available for the grant of Awards
under the Plan, subject, however, in the case of Incentive Stock Options
(as hereinafter defined), to any limitation required under the Code.
Shares issued under the Plan may consist in whole or in part of
authorized but unissued shares or treasury shares.

(2) Per-Participant Limit.  Subject to adjustment under
Section 8, the maximum number of shares of Common Stock with respect to
which an Award may be granted to any Participant under the Plan shall be
250,000 per calendar year.  The per-Participant limit described in this
Section 4(b) shall be construed and applied consistently with Section
162(m) of the Code.

5. Stock Options

(1) General.  The Board may grant options to purchase Common
Stock (each, an "Option") and determine the number of shares of Common
Stock to be covered by each Option, the exercise price of each Option
and the conditions and limitations applicable to the exercise of each
Option, including conditions relating to applicable federal or state
securities laws, as it considers necessary or advisable.  An Option
which is not intended to be an Incentive Stock Option (as hereinafter
defined) shall be designated a "Nonstatutory Stock Option".

(2) Incentive Stock Options.  An Option that the Board intends
to be an "incentive stock option" as defined in Section 422 of the Code
(an "Incentive Stock Option") shall only be granted to employees of the
Company and shall be subject to and shall be construed consistently with
the requirements of Section 422 of the Code.  The Company shall have no
liability to a Participant, or any other party, if an Option (or any
part thereof) which is intended to be an Incentive Stock Option is not
an Incentive Stock Option.

(3) Exercise Price.  The Board shall establish the exercise
price at the time each Option is granted and specify it in the
applicable option agreement; provided, however, that the exercise price
shall be not less than 100% of the fair market value of the Common
Stock, as determined by the Board, at the time the Option is granted.

(4) Duration of Options.  Each Option shall be exercisable at
such times and subject to such terms and conditions as the Board may
specify in the applicable option agreement; provided, however, that no
Option will be granted for a term in excess of 10 years.

(5) Exercise of Option.  Options may be exercised by delivery to
the Company of a written notice of exercise signed by the proper person
or by any other form of notice (including electronic notice) approved by
the Board together with payment in full as specified in Section 5(f) for
the number of shares for which the Option is exercised.

(6) Payment Upon Exercise.  Common Stock purchased upon the
exercise of an Option granted under the Plan shall be paid for as
follows:

(1) in cash or by check, payable to the order of the
Company;

(2) except as the Board may, in its sole discretion,
otherwise provide in an option agreement, by (i) delivery of an
irrevocable and unconditional undertaking by a creditworthy broker to
deliver promptly to the Company sufficient funds to pay the exercise
price or (ii) delivery by the Participant to the Company of a copy of
irrevocable and unconditional instructions to a creditworthy broker to
deliver promptly to the Company cash or a check sufficient to pay the
exercise price;

(3) when the Common Stock is registered under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), by
delivery of shares of Common Stock owned by the Participant valued at
their fair market value as determined by (or in a manner approved by)
the Board in good faith ("Fair Market Value"), provided (i) such method
of payment is then permitted under applicable law and (ii) such Common
Stock was owned by the Participant at least six months prior to such
delivery;

(4) to the extent permitted by the Board, in its sole
discretion by (i) delivery of a promissory note of the Participant to
the Company on terms determined by the Board, or (ii) payment of such
other lawful consideration as the Board may determine; or

(5) by any combination of the above permitted forms of
payment.

6. Restricted Stock

(1) Grants.  The Board may grant Awards entitling recipients to
acquire shares of Common Stock, subject to the right of the Company to
repurchase all or part of such shares at their issue price or other
stated or formula price (or to require forfeiture of such shares if
issued at no cost) from the recipient in the event that conditions
specified by the Board in the applicable Award are not satisfied prior
to the end of the applicable restriction period or periods established
by the Board for such Award (each, a "Restricted Stock Award").

(2) Terms and Conditions.  The Board shall determine the terms
and conditions of any such Restricted Stock Award, including the
conditions for repurchase (or forfeiture) and the issue price, if any.
Any stock certificates issued in respect of a Restricted Stock Award
shall be registered in the name of the Participant and, unless otherwise
determined by the Board, deposited by the Participant, together with a
stock power endorsed in blank, with the Company (or its designee).  At
the expiration of the applicable restriction periods, the Company (or
such designee) shall deliver the certificates no longer subject to such
restrictions to the Participant or if the Participant has died, to the
beneficiary designated, in a manner determined by the Board, by a
Participant to receive amounts due or exercise rights of the Participant
in the event of the Participant's death (the "Designated Beneficiary").
In the absence of an effective designation by a Participant, Designated
Beneficiary shall mean the Participant's estate.

7. Other Stock-Based Awards

The Board shall have the right to grant other Awards based upon
the Common Stock having such terms and conditions as the Board may
determine, including the grant of shares based upon certain conditions,
the grant of securities convertible into Common Stock and the grant of
stock appreciation rights.

8. Adjustments for Changes in Common Stock and Certain Other Events

(1) Changes in Capitalization.  In the event of any stock split,
reverse stock split, stock dividend, recapitalization, combination of
shares, reclassification of shares, spin-off or other similar change in
capitalization or event, or any distribution to holders of Common Stock
other than a normal cash dividend, (i) the number and class of
securities available under this Plan, (ii) the per-Participant limit set
forth in Section 4(b), (iii) the number and class of securities and
exercise price per share subject to each outstanding Option, (iv) the
repurchase price per share subject to each outstanding Restricted Stock
Award, and (v) the terms of each other outstanding Award shall be
appropriately adjusted by the Company (or substituted Awards may be
made, if applicable) to the extent the Board shall determine, in good
faith, that such an adjustment (or substitution) is necessary and
appropriate.  If this Section 8(a) applies and Section 8(c) also applies
to any event, Section 8(c) shall be applicable to such event, and this
Section 8(a) shall not be applicable.

(2) Liquidation or Dissolution.  In the event of a proposed
liquidation or dissolution of the Company, the Board shall upon written
notice to the Participants provide that all then unexercised Options
will (i) become exercisable in full as of a specified time at least 10
business days prior to the effective date of such liquidation or
dissolution and (ii) terminate effective upon such liquidation or
dissolution, except to the extent exercised before such effective date.
The Board may specify the effect of a liquidation or dissolution on any
Restricted Stock Award or other Award granted under the Plan at the time
of the grant of such Award.

(3) Acquisition and Change in Control Events

(1) Definitions

(1) An "Acquisition Event" shall mean:

(1) any merger or consolidation of the Company
with or into another entity as a result of
which the Common Stock is converted into
or exchanged for the right to receive
cash, securities or other property; or

(2) any exchange of shares of the Company for
cash, securities or other property
pursuant to a statutory share exchange
transaction.
(2) A "Change in Control Event" shall mean:

(1) the acquisition by an individual, entity
or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the
"Exchange Act")) (a "Person") of
beneficial ownership of any capital stock
of the Company if, after such acquisition,
such Person beneficially owns (within the
meaning of Rule 13d-3 promulgated under
the Exchange Act) thirty percent (30%) or
more of either (x) the then-outstanding
shares of common stock of the Company (the
"Outstanding Company Common Stock") or (y)
the combined voting power of the then-
outstanding securities of the Company
entitled to vote generally in the election
of directors (the "Outstanding Company
Voting Securities"); provided, however,
that for purposes of this subsection (i),
the following acquisitions shall not
constitute a Change in Control Event: (A)
any acquisition directly from the Company
(excluding an acquisition pursuant to the
exercise, conversion or exchange of any
security exercisable for, convertible into
or exchangeable for common stock or voting
securities of the Company, unless the
Person exercising, converting or
exchanging such security acquired such
security directly from the Company or an
underwriter or agent of the Company), (B)
any acquisition by any employee benefit
plan (or related trust) sponsored or
maintained by the Company or any
corporation controlled by the Company, (C)
any acquisition by any corporation
pursuant to a Business Combination (as
defined below) which complies with clauses
(x) and (y)  of subsection (iii) of this
definition or (D) any acquisition by
(i) American Research and Development I,
L.P.; (ii) American Research and
Development III, L.P.; (iii) Ampersand
Specialty Material Ventures Limited
Partnership; (iv) Grant C. Bennett or (v)
Waco Partners (each such party is referred
to herein as an "Exempt Person") of any
shares of Common Stock; provided that,
after such acquisition, such Exempt Person
does not beneficially own more than forty-
five percent (45%) of either (i) the
Outstanding Company Common Stock or (ii)
the Outstanding Company Voting Securities;
or

(2) such time as the Continuing Directors (as
defined below) do not constitute a
majority of the Board (or, if applicable,
the Board of Directors of a successor
corporation to the Company), where the
term "Continuing Director" means at any
date a member of the  Board (x) who was a
member of the Board on the date of the
initial adoption of this Plan by the Board
or (y) who was nominated or elected
subsequent to such date by at least a
majority of the directors who were
Continuing Directors at the time of such
nomination or election or whose election
to the Board was recommended or endorsed
by at least a majority of the directors
who were Continuing Directors at the time
of such nomination or election; provided,
however, that there shall be excluded from
this clause (y) any individual whose
initial assumption of office occurred as a
result of an actual or threatened election
contest with respect to the election or
removal of directors or other actual or
threatened solicitation of proxies or
consents, by or on behalf of a person
other than the Board; or

(3) the consummation of a merger,
consolidation, reorganization,
recapitalization or statutory share
exchange involving the Company or a sale
or other disposition of all or
substantially all of the assets of the
Company (a "Business Combination"),
unless, immediately following such
Business Combination, each of the
following two conditions is satisfied: (x)
all or substantially all of the
individuals and entities who were the
beneficial owners of the Outstanding
Company Common Stock and Outstanding
Company Voting Securities immediately
prior to such Business Combination
beneficially own, directly or indirectly,
more than 50% of the then-outstanding
shares of common stock and the combined
voting power of the then-outstanding
securities entitled to vote generally in
the election of directors, respectively,
of the resulting or acquiring corporation
in such Business Combination (which shall
include, without limitation, a corporation
which as a result of such transaction owns
the Company or substantially all of the
Company's assets either directly or
through one or more subsidiaries) (such
resulting or acquiring corporation is
referred to herein as the "Acquiring
Corporation") in substantially the same
proportions as their ownership of the
Outstanding Company Common Stock and
Outstanding Company Voting Securities,
respectively, immediately prior to such
Business Combination and (y) no Person
(excluding the Acquiring Corporation, any
employee benefit plan (or related trust)
maintained or sponsored by the Company or
by the Acquiring Corporation or any Exempt
Person) beneficially owns, directly or
indirectly, 30% or more of the then-
outstanding shares of common stock of the
Acquiring Corporation, or of the combined
voting power of the then-outstanding
securities of such corporation entitled to
vote generally in the election of
directors (except to the extent that such
ownership existed prior to the Business
Combination).

(2) Effect on Options

(1) Acquisition Event.  Upon the occurrence of an
Acquisition Event (regardless of whether such
event also constitutes a Change in Control
Event), or the execution by the Company of any
agreement with respect to an Acquisition Event
(regardless of whether such event will result in
a Change in Control Event), the Board shall
provide that all outstanding Options shall be
assumed, or equivalent options shall be
substituted, by the acquiring or succeeding
corporation (or an affiliate thereof); provided
that if such Acquisition Event also constitutes
a Change in Control Event, except to the extent
specifically provided to the contrary in the
instrument evidencing any Option or any other
agreement between a Participant and the Company,
such assumed or substituted options shall be
immediately exercisable in full upon the
occurrence of such Acquisition Event.  For
purposes hereof, an Option shall be considered
to be assumed if, following consummation of the
Acquisition Event, the Option confers the right
to purchase, for each share of Common Stock
subject to the Option immediately prior to the
consummation of the Acquisition Event, the
consideration (whether cash, securities or other
property) received as a result of the
Acquisition Event by holders of Common Stock for
each share of Common Stock held immediately
prior to the consummation of the Acquisition
Event (and if holders were offered a choice of
consideration, the type of consideration chosen
by the holders of a majority of the outstanding
shares of Common Stock); provided, however, that
if the consideration received as a result of the
Acquisition Event is not solely common stock of
the acquiring or succeeding corporation (or an
affiliate thereof), the Company may, with the
consent of the acquiring or succeeding
corporation, provide for the consideration to be
received upon the exercise of Options to consist
solely of common stock of the acquiring or
succeeding corporation (or an affiliate thereof)
equivalent in fair market value to the per share
consideration received by holders of outstanding
shares of Common Stock as a result of the
Acquisition Event.

Notwithstanding the foregoing, if the
acquiring or succeeding corporation (or an
affiliate thereof) does not agree to assume, or
substitute for, such Options, then the Board
shall, upon written notice to the Participants,
provide that all then unexercised Options will
become exercisable in full as of a specified
time prior to the Acquisition Event and will
terminate immediately prior to the consummation
of such Acquisition Event, except to the extent
exercised by the Participants before the
consummation of such Acquisition Event;
provided, however, in the event of an
Acquisition Event under the terms of which
holders of Common Stock will receive upon
consummation thereof a cash payment for each
share of Common Stock surrendered pursuant to
such Acquisition Event (the "Acquisition
Price"), then the Board may instead provide that
all outstanding Options shall terminate upon
consummation of such Acquisition Event and that
each Participant shall receive, in exchange
therefor, a cash payment equal to the amount (if
any) by which (A) the Acquisition Price
multiplied by the number of shares of Common
Stock subject to such outstanding Options
(whether or not then exercisable), exceeds (B)
the aggregate exercise price of such Options.

(2) Change in Control Event that is not an
Acquisition Event.  Upon the occurrence of a
Change in Control Event that does not also
constitute an Acquisition Event, except to the
extent specifically provided to the contrary in
the instrument evidencing any Option or any
other agreement between a Participant and the
Company, all Options then-outstanding shall
automatically become immediately exercisable in
full.

(3) Effect on Restricted Stock Awards

(1) Acquisition Event that is not a Change in
Control Event. Upon the occurrence of an
Acquisition Event that is not a Change in
Control Event, the repurchase and other rights
of the Company under each outstanding Restricted
Stock Award shall inure to the benefit of the
Company's successor and shall apply to the cash,
securities or other property which the Common
Stock was converted into or exchanged for
pursuant to such Acquisition Event in the same
manner and to the same extent as they applied to
the Common Stock subject to such Restricted
Stock Award.

(2) Change in Control Event.  Upon the occurrence of
a Change in Control Event (regardless of whether
such event also constitutes an Acquisition
Event), except to the extent specifically
provided to the contrary in the instrument
evidencing any Restricted Stock Award or any
other agreement between a Participant and the
Company, all restrictions and conditions on all
Restricted Stock Awards then-outstanding shall
automatically be deemed terminated or satisfied.

(4) Effect on Other Awards

(1) Acquisition Event that is not a Change in
Control Event. The Board shall specify the
effect of an Acquisition Event that is not a
Change in Control Event on any other Award
granted under the Plan at the time of the grant
of such Award.

(2) Change in Control Event.  Upon the occurrence of
a Change in Control Event (regardless of whether
such event also constitutes an Acquisition
Event), except to the extent specifically
provided to the contrary in the instrument
evidencing any other Award or any other
agreement between a Participant and the Company,
all other Awards shall become exercisable,
realizable or vested in full, or shall be free
of all conditions or restrictions, as applicable
to each such Award.

9. General Provisions Applicable to Awards

(1) Transferability of Awards.  Except as the Board may
otherwise determine or provide in an Award, Awards shall not be sold,
assigned, transferred, pledged or otherwise encumbered by the person to
whom they are granted, either voluntarily or by operation of law, except
by will or the laws of descent and distribution, and, during the life of
the Participant, shall be exercisable only by the Participant.
References to a Participant, to the extent relevant in the context,
shall include references to authorized transferees.

(2) Documentation.  Each Award shall be evidenced by a written
instrument in such form as the Board shall determine.  Such written
instrument may be in the form of an agreement signed by the Company and
the Participant or a written confirming memorandum to the Participant
from the Company.  Each Award may contain terms and conditions in
addition to those set forth in the Plan.

(3) Board Discretion.  Except as otherwise provided by the Plan,
each Award may be made alone or in addition or in relation to any other
Award.  The terms of each Award need not be identical, and the Board
need not treat Participants uniformly.

(4) Termination of Status.  The Board shall determine the effect
on an Award of the disability, death, retirement, authorized leave of
absence or other  change in the employment or other status of a
Participant and the extent to which, and the period during which, the
Participant, the Participant's legal representative, conservator,
guardian or Designated Beneficiary may exercise rights under the Award.

(5) Withholding.  Each Participant shall pay to the Company, or
make provision satisfactory to the Board for payment of, any taxes
required by law to be withheld in connection with Awards to such
Participant no later than the date of the event creating the tax
liability.  Except as the Board may otherwise provide in an Award, when
the Common Stock is registered under the Exchange Act, Participants may,
to the extent then permitted under applicable law, satisfy such tax
obligations in whole or in part by delivery of shares of Common Stock,
including shares retained from the Award creating the tax obligation,
valued at their Fair Market Value.  The Company may, to the extent
permitted by law, deduct any such tax obligations from any payment of
any kind otherwise due to a Participant.

(6) Amendment of Award.  The Board may amend, modify or
terminate any outstanding Award, including but not limited to,
substituting therefor another Award of the same or a different type,
changing the date of exercise or realization, and converting an
Incentive Stock Option to a Nonstatutory Stock Option, provided that the
Participant's consent to such action shall be required unless the Board
determines that the action, taking into account any related action,
would not materially and adversely affect the Participant.

(7) Conditions on Delivery of Stock.  The Company will not be
obligated to deliver any shares of Common Stock pursuant to the Plan or
to remove restrictions from shares previously delivered under the Plan
until (i) all conditions of the Award have been met or removed to the
satisfaction of the Company, (ii) in the opinion of the Company's
counsel, all other legal matters in connection with the issuance and
delivery of such shares have been satisfied, including any applicable
securities laws and any applicable stock exchange or stock market rules
and regulations, and (iii) the Participant has executed and delivered to
the Company such representations or agreements as the Company may
consider appropriate to satisfy the requirements of any applicable laws,
rules or regulations.

(8) Acceleration.  The Board may at any time provide that any
Options shall become immediately exercisable in full or in part, that
any Restricted Stock Awards shall be free of restrictions in full or in
part or that any other Awards may become exercisable in full or in part
or free of some or all restrictions or conditions, or otherwise
realizable in full or in part, as the case may be.

10. Miscellaneous

(1) No Right To Employment or Other Status.  No person shall
have any claim or right to be granted an Award, and the grant of an
Award shall not be construed as giving a Participant the right to
continued employment or any other relationship with the Company.  The
Company expressly reserves the right at any time to dismiss or otherwise
terminate its relationship with a Participant free from any liability or
claim under the Plan, except as expressly provided in the applicable
Award.

(2) No Rights As Stockholder.  Subject to the provisions of the
applicable Award, no Participant or Designated Beneficiary shall have
any rights as a stockholder with respect to any shares of Common Stock
to be distributed with respect to an Award until becoming the record
holder of such shares.  Notwithstanding the foregoing, in the event the
Company effects a split of the Common Stock by means of a stock dividend
and the exercise price of and the number of shares subject to such
Option are adjusted as of the date of the distribution of the dividend
(rather than as of the record date for such dividend), then an optionee
who exercises an Option between the record date and the distribution
date for such stock dividend shall be entitled to receive, on the
distribution date, the stock dividend with respect to the shares of
Common Stock acquired upon such Option exercise, notwithstanding the
fact that such shares were not outstanding as of the close of business
on the record date for such stock dividend.

(3) Effective Date and Term of Plan.  The Plan shall become
effective on the date on which it is adopted by the Board but no Award
granted to a Participant designated by the Board as subject to Section
162(m) of the Code by the Board shall become exercisable, vested or
realizable, as applicable to such Award, unless and until the Plan has
been approved by the Company's stockholders to the extent stockholder
approval is required by Section 162(m) in the manner required under
Section 162(m) (including the vote required under Section 162(m)).  No
Awards shall be granted under the Plan after the completion of ten years
from the earlier of (i) the date on which the Plan was adopted by the
Board or (ii) the date the Plan was approved by the Company's
stockholders, but Awards previously granted may extend beyond that date.

(4) Amendment of Plan.  The Board may amend, suspend or
terminate the Plan or any portion thereof at any time provided that to
the extent required by Section 162(m) of the Code, no Award granted to a
Participant designated as subject to Section 162(m) by the Board after
the date of such amendment shall become exercisable, realizable or
vested, as applicable to such Award (to the extent that such amendment
to the Plan was required to grant such Award to a particular
Participant), unless and until such amendment shall have been approved
by the Company's stockholders as required by Section 162(m) (including
the vote required under Section 162(m)).

(5) Governing Law.  The provisions of the Plan and all Awards
made hereunder shall be governed by and interpreted in accordance with
the laws of the State of Delaware, without regard to any applicable
conflicts of law.December 16, 1999

Ms. Diana Woodard, CCTS
Relationship Specialist

US Bank - Corporate Trust Services
601 Union Street, Suite 2120

Seattle, WA 98101

Subject: Request for Execution and Delivery of CoBank-7 Bond

Dear Ms. Woodard:

Enclosed  are  the  following  original  documents,  including  attachments,  in
connection with the CoBank-7 bond in the amount of $30,000,000:

                  Opinion of Counsel,
                  Board Resolution,
                  First Mortgage Bond,
                  Certificate as to Bondable Additions No. 7,
                  Available Margins Certificate, and
                  Officers Certificate.

I have also enclosed a set of these documents for your files. Please execute the
bond and deliver it to the attention of John McFarlane at CoBank, P.O. Box 5110,
Denver,  Colorado  80217.  Would you also please  provide  Chugach a copy of the
executed bond for our files.

Thank you for your assistance in this transaction.

Sincerely,

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

Enclosures                                                           Bond/letter

December 16, 1999

U.S. Bank Trust, National Association
601 Union Street, Suite 2120
Seattle, Washington  98101

Attention: Diana Woodard

Re:      Opinion of Counsel and Title Evidence in connection
         with issuance of First Mortgage Bond, CoBank Series

Ladies and Gentlemen:

This  letter  constitutes  the opinion of General  Counsel for Chugach  Electric
Association,  Inc.  ("Chugach")  pursuant to  Sections  5.01C,  5.01E,  5.02(5),
5.02(6),  5.02(7) and 5.03D of the  Indenture of Trust dated as of September 15,
1991   between    Chugach   and   U.S.Bank    Trust,    National    Association,
successor-in-interest to First Trust National Association, successor-in-interest
to Security  Pacific  Bank  Washington,  N.A.,  as Trustee (the  "Trustee")  (as
amended by the First, Second,  Third,  Fourth,  Fifth, Sixth, Seventh and Eighth
Supplemental  Indentures  thereto,  dated March 17, 1993, May 19, 1994, June 29,
1994,  March 1, 1995,  September  6,  1995,  April 3,  1996,  June 1, 1997,  and
February 4, 1998  respectively,  the "Indenture of Trust") and the terms used in
this  opinion  shall  have the  meanings  established  therein.  I have based my
opinion on my review of the following records and documents  associated with the
issuance of a First Mortgage Bond, CoBank Series, No. CoBank-7,  in the original
principal  amount of  $30,000,000  Dollars  (the  "Bond")  pursuant to the Third
Supplemental  Indenture  of Trust  dated June 29, 1994 as amended by the Seventh
Supplemental  Indenture  of  Trust  dated  as  of  June  1,  1997  (the  "CoBank
Supplemental Indenture"),  which review is in my opinion sufficient to enable me
to express an informed opinion on the matters discussed in this letter:

         The Bond;

         Indenture of Trust;

         Credit  Agreement  between  Chugach and National Bank for  Cooperatives
         (predecessor to CoBank,  ACB)("CoBank")  dated June 22, 1994 as amended
         by Amendment No. 1 to National Bank for  Cooperatives  Credit Agreement
         dated June 1, 1997;

         Board Resolution dated December 15, 1999, authorizing the issuance of a
         First  Mortgage  Bond to CoBank  pursuant  to the  CoBank  Supplemental
         Indenture;

         Officers'  Certificate  dated December 16, 1999,  signed by the General
         Manager and the Executive Manager, Finance and Planning;

         Available Margins Certificate dated December 16, 1999;

         Certificate as to Bondable Additions No. 7 dated December 16, 1999;

         The articles of incorporation of Chugach (including all amendments
         thereto); and

         The bylaws of Chugach as in effect on the date hereof.

Based on my review of the above  records and my  knowledge of Chugach as General
Counsel, I am of the opinion that:

         (1)      no tax, recording or filing law requirements apply to the
                  issuance of the Bond;

         (2)      no authorization,  approval or consent by any Federal, state
                  or other governmental  regulatory agency is required for
                  the issuance of the Bond;

         (3)      all conditions  precedent  provided for in the Indenture of
                  Trust relating to the  authentication and delivery of the
                  Bond to CoBank have been complied with;

         (4) the Bond, when executed by Chugach and  authenticated and delivered
by the Trustee and when issued by Chugach  will be the legal,  valid and binding
obligation of Chugach  enforceable in accordance with its terms and the terms of
the Indenture of Trust (subject to bankruptcy,  insolvency, fraudulent transfer,
reorganization,  moratorium and other laws of general applicability  relating to
or affecting creditors' rights and to general equity principles) and entitled to
the benefits of and secured by the lien of the  Indenture  of Trust  equally and
ratably with all other Outstanding Secured Bonds;

         (5)      none of the Trust  Estate is subject to any Prior Lien other
                  than  Prior  Liens  permitted  by Section  14.06 of the
                  Indenture of Trust;

         (6) Except as noted below, no instruments,  other than the Indenture of
Trust,  are  necessary  to vest in the Trustee as a part of the Trust Estate all
right,  title and interest of Chugach in and to all Property  Additions to which
the  Certificate  as to  Bondable  Additions  refers.  Chugach  will  prepare  a
Supplemental  Indenture  of Trust,  the  purpose of which is to  provide  record
notice of the  application  of the lien of the  Indenture to two parcels of real
property acquired January 31, 1999 and February 1, 1999 for $7,500 each. Chugach
intends to submit the Supplemental Indenture of Trust and a resolution approving
it to its  Board of  Directors  early in 2000.  Chugach  will  record  it in the
necessary  Recording  Districts  after  execution.  In addition,  Chugach sold a
parcel of real  property  December  23,  1998 for  $9,920 for which it will seek
release from the lien of the Indenture;

         (7) with respect to all Property  Additions to which the Certificate as
to Bondable  Additions  refers that are located or constructed on, over or under
public highways, rivers, waters or other public property, Chugach has the lawful
right  under  permits  or  franchises  granted  by a  governmental  body  having
jurisdiction  in the premises or by law to maintain  and operate  such  Property
Additions for an unlimited,  indeterminate  or indefinite  period of time or for
the period,  if any,  specified in such permit,  franchise or law, and to remove
such property at the expiration of the period covered by such permit,  franchise
or law,  or the  terms of such  permit,  franchise  or law  require  any  public
authority having the right to take over such property to pay fair  consideration
therefor.

         (8)      Chugach has  corporate  power to own and operate  all
                  Property  Additions  to which the  Certificate  as to Bondable
                  Additions refers;

         (9) the  Indenture  of Trust  is a lien  upon  all  Property  Additions
described in the Certificate as to Bondable  Additions (except such as have been
Retired)  free and  clear of any Prior  Liens  except  to the  extent  otherwise
provided in Section 6.02D(2) of the Indenture of Trust;

         (10) the  documents  which have been or are  herewith  delivered to the
Trustee conform to the requirements of the Indenture of Trust for an Application
for the  authentication  and  delivery  of the Bond  and,  upon the basis of the
Application,  all  conditions  precedent  provided for in the Indenture of Trust
relating to authentication and delivery of the Bond have been complied with;

         (11)  Chugach  has title to the  Property  Additions  described  in the
Certificate as to Bondable  Additions  (except as have been  Retired),  free and
clear of any Prior  Liens  (except  to the  extent  otherwise  permitted  by the
proviso to Section  6.02D(2) of the  Indenture of Trust and except for Permitted
Encumbrances),  and Chugach has duly  obtained any  easements  or  rights-of-way
which are described in the Certificate as to Bondable Additions, subject only to
Permitted Encumbrances; and,

         (12)  to  the  extent  Chugach's  Application  for  authentication  and
delivery of the Bond is based on  satisfaction  of the  conditions  described in
Section 5.03 of the Indenture of Trust, the evidence of repurchase of Bonds that
has been delivered to the Trustee  conforms to the requirements of the Indenture
of  Trust  and,  upon the  basis of the  relevant  Application,  the  conditions
precedent to  authentication  and delivery of the Bond under Article Five of the
Indenture of Trust have been  satisfied.  Pursuant to the  definition  of "Title
Evidence"  contained  in Section  1.01 of the  Indenture  of Trust,  each of the
foregoing  opinions to the effect  that  Chugach has title to any portion of the
Trust  Estate  shall be deemed to be an opinion only that Chugach has such title
as in my opinion is  satisfactory  for the use  thereof in  connection  with its
operations and is qualified by and subject to any  irregularity or deficiency in
the record evidence of title which,  in my opinion,  can be cured by proceedings
within the power of Chugach or does not  substantially  impair the usefulness of
such property for the purposes of Chugach.

This opinion is limited to the federal laws of the United  States of America and
the laws of the State of Alaska,  and I disclaim  any  opinion as to the laws of
any other jurisdiction.

This opinion is rendered to you in connection  with the issuance of the Bond and
is solely for your  benefit.  This  opinion  may not be relied upon by any other
person,  firm,  corporation or other entity without my prior written consent.  I
disclaim any  obligation to advise you of any change of law that occurs,  or any
facts of which I become aware, after the date of this opinion.

Sincerely,

CHUGACH ELECTRIC ASSOCIATION, INC.

/s/ Donald W. Edwards
Donald W. Edwards
General Counsel

                       CHUGACH ELECTRIC ASSOCIATION, INC.

                                ANCHORAGE, ALASKA

                                   RESOLUTION

WHEREAS,  the Board of Directors has  previously  approved and Chugach  Electric
Association, Inc. ("Chugach") has entered into a Third Supplemental Indenture of
Trust dated as of June 29, 1994 between Chugach and Seattle-First  National Bank
("Third  Supplemental  Indenture")  amending and supplementing that Indenture of
Trust dated as of September 15, 1991 (as heretofore  amended,  the  "Indenture")
and  establishing a new series of bonds to be designated  First Mortgage  Bonds,
CoBank Series, to be issued to Cobank, ACB (successor by merger to National Bank
for Cooperatives  ("CoBank") pursuant to a Credit Agreement dated June 22, 1994,
as amended by Amendment No. 1 to National Bank for Cooperatives Credit Agreement
dated June 1, 1997, from time to time to secure advances made by CoBank, and the
Third  Supplemental  Indenture  has been  amended  by the  Seventh  Supplemental
Indenture of Trust dated as of June 1, 1997 (the Third Supplemental Indenture as
so amended, the "CoBank Supplemental Indenture");

         WHEREAS,  it is in the  best  interest  of  Chugach  for the  Board  of
Directors  to  authorize  the  issuance  of a bond to CoBank  under  the  CoBank
Supplemental   Indenture   for  the   purpose  of  securing   indebtedness   for
$30,000,000.00.

         NOW  THEREFORE  BE IT  RESOLVED,  that the  Board of  Directors  hereby
requests the authentication and delivery of a First Mortgage Bond, CoBank Series
(designated CoBank- 7), in the principal amount of $30,000,000.00, under Section
5.02 of the Indenture;

         BE IT FURTHER RESOLVED, that the President, Vice President,  Treasurer,
Secretary,  General  Manager and Executive  Managers of Chugach,  or any of them
(the  "Officers  and  Managers")  are and each of them  hereby  is,  authorized,
empowered and directed, for and on behalf of Chugach, to execute and deliver, 1)
the  First  Mortgage  Bond,  CoBank  Series,  No.  CoBank-7,  in the  amount  of
$30,000,000.00,   to  bear   interest  at  the  CoBank   Fixed  Rate  Option  in
substantially the form attached hereto, and 2) any Company Request, Application,
Company Order or other document or instrument  that such person deems  necessary
or desirable in connection with the issuance of such bond;

         BE IT  FURTHER  RESOLVED,  that  the  execution  by such  Officers  and
Managers of the said Bond, instrument or other document and the doing by them of
any act in connection with the foregoing  matters shall  conclusively  establish
their authority therefor from Chugach.

                                  CERTIFICATION

         I, Bruce  Davison,  do hereby  certify  that I am  Secretary of Chugach
Electric  Association,  Inc.,  an  electric  non-profit  cooperative  membership
corporation  organized and existing under the laws of the State of Alaska;  that
the  foregoing  is a complete  and  correct  copy of a  resolution  adopted at a
meeting of the Board of Directors of this corporation,  duly and properly called
and held on the 15th day of  December,  1999;  that a quorum was  present at the
meeting;  that the resolution is set forth in the minutes of the meeting and has
not been rescinded or modified.

         IN WITNESS WHEREOF, I have hereunto  subscribed my name and affixed the
seal of this corporation this 15th day of December, 1999.

                                                             /s/ Bruce Davison
                                                                  Secretary

         THIS FIRST MORTGAGE BOND,  CoBANK SERIES,  HAS NOT BEEN AND WILL NOT BE
         REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE
         SOLD, OFFERED FOR SALE OR OTHERWISE  TRANSFERRED  WITHOUT  REGISTRATION
         UNDER  SUCH  ACT OR IN  RELIANCE  UPON  AN  APPLICABLE  EXEMPTION  FROM
         REGISTRATION UNDER SUCH ACT.

                       Chugach Electric Association, Inc.

                First Mortgage Bond, CoBank Series, Due 3/15/2002

No. CoBank-7      $30,000,000.00

         Chugach  Electric  Association,  Inc., an Alaska  electric  cooperative
(herein  called the  "Company",  which term includes any  successor  corporation
under  the  Indenture  hereinafter  referred  to),  for value  received,  hereby
promises  to pay to  CoBank  (the  "Lender"),  or  registered  assigns,  (1) the
principal sum of $30,000,000.00  Dollars, (2) interest (computed on the basis of
a 360 day  year)  thereon,  from  the  date of  issuance,  at the  rate or rates
hereafter provided for, which interest shall be payable on each Regular Interest
Payment Date with respect to the principal balance Outstanding from time to time
during the calendar  month most  recently  ended prior to such Regular  Interest
Payment Date, and (3) a Redemption  Premium in the amounts (if any)  hereinafter
provided.  The interest so payable, and punctually paid or duly provided for, on
any Interest  Payment Date will, as provided in the  Indenture  described on the
reverse  hereof,  be paid to the  Person in whose name this Bond (or one or more
predecessor  Bonds) is registered at the close of business on the Regular Record
Date (as defined below) for such  interest.  Any such interest not so punctually
paid or duly  provided for will  forthwith  cease to be payable to the Holder on
such  Regular  Record Date and may be paid to the Person in whose name this Bond
(or one or more  Predecessor  Bonds) is registered at the close of business on a
Special  Record Date for the payment of such  defaulted  interest to be fixed by
the Trustee,  notice  whereof  shall be given to Holders of Bonds of this series
not less than 10 days prior to such Special Record Date.

         Payments of the principal of (and premium, if any) and interest on this
Bond  shall  be made  to the  Holder  hereof  by wire  transfer  of  immediately
available funds. Wire transfers will be made to ABA #307088754 for advice to and
credit of CoBank (or to such other account as the Holder hereof may designate by
notice) and shall be in time to be received prior to 1:00 p.m.,  Alaska time, on
the date each payment is due.

         This Bond will mature on the dates stated above. Interest only shall be
due until the first  Principal  Payment Date. The principal  amount of this Bond
shall be repaid in accordance with the following amortization schedule:

                Date 03/15/2002 Principal Amount Due $30,000,000

         Reference  is hereby  made to the further  provisions  of this Bond set
forth on the reverse  hereof,  which further  provisions  shall for all purposes
have the same effect as if set forth at this place.

         Unless the  certificate of  authentication  hereon has been executed by
the Trustee  referred to on the reverse  hereof by manual  signature,  this Bond
shall  not be  entitled  to any  benefit  under  the  Indenture  or be  valid or
obligatory for any purpose.

         IN  WITNESS  WHEREOF,  the  Company  has  caused  this  Bond to be duly
executed.

Dated:     December 16, 1999                  CHUGACH ELECTRIC ASSOCIATION, INC.

Attest: /s/ Chris Birch                              By: /s/ Eugene N. Bjornstad
         President                                            Authorized Officer

<PAGE>

This Bond is one of a duly authorized  issue of Bonds of the Company  designated
as its "First  Mortgage  Bonds"  (herein  called the "Bonds"),  issued and to be
issued in one or more series  under,  all  equally  and  ratably  secured by, an
Indenture of Trust,  dated as of September 15, 1991,  (herein  together with the
First  Supplemental  Indenture of Trust,  dated as of March 17, 1993, the Second
Supplemental Indenture of Trust dated as of May 19, 1994, the Third Supplemental
Indenture of Trust dated as of June 29, 1994, the Fourth Supplemental  Indenture
of Trust dated as of March 1, 1995,  the Fifth  Supplemental  Indenture of Trust
dated as of September 6, 1995, the Sixth  Supplemental  Indenture of Trust dated
as of April 3, 1996,  the Seventh  Supplemental  Indenture  of Trust dated as of
June 1,  1997,  and the  Eighth  Supplemental  Indenture  of  Trust  dated as of
February 4, 1998,  called the  "Indenture"),  between  the Company and  U.S.Bank
Trust,  National  Association  (successor-in-interest  to First  Trust  National
Association,  successor-in-interest to Security Pacific Bank Washington,  N.A.),
as trustee  (herein  called the  "Trustee",  which term  includes any  successor
trustee under the Indenture),  to which Indenture reference is hereby made for a
statement of the description of the properties  thereby  mortgaged,  pledged and
assigned,  the nature  and extent of the  security  and the  respective  rights,
limitations  of rights,  duties and  immunities  thereunder of the Company,  the
Trustee  and the Holders of the Bonds and of the terms upon which the Bonds are,
and are to be,  authenticated and delivered.  This Bond is one of the series and
maturity designated on the face hereof.

         This Bond is subject to  redemption  at any time,  upon at least twenty
(20) Business Days (as hereinafter  defined)  notice to the Holder hereof,  as a
whole or in part in  multiples of $1,000,  at the election of the Company,  at a
Redemption  Price equal to 100% of the principal  amount being redeemed plus the
Redemption  Premium (as defined  below),  if any,  with respect to the principal
amount hereof being redeemed,  together with accrued  interest to the Redemption
Date on the principal  amount being redeemed,  but interest  installments  whose
Stated  Maturity is on or prior to such  Redemption  Date will be payable to the
Holder of this Bond, or one or more Predecessor Bonds, of record at the close of
business on the relevant Record Dates.

         The Company has  selected  the Fixed Rate Option set forth in (B) below
for an initial period of 30 days at an interest rate of ________ % per annum:

                  (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 at all times to the National  Variable Rate (as hereinafter  defined) plus
25 basis points.  For purposes hereof, the National Variable Rate shall mean the
rate of  interest  established  by  CoBank  from  time  to time as its  National
Variable  Rate.  The  National  Variable  Rate is  intended  by  CoBank  to be a
reference  rate, and CoBank may charge other borrowers rates at, above, or below
that rate.  Any change in the  National  Variable  Rate shall take effect on the
date  established  by CoBank as the  effective  date of such change,  and CoBank
agrees to notify the Company promptly after any change in the rate.

                  (B) Fixed Rate Option. From time to time at the request of the
Company, the rate of interest charged on this CoBank Bond may be fixed at a rate
to be quoted by CoBank in its sole and absolute  discretion.  Under this option,
individual amounts may be fixed for periods ranging from thirty (30) days to the
life of the CoBank Bond, and the minimum  aggregate  principal  amount of CoBank
Bonds on which the interest rate may be fixed at any one time shall be $100,000.
However, rates may only be fixed for periods which expire on a Business Day, and
shall  take  into  account  repayments  of  principal  in  accordance  with  the
amortization  schedule.  Upon the expiration of any fixed rate period,  interest
shall automatically accrue at the rate set forth in (A) above, unless the amount
fixed is repaid or the Company fixes the rate for an additional period.

         Until the principal  hereof is completely  repaid  whether by reason of
maturity  or  redemption,  interest on this Bond not  theretofore  paid shall be
payable, in arrears, on each Interest Payment Date with respect to the principal
balance  outstanding  from time to time during the Interest Period to which such
Interest Payment date relates. Interest shall be calculated on the actual number
of days this Bond is outstanding on the basis of a year  consisting of 360 days.
In  calculating  interest,  the first day of each  period for which  interest is
calculated  shall be  included  and the day on which  interest  is paid shall be
excluded.

         If prior to maturity of this Bond the Company fails to make any payment
required to be made hereunder or under the terms of the Credit  Agreement,  then
at the Holder's  option in each instance,  such payment shall bear interest from
the date due to the date  such  amount is paid in full at the  Default  Rate (as
hereafter  defined).  After  maturity,  whether  by  reason of  acceleration  or
otherwise,  the entire  indebtedness  under this Bond shall  automatically  bear
interest at the Default Rate. All interest  provided for in this provision shall
be payable on demand.

         If an Event of Default  with  respect to the Bonds  shall  occur and be
continuing,  the  principal  of the Bonds may be declared due and payable in the
manner and with the effect provided in the Indenture.

         The Indenture permits, with certain exceptions as therein provided, the
amendment  thereof and the  modification  of the rights and  obligations  of the
Company and the rights of the Holders of Bonds under the  Indenture  at any time
by the  Company  with the  consent of the  Holders of a  majority  in  aggregate
principal amount of Bonds of all series at the time outstanding affected by such
modification. The Indenture also contains provisions permitting the Holders of a
majority in principal amount of Bonds at the time Outstanding,  on behalf of the
Holders of all Bonds to waive compliance by the Company with certain  provisions
of the  Indenture  and  certain  past  defaults  under the  Indenture  and their
consequences.  Any such  consent  or waiver by the  Holder of this Bond shall be
conclusive and binding upon such Holder and upon all future Holders of this Bond
and of any bond issued upon the  registration  of transfer hereof or in exchange
hereof or in lieu  hereof,  whether or not notation of such consent or waiver is
made upon this Bond.

         No reference  herein to the Indenture and no provisions of this Bond or
of the Indenture  shall alter or impair the obligation of the Company,  which is
absolute and  unconditional,  to pay the principal of (and premium,  if any) and
interest  on this  Bond at the  times,  places  and  rates,  and in the  coin or
currency, herein provided.

         Pursuant to Section 34.20.160 of the Alaska Statutes,  notice is hereby
given that the Company is  personally  obligated and fully liable for the amount
due  under  this  Bond and the  Holder of this Bond has the right to sue on this
Bond and obtain a personal  judgment against the Company for satisfaction of the
amount due hereunder  either before or after a judicial  foreclosure of the lien
of the Indenture under Sections 09.45.170 through 09.45.220 of Alaska Statutes.

         As provided in the Indenture and subject to certain limitations therein
set forth,  the transfer of this Bond is registrable in the Bond Register.  Upon
surrender of this Bond for  registration  of transfer at the office or agency of
the company in Anchorage,  Alaska, duly endorsed by, or accompanied by a written
instrument  of  transfer  in form  satisfactory  to the  Company  and  the  Bond
Registrar  duly  executed by the Holder  hereof or the  Holder's  attorney  duly
authorized  in  writing,  one or more new Bonds of this  series,  of  authorized
denominations and for the same aggregate principal amount, will be issued to the
designated transferee or transferees.

         The Bonds of this series are issuable only in  registered  form without
coupons in denomination of $1,000 and any integral multiple thereof. As provided
in the Indenture and subject to certain  limitations therein set forth, Bonds of
this series are exchangeable  for a like aggregate  principal amount of Bonds of
this series of a different authorized denomination, but of the same maturity and
interest rate or interest rate formula,  as requested by the Holder surrendering
the same.

         No service charge shall be made for any such  registration  of transfer
or exchange,  but the Company may require  payment of a sum  sufficient to cover
any tax or other governmental charge payable in connection therewith.

         Prior to due presentment of this Bond for registration of transfer, the
Company,  the  Trustee and any agent of the Company or the Trustee may treat the
Person in whose  name  this  Bond is  registered  as the  owner  hereof  for all
purposes,  whether or not this Bond is overdue,  and neither  the  Company,  the
Trustee nor any such agent shall be affected by notice to the contrary.

         As used herein, the term:

         "Business  Day" means any day on which  CoBank and the Trustee are open
for business.

         "CoBank"  means  CoBank,   ACB  (as  successor  to  National  Bank  for
Cooperatives by virtue of merger).

         "CoBank Bond" means a First Mortgage Bond, CoBank Series.

         "Credit  Agreement" means that Credit Agreement secured hereby dated as
of  June  22,  1994,  as  amended  by  Amendment  No.  1 to  National  Bank  for
Cooperatives Credit Agreement dated June 1, 1997 between CoBank and the Company,
as the same may be amended from time to time, or such other Credit  Agreement as
may hereafter  exist between CoBank and the Company  relating to the issuance of
CoBank Bonds.

         "Default  Rate"  means 4% per annum in excess of the rate or rates that
would otherwise be in effect.

         "Interest Payment Date" with respect to any CoBank Bond means a Regular
Interest Payment Date with respect to such Bond.

         "Interest Period" means a calendar month.

         "Maturity Date" with respect to this CoBank Bond means the due date set
forth on the face hereof.

         "National Variable Rate" shall mean the rate of interest established by
CoBank from time to time as its National  Variable Rate.  The National  Variable
Rate is intended by CoBank to be a reference  rate,  and CoBank may charge other
borrowers rates at, above, or below that rate.

         "Principal  Payment  Date" with  respect to this CoBank Bond means each
date on which a payment of  principal is required to be made on this CoBank Bond
pursuant to the amortization schedule set forth on the face hereof.

         "Redemption Premium" with respect to this CoBank Bond means the premium
due upon the  redemption  or  repricing  of any portion of this CoBank Bond then
subject to a fixed rate of interest  calculated by CoBank in accordance with its
methodology  and equal to the present value of the difference  between:  (A) the
amount of interest which would have accrued on such portion during the remainder
of the applicable fixed rate period; less (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  remaining  fixed rate  period.  For the purpose of  calculating  present
value,  the  discount  rate will be the rate of  interest  accruing  on the U.S.
Treasury obligations selected in (B) above.

         "Regular  Interest Payment Date" with respect to this CoBank Bond means
the 20th day of each calendar month.

         "Regular  Record  Date" for the payment of interest on this CoBank Bond
payable,  and punctually paid or duly provided for, on any Interest Payment Date
means the last day (whether or not a Business  Day) of the  calendar  month next
preceding such Interest Payment Date.

         All other  capitalized  terms used in this Bond shall have the meanings
assigned to them in the Indenture.

                     TRUSTEE'S CERTIFICATE OF AUTHENTICATION

                                FOR CoBANK BONDS

         This is one of the Bonds of the series  designated  therein referred to
in the within-mentioned Indenture.

                                           U.S.BANK TRUST, National Association,
                                                                      as Trustee

                                                             By: /s/ Dawnita Ehl

                                                            Authorized Signatory

                  CERTIFICATE AS TO BONDABLE ADDITIONS NO. 7

     (Re Application for Authentication and Delivery of Bond CoBank-7)

         Pursuant  to  Section  5.02  of the  Indenture  of  Trust  dated  as of
September 15, 1991 from Chugach  Electric  Association,  Inc. (the "Company") to
Security Pacific Bank Washington, N.A., as trustee, as modified and supplemented
by Supplemental Indentures No. 1, 2, 3, 4, 5, 6, 7 and 8 thereto dated March 17,
1993, May 19, 1994, June 29, 1994,  March 1, 1995,  September 6, 1995,  April 3,
1996, June 1, 1997 and February 4, 1998 respectively (the  "Indenture"),  and in
connection  with the  Company's  request for  authentication  and delivery of an
additional Bond No.  CoBank-7,  the undersigned  hereby make this Certificate of
Bondable  Additions.  Capitalized  terms not otherwise  defined  herein have the
meanings assigned to them in the Indenture.

(a)      The balance of Bondable  Additions  stated in item 9 of the most recent
         (January  31, 1999)  Summary of  Certificate  as to Bondable  Additions
         heretofore filed with the Trustee as the balance of Bondable  Additions
         to remain after the action then applied for, is $62,626,562  (item 1 in
         the Summary of  Certificate  as to Bondable  Additions  set forth below
         (the "Summary")).

(b)      The Amount (item 2 in the Summary) of Property Additions, not described
         in any previous  Certificate as to Bondable Additions,  acquired during
         the  period  from  February  1, 1999  through  November  30,  1999,  is
         $16,676,164. Such Property Additions are described in reasonable detail
         on Attachment 1 hereto, and:

         i)       have not been included in any previous Certificate as to
                  Bondable Additions;

         ii)      do not include Acquired Facilities or assets acquired and paid
                  for in whole or in part through the transfer or delivery of
                  securities or other property; and

         iii)     are listed in Attachment 1 at Cost, which in the opinion of
                  the undersigned is equal to their Fair Value to the Company.

(c)      The aggregate amount (item 3 in the Summary) of all Retirements during
         the period from January 31, 1999, through November30, 1999,
         is $9,499,044.

(d)      There are no credits (item 4 of the Summary) against Retirements.

(e)      The excess (item 6 in the Summary) of the Amount of Property  Additions
         shown in (b)  above  (item 2 of the  Summary)  over the net  amount  of
         Retirements (item 5 of the Summary) is $7,177,120,  which is the amount
         of the net Bondable Additions now being certified.

(f)      The sum (item 7 of the Summary) of the amount shown  pursuant to clause
         (a) above (item 1) and the net amount of Bondable  Additions  now being
         certified shown in clause (e) (item 6) above is $69,803,682.

(g)      The total amount (item 8 in the  Summary) of Bondable  Additions  being
         used in connection with  authentication  and delivery of the additional
         Bond whose  authentication and delivery are now being applied for under
         Section 5.02 of the  Indenture  is  calculated  as the bonds  currently
         being applied for times 110% or $30,000,000 x 110% = $33,000,000.

(h)      The balance (item 9 in the Summary) of the Bondable Additions that will
         remain  after  the  granting  of the  Application  now  being  made  is
         $36,803,682.

(i)      With respect to the Property Additions described in this Certificate:

         i)       such Property Additions are desirable in the conduct of the
                  business of the Company;

         ii)      the allocation of the Cost to the Company of such Property
                  Additions to each account is, in the opinion of the
                  undersigned, proper; and

         iii)     the  balance of the  Bondable  Additions  to remain  after the
                  action  applied  for plus the Cost to the  Company or the Fair
                  Value  to the  Company,  whichever  is  less,  of  uncertified
                  Property  Additions is at least equal to the aggregate  amount
                  of uncertified Retirements.

(j)      The  allowances or charges (if any) for interest,  taxes,  engineering,
         legal expenses, superintendence,  insurance, casualties and other items
         during  construction (or in connection with the acquisition of Property
         Additions) which are included in the Cost to the Company of such of the
         Property Additions described in this Certificate as were constructed or
         acquired  by or for the  Company  have been  charged  and are  properly
         chargeable  to fixed  plant  accounts  in  accordance  with  Accounting
         Requirements and are, in the opinion of the signers,  proper in respect
         of the Property Additions specified;

(k)      No  portion  of the  Cost  to the  Company  of the  Property  Additions
         described  in this  Certificate  should  properly  have been charged to
         maintenance  or  repairs  and no  expenditures  are  included  in  this
         Certificate  which  under  Accounting  Requirements  are  not  properly
         chargeable to fixed plant accounts.

(l)      The terms used in this Certificate which are defined in the Indenture
         are used as defined in the Indenture.

<PAGE>

              Summary of Certificate as to Bondable Additions No. 7

The undersigned certify the following to be a true summary of this Certificate:
Start with:
<TABLE>
<S>                                                                                                          <C>

1.       The balance of Bondable Additions remaining after the action applied for in
         the previous Certificate (Certificate No. 6)...........................                             $62,626,562
                                                                                                              ----------

Then take the new gross Property Additions as shown in item 2 below:

2.       Amount of additional Property Additions now certified, being the Amount of all
         or some Property Additions in the period from February 1, 1999 through
         November 30, 1999 (none of which has been certified in any previous
         Certificate as to Bondable Additions).                                                              $16,676,164
                                                                                                              ----------

Then  determine the  deductions  for  Retirements by deducting item 4 below from
item 3 below to produce item 5:

3.       The aggregate amount of all Retirements                                                             $ 9,499,044
                                                                                                              ----------

4..      The sum of the credits against
               Retirements......................................................                             $         0
                                                                                                              ----------

5..      The net amount of Retirements to be deducted...........................                             $ 9,499,044
                                                                                                              ----------

Then determine the net Bondable  Additions now being certified by deducting item
5 from item 2 to produce item 6:

6..      Net Bondable Additions now being

               certified........................................................                             $ 7,177,120
                                                                                                              ----------

Then add item 1 and item 6 to produce item 7:

7..      Total Bondable additions available for the action applied for..........
                                                                                                             $69,803,682

Deduct item 8 from item 7 to produce item 9:

                                                                                                             $33,000,000

8..      Bondable Additions now being used......................................
9.       Balance of Bondable Additions to remain after the action applied for. .                             $36,803,682

                                                                                                              ----------
</TABLE>

Dated December 16, 1999

                                                       /s/ Michael R. Cunningham
                                                           Michael R. Cunningham
                                            Title:  Principal Accounting Officer
                                                              (Accountant)

                                                       /s/ Evan J. Griffith, Jr.
                                                           Evan J. Griffith, Jr.
                                             Title:  Principal Financial Officer

                                                         /s/ Eugene N. Bjornstad
                                                             Eugene N. Bjornstad
                                                         Title:  General Manager
                                                                (Engineer)

<PAGE>

                    CHUGACH ELECTRIC ASSOCIATION, INC.
        ATTACHMENT 1 TO CERTIFICATE AS TO BONDABLE ADDITIONS NO. 7
                      NET CHANGES TO ELECTRIC PLANT
        FOR THE PERIOD FEBRUARY 1, 1999 THROUGH NOVEMBER 30, 1999

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

                                                                                        02/01/1999    02/01/1999   ADJ FOR GEN PLANT
                                                            01/31/1999   11/30/1999     11/30/1999   CONVERSION TO     11/30/1999
ACCOUNT                            DESCRIPTION                BALANCE     ADDITIO      RETIREMENTS  AMORTIZATION (1)      BALANCE

PRODUCTION PLANT

31100   626  00 2101 STM - STRC & IMPR/BELUGA./OTHR/G&A.       7,349,213           0            0              0           7,349,213
31200   626  00 2101 STM - BLR PLT EQP/BELUGA./OTHR/G&A.      24,850,704           0            0              0          24,850,704
31400   626  00 2101 STM - TURBOGENR../BELUGA./OTHR/G&A.      20,716,146           0            0              0          20,716,146
31500   626  00 2101 STM - ACC ELEC EQ/BELUGA./OTHR/G&A.       6,932,778           0            0              0           6,932,778
31600   626  00 2101 STM -MISC PWR PLT/BELUGA./OTHR/G&A.         544,029           0            0              0             544,029
33100   621  00 2101 HYD - STRC & IMPR/GENERAL/OTHR/G&A.         690,040           0            0              0             690,040
33200   621  00 2101 HYD - RESV-DM-WW./GENERAL/OTHR/G&A.       5,698,534           0            0              0           5,698,534
33300   621  00 2101 HYD - WTWL-TR-GN./GENERAL/OTHR/G&A.       1,047,402           0            0              0           1,047,402
33400   621  00 2101 HYD - ACC ELEC EQ/GENERAL/OTHR/G&A.         371,914           0            0              0             371,914
33500   621  00 2101 HYD - MISC PW PLT/GENERAL/OTHR/G&A.          97,706           0            0              0              97,706
33600   621  00 2101 HYD - RESV-DM-WW./GENERAL/OTHR/G&A.         893,099           0            0              0             893,099
34000   626  00 2101 OTH - LAND&RIGHTS/BELUGA./OTHR/G&A.         422,664           0            0              0             422,664
34100   622  00 2101 OTH - STRC & IMPR/INTNATL/OTHR/G&A.         346,045           0            0              0             346,045
34100   624  00 2101 OTH - STRC & IMPR/BERNLKE/OTHR/G&A.       1,778,752           0            0              0           1,778,752
34100   626  00 2101 OTH - STRC & IMPR/BELUGA./OTHR/G&A.      20,862,174           0            0              0          20,862,174
34200   622  00 2101 OTH - FL HLDR-PRS/INTNATL/OTHR/G&A.         152,868           0            0              0             152,868
34200   624  00 2101 OTH - FL HLDR-PRS/BERNLKE/OTHR/G&A.         471,850           0            0              0             471,850
34200   626  00 2101 OTH - FL HLDR-PRS/BELUGA./OTHR/G&A.       3,040,258           0            0              0           3,040,258
34300   622  00 2101 OTH - PRIME MOVER/INTNATL/OTHR/G&A.       3,647,259           0            0              0           3,647,259
34300   624  00 2101 OTH - PRIME MOVER/BERNLKE/OTHR/G&A.       8,862,659           0            0              0           8,862,659
34300   626  00 2101 OTH - PRIME MOVER/BELUGA./OTHR/G&A.      50,413,829   3,030,963    7,258,677              0          46,186,115
34400   622  00 2101 OTH - GENERATORS./INTNATL/OTHR/G&A.         779,742           0            0              0             779,742
34400   624  00 2101 OTH - GENERATORS./BERNLKE/OTHR/G&A.       2,643,899           0            0              0           2,643,899
34400   626  00 2101 OTH - GENERATORS./BELUGA./OTHR/G&A.       8,941,743           0            0              0           8,941,743
34500   622  00 2101 OTH - ACC ELEC EQ/INTNATL/OTHR/G&A.         459,888           0            0              0             459,888
34500   624  00 2101 OTH - ACC ELEC EQ/BERNLKE/OTHR/G&A.         784,574           0            0              0             784,574
34500   626  00 2101 OTH - ACC ELEC EQ/BELUGA./OTHR/G&A.       3,661,137           0            0              0           3,661,137
34600   622  00 2101 OTH -MISC PWR PLT/INTNATL/OTHR/G&A.          19,465           0            0              0              19,465
34600   624  00 2101 OTH -MISC PWR PLT/BERNLKE/OTHR/G&A.           1,539           0            0              0               1,539
34600   626  00 2101 OTH -MISC PWR PLT/BELUGA./OTHR/G&A.       1,862,815           0            0              0           1,862,815
TOTAL PRODUCTION PLANT                                       178,344,725   3,030,963    7,258,677              0         174,117,011

TRANSMISSION PLANT

35000   000  00 2101 TRN - LD & LDRITS/GENERAL/OTHR/G&A.         454,983           0            0              0             454,983
35200   000  00 2101 TRN - STRC & IMPR/GENERAL/OTHR/G&A.         847,631           0            0              0             847,631
35200   626  00 2101 TRN - STRC & IMPR/BELUGA./OTHR/G&A.         428,664           0            0              0             428,664
35300   000  00 2101 TRN - STATION EQP/GENERAL/OTHR/G&A.      31,514,118           0            0              0          31,514,118
35300   304  00 2101 TRN - STATION EQP/LDSRVMT/OTHR/G&A.         196,977           0            0              0             196,977
35300   626  00 2101 TRN - STATION EQP/BELUGA./OTHR/G&A.      38,649,029           0            0              0          38,649,029
35400   000  00 2101 TRN - TWR & FXTRS/GENERAL/OTHR/G&A.       5,378,824           0            0              0           5,378,824
35400   626  00 2101 TRN - TWR & FXTRS/BELUGA./OTHR/G&A.      26,890,112     615,608      313,007              0          27,192,712
35500   000  00 2101 TRN - POLES & FIX/GENERAL/OTHR/G&A.       8,962,166   6,126,238      685,605              0          14,402,800
35500   626  00 2101 TRN - POLES & FIX/BELUGA./OTHR/G&A.       1,074,661           0            0              0           1,074,661
35600   000  00 2101 TRN -OH CND & DVS/GENERAL/OTHR/G&A.       6,481,748   2,717,489      460,806              0           8,738,431
35600   626  00 2101 TRN -OH CND & DVS/BELUGA./OTHR/G&A.       7,836,678      54,512       10,792              0           7,880,398
35700   000  00 2101 TRN - UG CONDUIT./GENERAL/OTHR/G&A.       2,152,235           0            0              0           2,152,235
35800   000  00 2101 TRN - UG CND & DV/GENERAL/OTHR/G&A.       6,093,269           0            0              0           6,093,269
35800   328  00 2101 TRN - UG CND & DV/NSUBCBL/OTHR/G&A.      40,700,570           0            0              0          40,700,570
35800   329  00 2101 TRN - UG CND & DV/SSUBCBL/OTHR/G&A.      14,295,122           0            0              0          14,295,122
35900   626  00 2101 TRN-RDS & TRL-BLG/BELUGA./OTHR/G&A.           4,000           0            0              0               4,000
TOTAL TRANSMISSION PLANT                                     191,960,787   9,513,847    1,470,210              0         200,004,424

DISTRIBUTION PLANT

36000   000  00 2101 DIS - LD & LDRITS/GENERAL/OTHR/G&A.         818,541           0            0              0             818,541
36100   000  00 2101 DIS - STRUC & IMP/GENERAL/OTHR/G&A.       1,817,354           0            0              0           1,817,354
36200   000  00 2101 DIS - STATION EQP/GENERAL/OTHR/G&A.      18,820,231           0            0              0          18,820,231
36400   000  00 2101 DIS - POLES-TW&FX/GENERAL/OTHR/G&A.      16,488,566     104,299       13,422              0          16,579,443
36500   000  00 2101 DIS - OH CND & DV/GENERAL/OTHR/G&A.       9,917,205      35,048        6,029              0           9,946,224
36600   000  00 2101 DIS - UG CONDUIT./GENERAL/OTHR/G&A.      11,546,683     918,396            0              0          12,465,079
36700   000  00 2101 DIS - UG CND & DV/GENERAL/OTHR/G&A.      37,485,391     930,530       54,454              0          38,361,467
36800   000  00 2101 DIS - LINE TRNSFR/GENERAL/OTHR/G&A.      21,308,855     935,075      125,414              0          22,118,516
36900   000  00 2101 DIS - SERVICES.../GENERAL/OTHR/G&A.      23,218,635     119,598       14,766              0          23,323,467
37000   000  00 2101 DIS - METERS...../GENERAL/OTHR/G&A.       7,154,194     285,497      540,296              0           6,899,395
37100   000  00 2101 DIS-INSTL CUS PRM/GENERAL/OTHR/G&A.         331,356           0            0              0             331,356
37300   000  00 2101 DIS-ST LTS & SIGN/GENERAL/OTHR/G&A.       8,135,034       1,689          369              0           8,136,354
TOTAL DISTRIBUTION PLANT                                     157,042,045   3,330,131      754,749              0         159,617,427

GENERAL PLANT

38900   000  00 2101 GEN - LD & LDRITS/GENERAL/OTHR/G&A.         127,063           0            0              0             127,063
38910   000  00 2101 GEN - LD IMPROVMT/GENERAL/OTHR/G&A.          65,097           0            0              0              65,097
39000   000  00 2101 GEN - STRC & IMPR/GENERAL/OTHR/G&A.      19,170,160       56768            0              0          19,226,928
39000   310  00 2101 GEN - STRC & IMPR/LSHLDIM/OTHR/G&A.         214,009           0        15408              0             198,601
39000   311  00 2101 GEN - STRC & IMPR/S&VSTRU/OTHR/G&A.          89,605           0            0              0              89,605
39100   000  00 2101 GEN-OFC FURN & EQ/GENERAL/OTHR/G&A.       1,158,190     134,039            0              0           1,292,229
39100   321  00 2101 GEN-OFC FURN & EQ/DPEQUIP/OTHR/G&A.       2,846,446     300,678            0        214,543           3,361,667
39200   000  00 2101 GEN - TRANSP EQMT/GENERAL/OTHR/G&A.       5,112,990     504,871      258,062              0           5,359,799
39200   323  00 2101 GEN - TRANSP EQMT/GENTRAN/OTHR/G&A.         140,193                   23,595              0             116,598
39200   326  00 2101 GEN - TRANSP EQMT/DISTRIB/OTHR/G&A.          44,855           0            0              0              44,855
39300   000  00 2101 GEN - STORES EQMT/GENERAL/OTHR/G&A.       1,145,485      18,752            0          5,203           1,169,440
39400   000  00 2101 GEN -TL-SHP & GAR/GENERAL/OTHR/G&A.       1,335,586      43,818            0         25,950           1,405,355
39500   000  00 2101 GEN - LAB EQUIPMT/GENERAL/OTHR/G&A.       2,123,082     172,571            0          1,603           2,297,256
39600   000  00 2101 GEN - PWR OP EQMT/GENERAL/OTHR/G&A.       1,266,295      13,866            0              0           1,280,161
39600   323  00 2101 GEN - PWR OP EQMT/GENTRAN/OTHR/G&A.         803,827           0            0              0             803,827
39800   000  00 2101 GEN - MISC EQUIPT/GENERAL/OTHR/G&A.         901,516      20,152            0         19,721             941,389
TOTAL GENERAL PLANT                                           36,544,399   1,265,515      297,065        267,020          37,779,870

COMMUNICATION PLANT

39700   000  00 2101 GEN - COMM EQUIPT/GENERAL/OTHR/G&A.       2,188,143      50,513                      30,004           2,268,660
39700   330  00 2101 GEN - COMM EQUIPT/MICROWV/OTHR/G&A.       1,393,119           0                     477,921           1,871,040
39700   331  00 2101 GEN - COMM EQUIPT/SCADA../OTHR/G&A.       2,438,365           0                      26,836           2,465,201
39700   333  00 2101 GEN - COMM EQUIPT/TELESYS/OTHR/G&A.       1,434,311      24,084                       5,626           1,464,021
39700   338  00 2101 GEN - COMM EQUIPT/ORSCADA/OTHR/G&A.          32,175           0                      70,320             102,495
TOTAL COMMUNICATION PLANT                                      7,486,113      74,597            0        610,708           8,171,417

TOTAL PLANT                                                  571,378,069  17,215,053    9,780,701        877,728         579,690,149

LESS EXCLUDABLE PLANT

39200   000  00 2101 GEN - TRANSP EQMT/GENERAL/OTHR/G&A.       5,112,990     504,871      258,062              0           5,359,799
39200   323  00 2101 GEN - TRANSP EQMT/GENTRAN/OTHR/G&A.         140,193                   23,595              0             116,598
39200   326  00 2101 GEN - TRANSP EQMT/DISTRIB/OTHR/G&A.          44,855           0            0              0              44,855
39600   000  00 2101 GEN - PWR OP EQMT/GENERAL/OTHR/G&A.       1,266,295      13,866            0              0           1,280,161
39600   323  00 2101 GEN - PWR OP EQMT/GENTRAN/OTHR/G&A.         803,827           0            0              0             803,827
39800   000  00 2101 GEN - MISC EQUIPT/GENERAL/OTHR/G&A.         901,516      20,152            0         19,721             941,389
TOTAL EXCLUDABLE PLANT                                         8,269,676     538,889      281,657         19,721           8,546,629

TOTAL INCLUDABLE PLANT                                       563,108,393  16,676,164    9,499,044        858,007         571,143,520

</TABLE>

<PAGE>

                       Chugach Electric Association, Inc.

                          Available Margins Certificate

         Eugene N.  Bjornstad,  General  Manager;  Evan J.  Griffith,  Jr.,
Executive  Manager,  Finance and Energy Supply  (Principal Financial Officer);
and Michael R. Cunningham,  Controller (Principal  Accounting Officer) of
Chugach Electric Association,  Inc. each hereby  certifies  that (1) the Margins
for Interest for any 12  consecutive  calendar  months during the period of 18
calendar  months immediately  preceding the first day of the calendar  month in
which this  application  for  authentication  and delivery of Additional Bonds
under  Section  5.02 of the  Indenture  described  below is made are not less
than 1.20 times the  Interest  Charges  during such 12-month  period;  (2) the
sum of (i) Margins for  Interest for any 12  consecutive  calendar  months
during the period of 18 calendar months  immediately  preceding  the first day
of the  calendar  month in which this  Application  for  authentication  and
delivery of additional Bonds under Section 5.02 is made and (ii) Incremental
Interest with respect to such 12-month period,  is not less than 1.20 times the
sum of Interest Charges during such 12-month period plus Incremental  Interest
with respect to such 12-month period;  and (3) the Margins for Interest have
been  calculated in accordance  with the definition  contained in Section 1.01
of that Indenture of Trust dated September 15, 1991 (as heretofore amended by
the First,  Second,  Third,  Fourth,  Fifth, Sixth,  Seventh and Eighth
Supplemental Indentures,  thereto dated March 17, 1993, May 19, 1994, June 29,
1994,  March 1, 1995,  September 6, 1995, April 3, 1996, June 1, 1997 and
February 4, 1998 respectively (the "Indenture") and such calculations are set
forth in the Attachment 1 hereto.

         Capitalized  terms used herein shall have the meanings assigned to them
in the Indenture.

         IN WITNESS WHEREOF, we have hereunto signed our names.

         Dated:  December 16, 1999

/s/ Eugene N. Bjornstad                                /s/ Michael R. Cunningham
Eugene N. Bjornstad                                        Michael R. Cunningham
Title:  General Manager                                       Title:  Controller
                                                    Principal Accounting Officer

/s/ Evan J. Griffith, Jr.
Evan J. Griffith, Jr.
Title:  Executive Manager,
           Finance and Energy Supply
           Principal Financial Officer

                                                                     Page 1 of 1

<PAGE>

                       Available Margins
                           CoBank 7

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

                                                                                    Plus:          Adjusted

                             Long Term          Short Term       Total              CoBank Bond    Interest     Adjusted    12 month
Month Ending      Margins    Interest Expense   Interest Expense Interest Expense   at 6.45% per   Expense       MFI/ I      MFI/ I
------------      -------    ----------------   ---------------- ----------------   -------------  -------       ------      ------
                                                                                                   annum

April, 1998          562,552      2,096,600         33,550         2,130,150            161,250    2,291,400     1.2455
May, 1998           -363,277      2,105,539         10,267         2,115,806            161,250    2,277,056     0.8405
June, 1998           639,439      2,099,371              0         2,099,371            161,250    2,260,621     1.2829
July, 1998        -1,557,225      2,105,539              0         2,105,539            161,250    2,266,789     0.3130
August, 1998         742,991      2,105,539              0         2,105,539            161,250    2,266,789     1.3278
September, 1998      593,694      2,093,309         14,778         2,108,087            161,250    2,269,337     1.2616
October, 1998        279,300      2,071,029         25,028         2,096,057            161,250    2,257,307     1.1237
November, 1998     1,823,297      2,053,196         12,875         2,066,071            161,250    2,227,321     1.8186       1.1502
December, 1998       248,165      2,050,280          7,201         2,057,481            161,250    2,218,731     1.1118       1.1460
January, 1999      2,921,817      2,052,849              0         2,052,849            161,250    2,214,099     2.3196       1.2612
February, 1999     1,845,656      2,033,617          7,719         2,041,336            161,250    2,202,586     1.8379       1.3126
March, 1999        2,058,818      1,839,477        202,351         2,041,828            161,250    2,203,078     1.9345       1.3634
April, 1999         -694,560      1,977,385         36,370         2,013,755            161,250    2,175,005     0.6807       1.3124
May, 1999            551,246      2,005,026         62,137         2,067,163            161,250    2,228,413     1.2474       1.3078
June, 1999          -361,281      1,995,096         48,918         2,044,014            161,250    2,205,264     0.8362       1.2768
July, 1999          -630,832      2,018,189         51,750         2,069,939            161,250    2,231,189     0.7173       1.2419
August, 1999         244,158      2,047,929         70,444         2,118,373            161,250    2,279,623     1.1071       1.2339
September, 1999      591,091      2,015,777        109,764         2,125,541            161,250    2,286,791     1.2585       1.2353
October, 1999        -76,403      2,033,202        138,257         2,171,459            161,250    2,332,709     0.9672       1.2206

</TABLE>

<PAGE>

                       Chugach Electric Association, Inc.

                            Officers' Certificate

         Eugene  N.  Bjornstad,  General  Manager,  and Evan J.  Griffith,  Jr.,
Executive  Manager,  Finance and Energy Supply of Chugach Electric  Association,
Inc.  ("Chugach")  each hereby certifies that: 1) he has read the conditions and
covenants and definitions  related thereto in the Indenture of Trust dated as of
September 15, 1991 (as heretofore amended, the "Trust Indenture");  2) the below
opinions  are based on the above  review and on his  knowledge of Chugach in the
above  capacity;   3)  he  has,  in  his  opinion,   made  such  examination  or
investigation as is necessary to enable him to express an informed opinion as to
the opinions expressed below; and 4) in accordance with Sections 5.01 B and 5.03
C of the Trust Indenture:

         (i)      No Event of Default exists;

         (ii)     None of the Trust Estate is subject to any Prior Lien other
                  than Prior Liens  permitted by Section 14.06 of the Trust
                  Indenture;

         (iii) In his  opinion,  all  conditions  precedent  provided for in the
         Trust  Indenture  relating to the  authentication  and  delivery of the
         First Mortgage Bond,  CoBank Series No. CoBank-7  ("CoBank-7  Bond") in
         the principal amount of $30,000,000.00, have been complied with;

Capitalized  terms not otherwise  defined in this  Certificate have the meanings
 assigned to them in the Trust Indenture.

         IN WITNESS WHEREOF, we have hereunto signed our names.

Dated:  December 16, 1999

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

                                                /s/ Evan J. Griffith, Jr.
                                                    Evan J. Griffith, Jr.
                                                    Title:  Executive Manager
                                                    Finance and Energy Supply
                                                    Principal Financial Officer

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