CHUGACH ELECTRIC ASSOCIATION, INC. ANCHORAGE, ALASKA. August 1, 2013

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1 ANCHORAGE, ALASKA To: From: Subject: Sherri McKay-Highers, Chief Financial Officer Renee Curran, Senior Financial Analyst June 2013 Year-to-Date Financial Results kwh Sales Retail kwh Sales 579,595, ,300,000 Wholesale kwh Sales 639,754, ,592,000 Total Firm kwh Sales 1,219,349,880 1,230,892,000 Economy Energy kwh Sales 175,942, ,329,000 Total kwh Sales 1,395,291,880 1,387,221,000 Year-to-date firm kwh sales through June 2013 totaled 1,219,349,880, which were 0.9% under budget. Retail kwh sales were under budget by 0.8% due primarily to lower than anticipated sales to residential customers. Wholesale kwh sales were 1.1% lower than budgeted, due primarily to lower than anticipated sales to Homer Electric Association (HEA). June 2013 economy energy sales to Golden Valley Electric Association (GVEA) totaled 175,942,000, which were 12.6% higher than budget. Energy Revenue (in millions) Retail Revenue $ 78.2 $ 76.1 Wholesale Revenue Total Firm Revenue Economy Energy kwh Sales Total kwh Sales $ $ Revenue from firm sales totaled $132.1 million through June 2013 compared to $127.2 million in the budget. Firm base revenue was lower than expected due to lower sales to residential customers and HEA, however, that variance was more than offset by higher fuel costs recovered in revenue through the fuel and purchased power adjustment process. Economy energy revenue totaled $18.4 million compared to $13.9 million in the budget. Economy energy base revenue was higher than expected due to higher kwh sales coupled with higher economy fuel costs recovered in revenue.

2 June 2013 Year-to-Date Financial Results Page 2 Other Operating Revenue (in millions) Other Operating Revenue $ 2.0 $ 1.2 Other operating revenue includes late fees, pole rental, wheeling, microwave and miscellaneous service and other electric revenue. Other operating revenue through June 2013 totaled $2.0 million compared to $1.2 million in the budget. The variance was due primarily to higher than anticipated wheeling revenue associated with sales to GVEA. Power Production (in millions) Operating & Maintenance $ 10.1 $ 10.5 Fuel Total $ 80.3 $ 68.5 Actual power production operating and maintenance expense through June 2013 was $10.1 million compared to $10.5 million in the budget. Lower than anticipated expense labor and ammonia expense at SPP was somewhat offset by higher costs associated with control repairs at Beluga. Fuel expense through June 2013 was $70.2 million compared to $58.0 million projected in the budget. This variance was due primarily to higher than anticipated MCF, due to more than anticipated sales to GVEA, more production due to Nikiski maintenance and commissioning activities and a higher average effective delivered price, due in part to higher than expected transportation costs. Actual fuel purchased for production through June was 12,205,367 MCF at an average effective delivered price of $5.52 per MCF compared to 10,226,147 MCF in the budget at an average effective delivered price of $5.33 per MCF. Purchased Power (in millions) Total Purchased Power $ 12.9 $ 14.5 Purchased power expense through June 2013 totaled $12.9 million, which included the cost of 1,151,891 MCF of fuel associated with purchases from Nikiski, compared to $14.5 million in the budget, which included the cost of 1,709,632 MCF of fuel associated with Nikiski. The variance was due primarily to a lower average effective price, which was primarily caused by Nikiski maintenance and higher than anticipated purchases from Bradley Lake. We purchased 254,739 MWh of energy at an average effective price of 4.57 cents per kwh compared to 251,449 MWh of energy at an average effective price of 5.27 cents per kwh in the budget.

3 June 2013 Year-to-Date Financial Results Page 3 Transmission Operations and Maintenance (in millions) Total Transmission $ 3.5 $ 3.6 Transmission operations and maintenance expense through June 2013 totaled $3.5 million compared to $3.6 million in the budget. This variance was due primarily to lower labor charged to this financial statement category and lower than anticipated overhead line clearing, which was partially offset by unplanned foundation repairs in Girdwood. Distribution Operations and Maintenance (in millions) Total Distribution $ 6.3 $ 6.2 Distribution operations and maintenance expenses through June 2013 totaled $6.3 million compared to $6.2 million in the budget. This variance was due primarily to higher labor charged to this financial statement category and higher than anticipated costs allocated to this financial statement category from information services. This variance was largely offset by the recognition of a FEMA grant awarded as a result of the September 2012 storm damage. Consumer Accounts / Customer Information (in millions) Total Consumer / Customer Information $ 3.2 $ 3.2 Consumer accounts and customer information expense through June 2013 totaled $3.2 million compared to $3.2 million in the budget. While not an overall variance, higher than anticipated labor was offset by lower than anticipated costs associated with the Energy Efficiency Program. Administrative & General (in millions) Total Administrative & General $ 11.0 $ 11.7 Administrative and general expenses through June 2013 totaled $11.0 million compared to $11.7 million in the budget. This variance was due primarily to lower than anticipated costs allocated to this financial statement category from information services and lower costs associated with safety and human resource initiatives, which were somewhat offset by costs associated with prior worker s compensation claims. The summary of all the above operations and maintenance expense through June 2013 total $117.2 million compared to $107.7 million in the 2013 budget. Depreciation expense totaled $20.0 million compared to $19.7 million in the budget, with no significant variance.

4 June 2013 Year-to-Date Financial Results Page 4 Tax expense totaled $409.5 thousand compared to $410.2 thousand in the budget, with no significant variance. Interest expense totaled $12.4 million compared to $12.5 million in the budget, with no significant variance. Interest during construction totaled $1.1 million compared to $1.0 million in the budget, with no significant variance. 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 through June 2013 totaled $255.2 thousand compared to $300.0 thousand in the budget. The variance was due primarily to lower than anticipated inventory write-offs. All of the foregoing expenses resulted in total cost of electric service of $149.3 million compared to $139.6 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. Through June 2013 nonoperating margins totaled $210.5 thousand compared to $369.4 thousand in the budget. This variance was due primarily to a loss in the market value of marketable securities which was somewhat offset by higher AFUDC caused by a higher than anticipated average CWIP balance that is equity financed. The net result of revenue and expenses through June 2013 was margins of $3.5 million compared to projected margins of $3.1 million in the budget. Per the attached comparative financial report on page 7, the current 6 months actual/6 months forecast projects year end margins of $14.2 million and an MFI/I of 1.58.

5 COMPARATIVE FINANCIAL REPORT STATEMENT OF OPERATIONS JUNE 2013 Page JUNE JUNE JUNE CATEGORY ACTUALS BUDGET VARIANCE REVENUES: TOTAL REVENUE $23,963,676 $21,703,789 $2,259,887 EXPENSES: FUEL EXPENSE 11,500,004 8,358,124 3,141,880 POWER PRODUCTION EXPENSE 1,763,099 1,957,549 (194,450) COST OF PURCHASED POWER 1,762,218 2,554,107 (791,889) TRANSMISSION EXPENSE 703, , ,404 DISTRIBUTION EXPENSE-OPERATIONS 562, , ,990 DISTRIBUTION EXPENSE-MAINTENANCE 632, ,060 42,177 CONSUMER ACCOUNTS EXPENSE 468, ,008 7,338 CUSTOMER SERVICE/INFO EXPENSE 25,191 42,725 (17,534) SALES EXPENSE ADMINISTRATIVE/GENERAL EXPENSE 1,661,051 1,831,842 (170,791) TOTAL OPERATIONS/MAINTENANCE EXP. $19,078,476 $16,786,351 $2,292,125 DEPRECIATION/AMORTIZATION EXPENSE 3,461,525 3,407,866 53,659 TAX EXPENSE-OTHER 62,383 63,389 (1,006) INTEREST ON LONG-TERM DEBT 2,017,729 2,016, INTEREST ON CONSTRUCTION-CREDIT (27,640) (29,375) 1,735 INTEREST ON SHORT-TERM DEBT 25,120 28,108 (2,988) OTHER DEDUCTIONS 48,030 50,000 (1,970) TOTAL COST OF ELECTRIC SERVICE $24,665,623 $22,323,237 $2,342,386 PATRONAGE CAPITAL/OPERATING MARGINS ($701,947) ($619,448) ($82,499) NON-OPERATING MARGINS-INTEREST 57,676 54,427 3,249 ALLOWANCE FUNDS USED DURING CONST. 12,564 8,051 4,513 NON-OPERATING MARGINS-OTHER (166,583) 0 (166,583) GENER./TRANS. CAPITAL CREDITS OTHER CAPITAL CREDITS/DIVIDENDS EXTRAORDINARY ITEMS PATRONAGE CAPITAL OR MARGINS ($798,286) ($556,970) ($241,316) MFI/I TIER

6 COMPARATIVE FINANCIAL REPORT STATEMENT OF OPERATIONS YEAR TO DATE Page ACTUALS BUDGET VARIANCE CATEGORY YTD YTD YTD REVENUES: TOTAL REVENUE $152,524,942 $142,315,964 $10,208,978 EXPENSES: FUEL EXPENSE 70,249,319 58,003,545 12,245,774 POWER PRODUCTION EXPENSE 10,060,684 10,531,273 (470,589) COST OF PURCHASED POWER 12,905,983 14,474,225 (1,568,242) TRANSMISSION EXPENSE 3,458,901 3,590,130 (131,229) DISTRIBUTION EXPENSE-OPERATIONS 2,868,219 2,577, ,309 DISTRIBUTION EXPENSE-MAINTENANCE 3,442,344 3,642,468 (200,124) CONSUMER ACCOUNTS EXPENSE 3,010,270 2,896, ,782 CUSTOMER SERVICE/INFO EXPENSE 177, ,535 (86,766) SALES EXPENSE ADMINISTRATIVE/GENERAL EXPENSE 11,037,992 11,716,508 (678,516) TOTAL OPERATIONS/MAINTENANCE EXP. $117,211,481 $107,697,082 $9,514,399 DEPRECIATION/AMORTIZATION EXPENSE 20,044,278 19,726, ,519 TAX EXPENSE-OTHER 409, ,151 (621) INTEREST ON LONG-TERM DEBT 12,314,927 12,330,009 (15,082) INTEREST ON CONSTRUCTION-CREDIT (1,077,540) (1,049,311) (28,229) INTEREST ON SHORT-TERM DEBT 112, ,141 (43,656) OTHER DEDUCTIONS 255, ,000 (44,783) TOTAL COST OF ELECTRIC SERVICE $149,270,378 $139,570,831 $9,699,547 PATRONAGE CAPITAL/OPERATING MARGINS $3,254,564 $2,745,133 $509,431 NON-OPERATING MARGINS-INTEREST 343, ,100 14,760 ALLOWANCE FUNDS USED DURING CONST. 78,341 40,254 38,087 NON-OPERATING MARGINS-OTHER (211,738) 0 (211,738) GENER./TRANS. CAPITAL CREDITS OTHER CAPITAL CREDITS/DIVIDENDS EXTRAORDINARY ITEMS PATRONAGE CAPITAL OR MARGINS $3,465,032 $3,114,487 $350,545 MFI/I TIER

7 COMPARATIVE FINANCIAL REPORT STATEMENT OF OPERATIONS 2013 FORECAST Page AMENDED REVISED CATEGORY BUDGET FORECAST REVENUES: TOTAL REVENUE $292,322,220 $301,941, EXPENSES: FUEL EXPENSE 119,104, ,350,765 1 POWER PRODUCTION EXPENSE 22,937,744 22,437,744 2 COST OF PURCHASED POWER 30,198,032 28,629,790 1 TRANSMISSION EXPENSE 6,935,287 6,928,755 2 DISTRIBUTION EXPENSE-OPERATIONS 5,337,214 5,334,211 2 DISTRIBUTION EXPENSE-MAINTENANCE 7,594,124 7,225,201 2 CONSUMER ACCOUNTS EXPENSE 5,898,476 5,894,087 2 CUSTOMER SERVICE/INFO EXPENSE 532, ,663 SALES EXPENSE 0 0 ADMINISTRATIVE/GENERAL EXPENSE 22,716,747 22,435,204 2 TOTAL OPERATIONS/MAINTENANCE EXP. $221,255,278 $230,768,420 DEPRECIATION/AMORTIZATION EXPENSE 40,166,298 40,166,298 TAX EXPENSE-OTHER 825, ,397 1 INTEREST ON LONG-TERM DEBT 24,389,924 24,374,842 1 INTEREST ON CONSTRUCTION-CREDIT (1,322,075) (1,350,304) 1 INTEREST ON SHORT-TERM DEBT 326, ,190 1 OTHER DEDUCTIONS 600, ,217 1 TOTAL COST OF ELECTRIC SERVICE $286,241,289 $295,622,060 PATRONAGE CAPITAL/OPERATING MARGINS $6,080,931 $6,319,138 NON-OPERATING MARGINS-INTEREST 658, ,673 1 ALLOWANCE FUNDS USED DURING CONST. 115, ,098 1 NON-OPERATING MARGINS-OTHER 7,000,000 6,788,262 1 GENER./TRANS. CAPITAL CREDITS 0 0 OTHER CAPITAL CREDITS/DIVIDENDS 300, ,005 1 EXTRAORDINARY ITEMS 0 0 PATRONAGE CAPITAL OR MARGINS $14,154,855 $14,234,176 MFI/I TIER Forecast based on 6 months actuals and 6 months forecast 2 Forecast has been adjusted to reflect known and measurable changes