Document:

SETTLEMENT AGREEMENT

         THIS SETTLEMENT  AGREEMENT  ("Agreement")  is entered into by and among
GOLDEN VALLEY ELECTRIC ASSOCIATION, INC. ("GVEA"), CHUGACH ELECTRIC ASSOCIATION,
INC.  ("Chugach") and the MUNICIPALITY OF ANCHORAGE,  d/b/a ANCHORAGE  MUNICIPAL
LIGHT & POWER ("ML&P").

                                R E C I T A L S:

         WHEREAS,  GVEA and  Chugach  are  parties to the  Chugach-GVEA  Nonfirm
Energy Agreement ("Nonfirm Energy Agreement") dated May 18, 1989; and

         WHEREAS,  on September 24, 1 997, the APUC issued an Order  authorizing
GVEA to  acquire  the  electric  utility  loads  formerly  served  by  Fairbanks
Municipal Utilities System; and

         WHEREAS,  GVEA,  Chugach  and ML&P  desire to create an open market for
certain nonfirm energy transactions;

         NOW, THEREFORE,  in consideration of mutual covenants contained herein,
the parties agrees as follows:

         1. This Agreement  shall become  effective on the date when  Amendatory
Agreement No. 2 to Agreement for the Sale and Purchase of Nonfirm Energy between
Chugach Electric Association,  Inc. and Golden Valley Electric Association, Inc.
("Amended  Chugach-Golden  Valley  Nonfirm  Agreement")  and this  Agreement are
approved by an Order of the Alaska Public  Utilities  Commission  ("Commission")
and upon  approval  by the  Commission  of  payment  by GVEA to ML&P  for  power
previously delivered pursuant to the contract at issue in Docket No. U-97-200.

         2.  Golden  Valley and Chugach  have agreed to amend the  ChugachGolden
Valley  Nonfirm  Agreement  to permit  GVEA to purchase a portion of its nonfirm
energy  requirements  on the Economy Energy Spot Market in amounts  representing
nonfirm energy associated with GVEA's FMUS system acquisition.

         3.  Participation  in the  competitive  market  created by the  Amended
Chugach-Golden  Valley  Nonfirm  Agreement  will be open to, but not limited to,
ML&P, Chugach,  and such other electric utilities,  independent power producers,
power marketers,  and other entities as may be willing and able to sell electric
energy to GVEA in accordance with applicable law and Commission  regulations.  A
copy of the Amendatory Agreement No. 2 to Agreement for the Sale and Purchase of
Nonfirm  Energy between  Chugach  Electric  Association,  Inc. and Golden Valley
Electric Association, Inc. is attached hereto.

         4. Upon this Settlement  Agreement  becoming  effective,  the following
proceedings and disputes shall be deemed to be settled by and among the parties,

<PAGE>

who will take appropriate  steps to terminate such  proceedings  without request
for any other action or relief from the court or the Commission, as the case may
be:

                  A.  Chugach  Electric  Association,   Inc.  v.  Golden  Valley
                  Electric Association, Inc., Case No. 3AN-97-8552CI;

                  B.       ML&P-GVEA Contract Docket U-97-200 before APUC; and

                  C.  A  "FMUS  Market  -  Nonfirm  Energy   Agreement"   Docket
                  U-97-188].

         IN WITNESS  WHEREOF,  the  parties  have caused  this  Agreement  to be
executed by their duly authorized officers or representatives.

                                            GOLDEN VALLEY ELECTRIC ASSOCIATION,
                                            INC.

                                            By:    /s/ Mile Kelly
                                               -------------------------------

                                            Title: President & CEO
                                                  ----------------------------

                                            CHUGACH ELECTRIC ASSOCIATION, INC.

                                            By:    /s/ Eugene N. Bjornstad
                                               -------------------------------

                                            Title: General Manager
                                                  ----------------------------

                                            ANCHORAGE MUNICIPAL LIGHT & POWER

                                            By:             /s/
                                               -------------------------------

                                            Title: Municipal Manager
                                                  ----------------------------

                                        2April 23, 1999

Mr. Joseph Falcone
ARCO Alaska, Inc.
P.O. box 100360
Anchorage, AK  99510-0360

Re:  ARCO Alaska Assignment of CEA Gas Contract

Dear Mr. Falcone:

You have explained that ARCO Alaska, Inc. ("AAI") desires the consent of Chugach
Electric  Association,   Inc.  ("Chugach")  to  a  contractual  assignment,   or
assignments,  as a result of which  AAI would  delegate  to a new  entity,  ARCO
Beluga Inc. ("ABI"), the obligation and right to perform for AAI, and to receive
performance  from Chugach under,  the April 21, 1989 "Agreement for the sale and
Purchase of Natural Gas" between AAI and Chugach, as amended ("Agreement')>

Chugach  hereby grants such consent,  subject to AAI's  acknowledgment  that AAI
shall not be  released  from the  Agreement,  and AAI shall  remain  secondarily
responsible  for ABI's  performance of the Agreement.  The  responsibility  will
include  making such  contractual or other  arrangements  to assure that Chugach
shall  continue  to  receive  actual  performance  under  the  Agreement,  i.e.,
deliveries  of  natural  gas,  including  in  the  event  of the  bankruptcy  or
insolvency of ABI.

Such  acknowledgement  represents  what we  understand to be the effect of AAI's
assignment/delegation  under  applicable law, and simply clarifies the intent of
AAI and Chugach  alike.  It is also  intended to assure that Chugach will not be
limited to damages for breach of contract but instead  will remain  assured of a
gas supply from AAI under the Agreement.

We are pleased to accommodate  AAI in this respect,  and we look forward to many
more years of cooperation between us.

Sincerely,                                       ACKNOWLEDGED AND AGREED:

/s/ Eugene N. Bjornstad
                                                ARCO ALASKA, INC.
Eugene N. Bjornstad
General Manager                                 By /s/ Joseph A. Leone
                                                  ---------------------------
                                                  Joseph A. Leone
                                                  Vice President

<PAGE>

ENB/TAL/ds

cc  Joe Griffith
    Mike Wheatall, ARCOAMENDATORY AGREEMENT NO. 4
                                       TO
               AGREEMENT FOR THE SALE AND PURCHASE OF NATURAL GAS
                                     between
                        CHUGACH ELECTRIC ASSOCIATION INC.
                                       AND
                              MARATHON OIL COMPANY
                            dated September 26, 1988

         WHEREAS,  Chugach Electric  Association,  Inc. ("Chugach") and Marathon
Oil Company ("Marathon"), entered into an Agreement for the Sale and Purchase of
Natural Gas ("Agreement") dated September 26, 1988;

         WHEREAS,  after having  operated under the Agreement,  the Parties have
determined that Section 7(c)4 of the Agreement does not  sufficiently add to the
smoothing of price increases to justify the effort required to use it;

         THEREFORE, the parties agree that:

         Section 7(c)4 of the Agreement is deleted

         In all other  respects,  the Agreement  remains in effect as heretofore
amended.

         IN WITNESS  WHEREOF,  Chugach and Marathon have caused this  Amendatory
Agreement No. 4 to be executed by their authorized representatives.

CHUGACH ELECTRIC ASSOCIATION, INC.              MARATHON OIL COMPANY

By:         /s/                                 By:     /s/
   -------------------------------                 -----------------------------
                                                Its Vice President, Natural Gas
Its: General Manager                                Marketing and Transportation
Date:  October 6, 1993                          Date: September 29, 1993January 18, 1996

R.G. Grammens
Vice President, Natural Gas
Marathon Oil Company
P.O. Box 3128
Houston, TX 77253-3 128

Dear Mr.  Grammens:

Chugach Electric Association, Inc. (Chugach) and Marathon Oil Company (Marathon)
learned that Golden Valley Electric Association, Inc. (GVEA) is actively seeking
nonfirm power supplies for use in connection with service to Fairbanks Municipal
Utility  System  (FMUS) and for other  additional  purchases  which might become
economical  at lower  prices.  This  letter  memorializes  the  agreement  which
Marathon and Chugach  (the  Parties)  have reached in order to more  effectively
compete for this  additional load in the Fairbanks area. The Parties have agreed
to the following arrangements.

     1. Nonfirm  energy sold by Chugach in order to serve FMUS will be generated
     using natural gas supplied by Marathon under the Agreement for the Sale and
     Purchase of Natural Gas between  Chugach  Electric  Association,  Inc.  and
     Marathon Oil  Company,  dated  September  26, 1988  (Marathon  Contract) in
     accordance  with the  partial  waiver  of  Section 7 to  produce  the price
     reduction for certain volumes known as Tier II purchases as outlined below.

     2. All gas sales by Marathon  to Chugach  for fuel to  generate  energy for
     sales to GVEA for  GVEA's  own  retail  load  which can be  generated  from
     Chugach  generating units which are currently  spinning (i.e. from spinning
     reserves)  are  Tier I  volumes.  Tier I  volumes  will be sold  under  the
     existing  contract between the Parties (as previously  amended) without any
     changes and  specifically  without any price  waivers  from  Marathon.  The
     parties  intend by this  provision  that  sales  previously  made under the
     Marathon  Contract and the  Agreement  for the Sale and Purchase of Nonfirm
     Energy  between  Chugach  Electric  Association,  Inc.  and  Golden  Valley
     Electric  Association,  Inc.  dated May 18, 1988 as amended  (GVEA  Nonfirm
     Energy  Agreement)  would continue as sales priced using Tier I priced gas.
     The  Parties  anticipate  that  volumes of gas sold by  Marathon  at Tier I
     prices will be  approximately  the same as those sold annually  before this
     special  5-year  agreement was made and that Tier II volumes are those sold
     as a result of starting  units which would not have been operated under the
     old arrangement.  The parties  recognize that Chugach and GVEA are involved
     in a pilot pooling  agreement  (the Bradley Lake Power  Banking  Agreement)
<PAGE>

     which  allows  Chugach  to  Schedule  GVEA's  Bradley  Hydro  resource  for
     Chugach's  own benefit  while  starting  turbines to cover GVEA load.  This
     allows  Chugach  to more  effectively  coordinate  the  hydro  and  thermal
     resources  under its control.  The pooling  arrangement  has  significantly
     increased  the fuel used to make economy  sales.  The costs and benefits of
     this  arrangement  vary  depending  on  system  loads,  system  maintenance
     schedules  and  Bradley  inflows.  Modification  or  renegotiation  of this
     agreement may affect the Tier I gas usage when  compared to the  historical
     period January 1, 1994, to present.

     3. The  Parties  agree that Tier II gas  includes  all gas used to generate
     energy for FMUS and all gas used to generate  energy for GVEA's retail load
     that is in  excess  of that  used in  Chugach  generating  units  which are
     currently spinning. For Tier II volumes,  Marathon agrees for a period of 5
     years from  January 1, 1996,  to waive the price it is  entitled to receive
     under Section 7 of the Marathon Contract by discounting the price of gas by
     22.5 cents per MFC below the price set by the Marathon Contract except that
     in no event will the price go below $l.20 per mcf,  exclusive  of severance
     taxes and other applicable reimbursements.

     4. The gas used  for  Tier II will be from the same gas  volumes  committed
     under the Marathon Contract and no new commitments of gas are required.

     5. Tier II volumes shall be determined in accordance  with the  Dispatching
     Protocols attached to this letter as Attachment 1.

     6. The gas  delivered  for Tier II sales  will  not  place  any  additional
     deliverability  burden on Marathon  and failure to deliver  Tier II gas for
     reasons  of  deliverability  shall not  constitute  a breach of  Marathon's
     obligations  under  Section  5(c) of the  Marathon  Contract.  However,  if
     Marathon  anticipates  deliverability  problems,  to  the  greatest  degree
     practicable,  Marathon  will provide  Chugach  with  advance  notice of its
     inability  to  deliver  the Tier II  volumes  so that  GVEA and FMUS can be
     notified in time to arrange for alternative supplies for Tier H purchases.

     7. In the event  that  Marathon  notifies  Chugach  that it has or may have
     insufficient  deliverability,  Chugach may  purchase the volumes of Tier II
     gas  needed  from  sources   other  than   Marathon   pursuant  to  Section
     5(c(2)(D)(vi) of the Marathon Contract.  If Chugach determines that it does
     not have units available to supply Tier II energy, then Chugach or GVEA may
     arrange for alternate power supplies.

     8. In accordance with Section 13(n) of the Marathon Contract,  Marathon may
     audit the books and records of Chugach to insure that  Chugach has remitted

                                       2
<PAGE>

     the proper price payable hereunder. Chugach agrees to provide Marathon with
     reasonable  access to its books and records during normal  business  hours.
     Chugach shall provide yearly forecasts of projected Tier I and Tier H sales
     volumes.

     9. This letter agreement is effective upon receipt of Necessary  Approvals,
     if any,  as  that  term is  defined  in  Section  1 4(cc)  of the  Marathon
     Contract.

     10. All other contractual obligations of the Parties remain unchanged.

If you  concur  that this  letter  fairly  memorializes  the  agreement  we have
reached, please indicate this by signing in the space provided below.

We  appreciate  Marathon's  willingness  to work with  Chugach in  meeting  this
challenge  to remain  competitive  and develop this new  opportunity  for mutual
benefit from additional sales.

Sincerely.

  /s/ Eugene N. Bjornstad
-------------------------
Eugene N. Bjornstad
General Manager

Marathon agrees with the terms and conditions recited above.

  /s/ R. G. Grammens                         Dated: January 22, 1996
---------------------                       -------------------------
R. G. Grammens
Vice President, Natural Gas
Marathon Oil Company

                                       3
<PAGE>

                    GOLDEN VALLEY ELECTRIC ASSOCIATION, INC.
                                       AND
                       CHUGACH ELECTRIC ASSOCIATION, INC.

                        NONFIRM ENERGY DISPATCH PROTOCOL

Tier I Fuel Usage

Tier I fuel usage will be determined by scheduling the Chugach firm load against
Chugach's  generation  resources.  Chugach's  generation resources include Hydro
resources for which Chugach has  scheduling  rights.  Loading and selling energy
using available  spinning reserve,  in the form of nonfirm energy sales to GVEA,
will be accomplished by utilizing Marathon fuel at the Tier I price.

Tier II Fuel Usage

Chugach controlled generation and Marathon Tier II fuel will be used to meet the
Combined  GVEA/FMUS  load,  above Tier I, up to an average ceiling heat rate for
14,000 Btu/kWh. This average will be taken over the period a unit is Schedule to
be in operation.

Tier III

Tier HI is GVEA/FMUS load which, if served by Chugach with available generation,
would  have a  average  heat  rate  in  excess  of  14,000  Btu/kWh.  GVEA  as a
representative  of the pool will shop for  resources  with an average  heat rate
lower than 14,000  Btu/kWh.  GVEA will acquire these  resources for the pool and
the resources will be utilized by the pool to meet the combined  GVEA/FMUS load.
In the event that GVEA is unable to  acquire  these  resources  for the pool and
decides to purchase  nonfirm energy from Chugach,  Marathon fuel will be used at
the Tier II price.

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