Document:

January 18, 1996

Mike Kelly, General Manager
Golden Valley Electric Assoc., Inc.
P.O. Box 71249
Fairbanks, Alaska 99707-1249

Dear Mike,

         GVEA has expressed an interest in procuring competitively price nonfirm
energy  for  resale  to FMUS  and  some of its own  retail  loads.  This  letter
memorializes  the  arrangements  we  have  made  to  obtain  natural  gas  price
reductions and reductions in Chugach's  margins under 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)  which  make  it  possible  for  Chugach  to  supply
competitively  priced nonfirm energy to GVEA for resale to FMUS and otherwise to
increase  sales and  purchases of nonfirm  energy under the GVEA Nonfirm  Energy
Agreement.

         The GVEA Nonfirm Energy Agreement already contemplates sales by Chugach
to GVEA for resale to FMUS.  However,  sales on that basis have not materialized
as we had hoped they might.  The problem was that much of the lower priced power
available on the Chugach system was already being used to supply  existing needs
of GVEA. We agreed that the challenge was to see if natural gas price reductions
coupled  with a Chugach  price  reduction  could  produce  competitively  priced
nonfirm energy in quantities  sufficient to meet  anticipated  needs for FMUS as
well as displace other additional GVEA self-generation which would not otherwise
have been possible  without price reductions  arrangements  memorialized in this
letter.

         On this basis,  Chugach approached Marathon Oil Company and asked about
possible price  concessions in order to be more competitive for sales for resale
to FMUS and other new sales. This process has produced a 5-year arrangement with
Marathon to  significantly  reduce its price for the  additional  fuel needed to
generate  to serve  FMUS and for other  new  sales.  Marathon's  waiver of price
provisions does not alter volumes of gas committed or enhance deliverability.  A
fundamental underpinning of the Marathon reduction is that it will not lower the
price for volumes  which it would  otherwise  have sold  without the addition of
FMUS and other new sales.  That  arrangement  is  memorialized  in the letter to
Marathon of January 18,  1996,  which I have  attached as  Attachment  A to this
letter.
<PAGE>

         GVEA has  agreed  that  based on the  special  gas  price  arrangements
Chugach has achieved and the partial waiver of margins by Chugach under the GVEA
Nonfirm Energy Agreement as outlined below,  GVEA will enter into agreement with
FMUS to supply  substantially  all of its power  needs net of any of FMUS's  own
resources.

         As is  memorialized  in  Attachment  A, Tier I volumes  include all gas
sales by Marathon  to Chugach for fuel to generate  energy for sales to GVEA for
GVEAs own retail load which can be generated from Chugach generating units which
are spinning when the system is dispatched to serve  Chugach's  load (i.e.  from
spinning  reserves)  and for  repayment  of banked  power under the terms of the
Bradley Lake Power Banking Agreement.  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.  Tier II  volumes  are  those  sold as a result of
starting  units in excess of those which  would not have been  operated to serve
Chugach's load and for Bradley Lake Power Banking repayment.

         Chugach and GVEA have agreed that Tier II purchases  of nonfirm  energy
by GVEA are all those purchases in excess of Tier I volumes,  i.e. all purchases
other  than from  Chugach's  spinning  reserves  as  described  in the  attached
Dispatch  Protocol.  Chugach  and GVEA have agreed that all sales by Chugach for
resale by GVEA to FMUS will occur  using Tier II gas  (priced  lower than Tier I
gas as  outlined in  Attachment  A).  Chugach  will charge for gas used to start
generating units but has agreed to pass through the lower Marathon gas price for
Tier II sales.  Chugach has also agreed that, provided the reduced priced gas is
available,  for five years,  it will reduce its margins on those Tier U sales by
4.26 mills  below what would  otherwise  be included in the price under the GVEA
Nonfirm Energy  Agreement.  At this time the margin under this arrangement would
be 6 mills. Those volumes will be determined  according to the Dispatch Protocol
(Attachment I to Attachment A).

         The Parties  have agreed that Tier III consists of energy which GVEA is
free to purchase from a supplier other than Chugach. In accordance with the GVEA
Nonfirm Purchase  Agreement and the Bradley Lake Power Banking  Agreement,  both
previously  approved  by the APUC,  except when it is not  available,  GVEA will
continue to purchase all nonfirm energy from Chugach. However, the Parties agree
that for the term of this  letter  agreement,  GVEA  shall not be  obligated  to
purchase Tier II energy if the average heat rate for the scheduled  unit exceeds
14,000 Btu/kWh.

         This letter agreement is effective upon receipt of Necessary Approvals,
if any,  as that term is  defined in Section  30(n) of the GVEA  Nonfirm  Energy
Agreement.

<PAGE>

Sincerely,

/s/ Eugene N. Bjornstad
------------------------------------

Eugene N. Bjornstad
General Manager, Chugach Electric Association, Inc.

Golden Valley Electric Association concurs in the above.

/s/ Michael P. Kelly                         Dated:  January 22, 1996
-------------------------------------              -----------------------------
Michael P. Kelly
General Manager, Golden Valley Electric Association, Inc.

<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
[4,000 Btu/kWh. This average will be taken over the period a unit is Schedule to
be in operation.

Tier III

Tier  III  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.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.
                             Dated February 8. 1999

         WHEREAS,  Chugach  Electric  Association,  Inc.  ("Chugach") and Golden
Valley Electric  Association,  Inc.  ("GVEA")  entered into an Agreement for the
Sale and Purchase of Nonfirm Energy dated May 18, 1989 ("Agreement"); and

         WHEREAS,  Chugach and GVEA amended such  Agreement by letter  agreement
dated  January  18,  1996 (Tier II  Agreement),  and the  Agreement  and Tier II
Agreement   together   constitute  the  current  amended   agreement   ("Amended
Agreement"); and

         WHEREAS,  Chugach and GVEA now wish to revise the various  terms of the
Amended Agreement;

         NOW,  THEREFORE,  in consideration of the mutual  agreements  contained
herein, the Parties agree as follows:

1.       Section 5(b) is amended to read as follows:

                  (b)   GVEA's   Requirements   for   Nonfirm   Energy.   GVEA's
         requirements  for Nonfirm  Energy in any hour shall be the  difference,
         expressed in  kilowatt-hours  (kWh),  between (1) GVEA's overall system
         load  (including  sales of  electric  power at  wholesale)  and (2) the
         energy  generated and delivered to GVEA from GVEA's Power  Resources or
         purchased by GVEA on the Economy Energy Spot Market, in accordance with
         the final proviso of Section 5(c) For purposes of this Agreement,  GVEA
         shall not Schedule electric energy from its Power Resources in any hour
         except to the extent that Nonfirm Energy is not available to GVEA under
         this Agreement,  or GVEA  reasonably and in good faith  determines that
         (1) the operation of a specific GVEA  generating  resource is necessary
         or prudent to  provide  system  reserves,  system  stability,  or other
         system reliability or security needs, or because transmission  capacity
         for Nonfirm Energy is  unavailable or limited;  (2) the cost of Nonfirm
         Energy  hereunder  exceeds  GVEA's  cost of energy  from  GVEA's  Power
         Resources;  or (3) such energy is provided by a Qualifying  Facility or
         from  another  resource  from which GVEA is  obligated  by  contract to
         accept delivery of such energy.

2.       Section 5(c) is amended to read as follows:

<PAGE>

                  (c)  Limitations  On  Other  Purchases.  In  consideration  of
         Chugach's  agreement  to sell  Nonfirm  Energy  to GVEA on the basis of
         GVEA's  requirements  for Nonfirm  Energy,  rather than on the basis of
         specified maximum and/or minimum purchase  amounts,  and in furtherance
         of GVEA's intention that Chugach and Marathon rely on this Agreement in
         entering into the Marathon Contract, GVEA agrees that (1) GVEA will not
         enter  into any new Firm Power  purchase  agreement  that would  reduce
         GVEA's  purchases of Nonfirm  Energy under this Agreement in the period
         prior to December 31, 1995,  unless GVEA is required by law or by order
         of a regulatory agency to do so; (2) GVEA will not at any time purchase
         or otherwise  obtain  nonfirm or economy or other  similar  energy from
         other suppliers (except QFs),  regardless of the price(s) at which such
         energy may be available to GVEA from such  suppliers,  if the effect of
         GVEA doing so would be to reduce  GVEA's  purchases  of Nonfirm  Energy
         under this Agreement;  provided,  that in addition to purchasing energy
         from QFs, GVEA shall be entitled to purchase  particular  increments of
         nonfirm, economy, or other similar energy from suppliers other than QFs
         if and to the  extent  that  Chugach is unable to make  Nonfirm  Energy
         available to meet such  increments of GVEA's  requirements  for Nonfirm
         Energy;  and provided  further,  that whenever  GVEA is entitled  under
         Exhibit B (attached  hereto and  incorporated  by reference  herein) to
         purchase energy from another supplier in  circumstances  requiring such
         supplier to start up one or more generating  units for GVEA, GVEA shall
         also be entitled  to commit to such  supplier  that GVEA will  purchase
         such  energy  produced  by such  units for some  reasonable  continuous
         period,  not to exceed  seventy-two (72) hours;  and provided  further,
         GVEA shall be  entitled to  purchase.  up to  one-third  (1/3rd) of the
         first  450,000,000  kilowatt-hours  and twenty percent (20%) of amounts
         over  450,000,000  kWh of its annual  requirement for nonfirm energy as
         Spot Market Economy Energy.

3.      Section 5 is amended to add new subsections (d), (e) and (f) as follows:

                  (d) To the extent  GVEA's  purchases  of nonfirm  energy  from
         Chugach in any calendar year are less than two-third (2/3rds) of GVEA's
         annual  purchase of nonfirm  energy from all sources,  GVEA's  purchase
         obligation  in the  succeeding  year shall be increased by such amount;
         provided  however,  that GVEA shall  operate  in good faith  under this
         Agreement to take in each year those amounts of nonfirm energy which it
         is capable,  with a reasonable  amount of care and planning,  of taking
         from Chugach in fulfillment of GVEA's obligations under this Agreement.

                  (e) From the  energy  that  GVEA  would  otherwise  have  been
         entitled  to purchase in the  Economy  Energy  Spot  Market,  GVEA will
         instead  purchase  from  Chugach on a one-time  basis  during the first
         twelve  (12)  months of this  Settlement  Agreement,  under a  mutually
         acceptable  schedule,  and in addition to any other purchases that GVEA

                                       2
<PAGE>

         is obligated or entitled to make from Chugach under the Nonfirm  Energy
         Agreement, a quantity of energy equal to 9,236,000 kilowatt-hours. This
         represents  energy that GVEA did not purchase  from  Chugach  under the
         Nonfirm Energy  Agreement in September and October of 1997 because GVEA
         instead took delivery of power from ML&P.

                  (f) For purposes of this Agreement, any and all electric power
         that GVEA obtains from  generators  owned by others shall be considered
         "nonfirm or economy or similar  energy" and not "Firm Power" unless the
         following  conditions,  as well as the definition of "Firm Power," have
         been met:

                          (1)       The power will be  generated by the capacity
                                    of a machine or portion of the capacity of a
                                    machine  that is  dedicated  to the  sale to
                                    GVEA and is in excess of any  requirement of
                                    the owner for generation or reserves;

                          (2)       For "Firm Power" to be produced using ML&P's
                                    generators, Chugach shall be provided either
                                    (A)  a  ruling  from  the  Internal  Revenue
                                    Service  that  the   proposed   contract  is
                                    consistent  with  provisions of the Internal
                                    Revenue Code applicable to ML&P's generation
                                    and  any   tax-exempt   financing   thereof,
                                    together  with a copy of ML&P's  request for
                                    that  ruling,  or (B) an  opinion  by ML&P's
                                    bond   counsel   that   such   contract   is
                                    consistent with such provisions, including a
                                    reasonable explanation of the basis for that
                                    opinion; and

                          (3)       GVEA   shall  have   requested   competitive
                                    proposals  for the  desired  Firm  Power and
                                    shall  have   selected   the   lowest   cost
                                    responsive proposal.

4.       Section 7(a) is amended to read as follows:

                  (a) In General.  Except as provided in the Tier II  Agreement,
         rates for the sale and  purchase of Nonfirm  Energy and any Spot Market
         Economy Energy sold by Chugach shall be established in accordance  with
         this Section 7 and with the provisions of Exhibits B, C, and E attached
         hereto and  incorporated by reference  herein;  provided that for hours
         GVEA requests  proposals for Spot Market  Economy  Energy and suppliers
         other than Chugach offer sales of incremental generation from otherwise
         operating generation facilities in quantities sufficient to meet GVEA's
         request,  Chugach may elect to offer Spot Market Economy Energy at such
         price as Chugach determines.

                                       3
<PAGE>

                  For purposes of determining the application of Tier I and Tier
         II pricing  under the Tier II  Agreement,  sales by  Chugach  for "FMUS
         loads" shall be deemed to be any GVEA  purchases of Spot Market Economy
         Energy from  Chugach.  In addition,  pursuant to the Tier II Agreement,
         all GVEA purchases of nonfirm energy other than from Chugach's spinning
         reserves  shall  continue to be Tier II purchases,  as set forth in the
         Tier II Agreement.

5.       Section 7(b) is amended to read as follows:

                  (b) Nonfirm  Energy Rate.  Except as provided in Section 7(a),
         the rate per kWh for all Nonfirm  Energy  or Spot
         Market Economy Energy sold by Chugach in any given day.

6.       Section 10 is amended to add new subsections (c) and (d) as follows:

                  (c) GVEA and  Chugach  dispatchers  will  coordinate  with any
         other entities desiring to make sales in the Economy Energy Spot Market
         to  maximize  availability  of Spot Market  Economy  Energy and Nonfirm
         Energy to GVEA.

                  (d)  Subject  to  GVEA's  purchase   obligations   under  this
         Agreement  and to Section  10(c)  above,  GVEA  shall  decide the final
         Schedule for purchases from Chugach and the Economy Energy Spot Market.

7.       Section 30 is amended to add the following definitions:

                  (i)(2)  Economy  Energy  Spot  Market.  The market of nonfirrn
                  energy  suppliers for sales to GVEA other than GVEA's required
                  purchases  from  Chugach  under this  Agreement.  The  Economy
                  Energy  Spot  Market  shall be a  competitive  market  open to
                  participation  by any and all qualified  sellers on a fair and
                  non-discriminatory  basis. Such sellers shall include, but not
                  necessarily  be  limited  to,  Chugach,  ML&P,  and such other
                  electric   utilities,   independent  power  producers,   power
                  marketers,  and other  entities  as may be willing and able to
                  sell electric power to GVEA in accordance  with applicable law
                  and Commission regulations.

                  (w)(2) Spot Market Economy Energy. Energy purchased by GVEA in
                  the Economy Energy Spot Market.

                                       4
<PAGE>

                                    CHUGACH ELECTRIC ASSOCIATION, INC.

Dated:  February 8, 1999            By:  /s/ Eugene N. Bjornstad
      ---------------------            -----------------------------------------
                                            Eugene N. Bjornstad, General Manager

                                    GOLDEN VALLEY ELECTRIC ASSOCIATION, INC.

Dated:  February 8, 1999            By:  /s/  Michael P. Kelly
      ---------------------            -----------------------------------------
                                            Michael P. Kelly, President & CEO

                                      5

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