CHUGACH ELECTRIC ASSOCIATION, INC. ANCHORAGE, ALASKA. March 20, Sherri McKay-Highers, Manager, Budget and Financial Reporting

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1 ANCHORAGE, ALASKA To: From: Subject: Ron Vecera, Interim Chief Financial Officer Sherri McKay-Highers, Manager, Budget and Financial Reporting kwh Sales Retail kwh Sales 116,746, ,739,000 Wholesale kwh Sales 127,512, ,311,000 Total Firm kwh Sales 244,259, ,050,000 Economy Energy kwh Sales 18,580,000 33,538,000 Total kwh Sales 262,839, ,588,000 January 2013 firm kwh sales totaled 244,259,205 which were 1.9% under budget. Retail kwh sales were under budget by 0.8% and wholesale kwh sales were 2.9% lower than budgeted, due primarily to lower than anticipated sales to Matanuska Electric Association (MEA). While sales to large commercial customers and Homer Electric Association (HEA) were slightly higher than anticipated, sales to all other customer classes were under budget. January 2013 economy energy sales to Golden Valley Electric Association (GVEA) totaled 18,580,000, which were 44.6% under budget. Energy Revenue (in millions) Retail Revenue $ 14.9 $ 13.4 Wholesale Revenue Total Firm Revenue Economy Energy Revenue Total Revenue $ 27.3 $ 24.8 Revenue from firm sales totaled $25.4 million in January 2013 compared to $22.1 million in the budget. Despite lower kwh sales, retail and wholesale revenue was higher than budget due to higher fuel and purchased power costs recovered in revenue through the fuel and purchased power rate adjustment process. Economy energy revenue totaled $1.9 million compared to $2.7 million in the budget. This variance was due to lower kwh sales to GVEA.

2 Page 2 Other Operating Revenue (in millions) Other Operating Revenue $ 0.3 $ 0.3 Other operating revenue includes late fees, pole rental, wheeling, microwave and miscellaneous service and other electric revenue. Other operating revenue for January 2013 totaled $0.3 million compared to $0.3 million in the budget, with no significant variance. Power Production (in millions) Operating & Maintenance $ 1.2 $ 1.2 Fuel Total $ 14.4 $ 12.3 Actual power production operating and maintenance expense in January 2013 was $1.2 million compared to $1.2 million in the budget, with no significant variance. Fuel expense in January 2013 was $13.2 million compared to $11.1 million projected in the budget. This variance was caused by more than anticipated MCF purchased due primarily to the timing of the commercial operation of SPP, despite a lower than anticipated average effective delivered fuel price due primarily to the difference in units used to support our load than expected. Actual fuel purchased for production in January was 2,661,765 MCF at an average effective delivered price of $5.46 per MCF compared to 2,080,418 MCF in the budget at an average effective delivered price of $6.14 per MCF. Purchased Power (in millions) Total Purchased Power $ 3.0 $ 2.8 Purchased power expense in January 2013 totaled $3.0 million compared to $2.8 million in the budget. The variance was due primarily to a higher average effective price, which was slightly offset by lower than anticipated purchases. We purchased 50,830 MWh of energy at an average effective price of 5.48 cents per kwh compared to 53,087 MWh of energy at an average effective price of 4.85 cents per kwh in the budget. Transmission Operations and Maintenance (in millions) Total Transmission $ 0.6 $ 0.6 Transmission operations and maintenance expense for January 2013 totaled $0.6 million compared to $0.6 million in the budget, with no significant variance.

3 Page 3 Distribution Operations and Maintenance (in millions) Total Distribution $ 1.2 $ 1.2 Distribution operations and maintenance expenses for January 2013 totaled $1.2 million compared to $1.2 million in the budget, with no significant variance. Consumer Accounts / Customer Information (in millions) Total Consumer / Customer Info $ 0.5 $ 0.5 Consumer accounts and customer information expense for January 2013 totaled $0.5 million compared to $0.5 million in the budget, with no significant variance. Administrative & General (in millions) Total Administrative and General $ 1.9 $ 2.0 Administrative and general expenses for January 2013 totaled $1.9 million compared to $2.0 million in the budget. While not an overall variance, higher than anticipated costs associated with prior worker s compensation claims was offset by lower costs associated with strategic and safety initiatives. The summary of all the above January 2013 operations and maintenance expenses total $21.6 million compared to $19.5 million in the 2013 budget. Depreciation expense totaled $2.7 million compared to $2.7 million in the budget, with no significant variance. Tax expense totaled $84.1 thousand compared to $78.9 thousand in the budget, with no significant variance. Interest expense totaled $2.1 million compared to $2.1 million in the budget, with no significant variance. Interest during construction totaled $0.9 million compared to $0.6 million in the budget. The variance was due primarily to the timing of SPP commercial operation, which resulted in higher SPP capitalized interest. Other deductions include donations, preliminary survey and investigation charges of abandoned projects and obsolete inventory write-offs which are not attributable to operating or maintenance accounts. Other deductions in January 2013 totaled $29.2 thousand compared to $50.0 thousand in the budget. The variance was due primarily to lower than anticipated inventory write-offs.

4 Page 4 All of the foregoing expenses resulted in total cost of electric service of $25.7 million compared to $23.9 million in the 2013 budget. Non-operating margins include interest income, allowance for funds used during construction (AFUDC), capital credit and patronage capital allocations and extraordinary items. January 2013 non-operating margins totaled $88.5 thousand compared to $60.4 thousand in the budget. The variance was due primarily to a higher than anticipated gain on marketable securities. The net result of revenue and expenses in January 2013 was margins of $1.9 million compared to projected margins of $1.2 million in the budget. Per the attached comparative financial report on page 7, the current 1 month actual/11 months forecast projects year end margins of $14.2 million and an MFI/I of 1.58.

5 COMPARATIVE FINANCIAL REPORT STATEMENT OF OPERATIONS JANUARY 2013 Page JANUARY JANUARY JANUARY CATEGORY ACTUALS BUDGET VARIANCE REVENUES: TOTAL REVENUE $27,516,180 $25,035,762 $2,480,418 EXPENSES: FUEL EXPENSE 13,232,545 11,132,862 2,099,683 POWER PRODUCTION EXPENSE 1,176,202 1,208,150 (31,948) COST OF PURCHASED POWER 3,036,742 2,789, ,839 TRANSMISSION EXPENSE 570, ,879 (51,537) DISTRIBUTION EXPENSE-OPERATIONS 474, ,201 22,201 DISTRIBUTION EXPENSE-MAINTENANCE 740, ,594 32,056 CONSUMER ACCOUNTS EXPENSE 522, ,014 20,010 CUSTOMER SERVICE/INFO EXPENSE 26,197 45,385 (19,188) SALES EXPENSE ADMINISTRATIVE/GENERAL EXPENSE 1,863,851 2,047,742 (183,891) TOTAL OPERATIONS/MAINTENANCE EXP. $21,642,955 $19,508,730 $2,134,225 DEPRECIATION/AMORTIZATION EXPENSE 2,750,090 2,700,778 49,312 TAX EXPENSE-OTHER 84,077 78,870 5,207 INTEREST ON LONG-TERM DEBT 2,092,651 2,106,305 (13,654) INTEREST ON CONSTRUCTION-CREDIT (933,755) (574,016) (359,739) INTEREST ON SHORT-TERM DEBT 1,029 22,250 (21,221) OTHER DEDUCTIONS 29,193 50,000 (20,807) TOTAL COST OF ELECTRIC SERVICE $25,666,240 $23,892,917 $1,773,323 PATRONAGE CAPITAL/OPERATING MARGINS $1,849,940 $1,142,845 $707,095 NON-OPERATING MARGINS-INTEREST 58,823 55,848 2,975 ALLOWANCE FUNDS USED DURING CONST. 13,649 4,600 9,049 NON-OPERATING MARGINS-OTHER 16, ,033 GENER./TRANS. CAPITAL CREDITS OTHER CAPITAL CREDITS/DIVIDENDS EXTRAORDINARY ITEMS PATRONAGE CAPITAL OR MARGINS $1,938,445 $1,203,293 $735,152 MFI/I TIER

6 COMPARATIVE FINANCIAL REPORT STATEMENT OF OPERATIONS YEAR TO DATE Page ACTUALS BUDGET VARIANCE CATEGORY YTD YTD YTD REVENUES: TOTAL REVENUE $27,516,180 $25,035,762 $2,480,418 EXPENSES: FUEL EXPENSE 13,232,545 11,132,862 2,099,683 POWER PRODUCTION EXPENSE 1,176,202 1,208,150 (31,948) COST OF PURCHASED POWER 3,036,742 2,789, ,839 TRANSMISSION EXPENSE 570, ,879 (51,537) DISTRIBUTION EXPENSE-OPERATIONS 474, ,201 22,201 DISTRIBUTION EXPENSE-MAINTENANCE 740, ,594 32,056 CONSUMER ACCOUNTS EXPENSE 522, ,014 20,010 CUSTOMER SERVICE/INFO EXPENSE 26,197 45,385 (19,188) SALES EXPENSE ADMINISTRATIVE/GENERAL EXPENSE 1,863,851 2,047,742 (183,891) TOTAL OPERATIONS/MAINTENANCE EXP. $21,642,955 $19,508,730 $2,134,225 DEPRECIATION/AMORTIZATION EXPENSE 2,750,090 2,700,778 49,312 TAX EXPENSE-OTHER 84,077 78,870 5,207 INTEREST ON LONG-TERM DEBT 2,092,651 2,106,305 (13,654) INTEREST ON CONSTRUCTION-CREDIT (933,755) (574,016) (359,739) INTEREST ON SHORT-TERM DEBT 1,029 22,250 (21,221) OTHER DEDUCTIONS 29,193 50,000 (20,807) TOTAL COST OF ELECTRIC SERVICE $25,666,240 $23,892,917 $1,773,323 PATRONAGE CAPITAL/OPERATING MARGINS $1,849,940 $1,142,845 $707,095 NON-OPERATING MARGINS-INTEREST 58,823 55,848 2,975 ALLOWANCE FUNDS USED DURING CONST. 13,649 4,600 9,049 NON-OPERATING MARGINS-OTHER 16, ,033 GENER./TRANS. CAPITAL CREDITS OTHER CAPITAL CREDITS/DIVIDENDS EXTRAORDINARY ITEMS PATRONAGE CAPITAL OR MARGINS $1,938,445 $1,203,293 $735,152 MFI/I TIER

7 COMPARATIVE FINANCIAL REPORT STATEMENT OF OPERATIONS 2013 FORECAST Page APPROVED REVISED CATEGORY BUDGET FORECAST REVENUES: TOTAL REVENUE $293,922,220 $296,402,638 1 EXPENSES: FUEL EXPENSE 119,104, ,204,674 1 POWER PRODUCTION EXPENSE 22,937,744 22,937,744 COST OF PURCHASED POWER 30,198,032 30,444,871 1 TRANSMISSION EXPENSE 6,935,287 6,935,287 DISTRIBUTION EXPENSE-OPERATIONS 5,337,214 5,337,214 DISTRIBUTION EXPENSE-MAINTENANCE 8,789,659 9,205,896 2 CONSUMER ACCOUNTS EXPENSE 5,898,476 5,898,476 CUSTOMER SERVICE/INFO EXPENSE 532, ,663 SALES EXPENSE 0 0 ADMINISTRATIVE/GENERAL EXPENSE 22,716,747 22,816,747 2 TOTAL OPERATIONS/MAINTENANCE EXP. $222,450,813 $225,313,572 DEPRECIATION/AMORTIZATION EXPENSE 40,166,298 40,166,298 TAX EXPENSE-OTHER 825, ,225 1 INTEREST ON LONG-TERM DEBT 24,389,924 24,376,270 1 INTEREST ON CONSTRUCTION-CREDIT (976,867) (1,322,075) 2 INTEREST ON SHORT-TERM DEBT 326, ,625 1 OTHER DEDUCTIONS 600, ,193 1 TOTAL COST OF ELECTRIC SERVICE $287,782,032 $290,249,108 PATRONAGE CAPITAL/OPERATING MARGINS $6,140,188 $6,153,530 NON-OPERATING MARGINS-INTEREST 658, ,888 1 ALLOWANCE FUNDS USED DURING CONST. 115, ,011 NON-OPERATING MARGINS-OTHER 7,000,000 7,016,033 1 GENER./TRANS. CAPITAL CREDITS 0 0 OTHER CAPITAL CREDITS/DIVIDENDS 300, ,000 1 EXTRAORDINARY ITEMS 0 0 PATRONAGE CAPITAL OR MARGINS $14,214,112 $14,246,462 MFI/I TIER Forecast based on 1 month actual and 11 months forecast 2 Forecast has been adjusted to reflect known and measurable changes