CHUGACH ELECTRIC ASSOCIATION 1 STATEMENT OF OPERATIONS. Allowance for Funds Used During Construction. Total Cost of Electric Service (MTD Actual)

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1 FINANCIAL REPORT MARCH 2014 STATEMENT OF OPERATIONS CATEGORY 2014 MTD ACTUAL 2014 MTD BUDGET Operating Revenue and Patronage Capital Fuel and Purchased Power Expense Power Production Expense Transmission Expense Distribution Expense Customer Expense Administrative, General and Other Depreciation & Amortization Expense Interest Expense, Net Total Cost of Electric Service Patronage Capital & Operating Margins Non-Operating Margins - Interest Allowance for Funds Used During Construction Non-Operating Margins - Other Patronage Capital or Margins $ 24,645,787 12,188,587 1,630, ,199 1,104, ,077 1,890,043 3,350,437 1,919,167 $ 23,108,251 $ 1,537,536 52,398 9,452 (13,388) $ 1,585,998 $ 24,856,444 12,134,615 1,750, ,645 1,055, ,876 2,065,294 3,397,906 1,944,297 $ 23,450,741 $ 1,405,703 42,908 5,344 $ 1,453, MTD VARIANCE $ $ $ $ (210,657) 53,972 (120,139) (56,446) 48,772 (20,799) (175,251) (47,469) (25,130) (342,490) 131,833 9,490 4,108 (13,388) 132,043 Total Cost of Electric Service (MTD Actual) Interest Expense, Net 8% Depreciation & Amortization 15% Fuel & Purchased Power 53% Admin, General and Other 8% Customer 2% Power Production 7% Distribution 5% Transmission 2% CHUGACH ELECTRIC ASSOCIATION 1

2 BALANCE SHEET ASSETS & OTHER DEBITS 03/31/14 12/31/13 Total Utility Plant in Service 1,146,568,754 1,135,356,956 Construction Work in Progress 18,584,771 28,674,163 Total Utility Plant $ 1,165,153,525 $ 1,164,031,119 Accum. Prov. for Depreciation/Amortization (474,057,334) (464,880,322) Net Utility Plant $ 691,096,191 $ 699,150,797 Nonutility Property - Net 76,889 76,889 Investment in Assoc. Organizations 9,853,115 10,204,193 Special Funds 565, ,546 Total Other Property & Investments $ 10,495,756 $ 10,817,628 Cash & Marketable Securities 12,200,477 14,655,696 Special Deposits 3,865,159 3,865,097 Accounts Receivable - Net 43,919,905 44,633,981 Materials and Supplies, Fuel Stock 34,208,843 38,886,243 Prepayments 3,018,114 1,863,407 Other Current & Accrued Assets 519, ,658 Total Current & Accrued Assets $ 97,731,665 $ 104,225,082 Deferred Debits 23,114,692 23,990,531 Total Assets & Other Debits $ 822,438,304 $ 838,184, Total Utility Plant (YTD) $1,165,153,525 Generation 41% Transmission 25% CWIP 2% Distribution 27% General & Other 5% LIABILITIES & OTHER CREDITS 03/31/14 12/31/13 Memberships 1,607,168 1,600,058 Pat. Capital, Margins & Equities 179,194, ,195,807 Total Margins & Equities $ 180,802,097 $ 175,795, Construction Work in Progress (YTD) $18,584,771 Long-Term Debt - Bonds (Net) 447,083, ,499,999 Long-Term Debt - Other (Net) 26,232,678 27,414,275 Total Long-Term Debt $ 473,316,010 $ 496,914,274 Notes Payable 71,781,695 54,682,812 Accounts Payable 7,934,067 11,461,303 Consumer Deposits 4,498,459 4,851,558 Other Current & Accrued Liabilities 25,712,137 37,094,167 Total Current & Accrued Liabilities $ 109,926,358 $ 108,089,840 Deferred Compensation 565, ,546 Deferred Liabilities 1,739,423 1,776,826 Patronage Capital Payable 7,931,295 7,931,295 Cost of Removal Obligation 48,157,369 47,139,392 Total Liabilities & Other Credits $ 822,438,304 $ 838,184,038 Transmission 15% Generation 44% Distribution 32% General Plant 9% CHUGACH ELECTRIC ASSOCIATION 2

3 COMPARATIVE FINANCIAL REPORT STATEMENT OF OPERATIONS CURRENT YTD ACTUAL TO BUDGET VARIANCE YTD YTD YTD CATEGORY ACTUAL BUDGET VARIANCE Operating Revenue and Patronage Capital $ 76,098,886 $ 77,891,291 $ (1,792,405) Fuel and Purchased Power Expense 37,705,611 38,077,127 (371,516) Power Production Expense 5,209,197 5,278,504 (69,307) Transmission Expense 1,568,005 1,721,051 (153,046) Distribution Expense 3,408,284 3,187, ,027 Customer Expense 1,597,192 1,667,940 (70,748) Administrative, General and Other 5,725,853 6,197,350 (471,497) Depreciation & Amortization Expense 10,253,381 10,096, ,764 Interest Expense, Net 5,842,558 5,914,076 (71,518) Total Cost of Electric Service $ 71,310,081 $ 72,139,922 $ (829,841) Patronage Capital & Operating Margins $ 4,788,805 $ 5,751,369 $ (962,564) Non-Operating Margins - Interest 167, ,724 39,105 Allowance Funds Used During Const. 32,846 14,790 18,056 Non-Operating Margins - Other 12,351-12,351 Patronage Capital or Margins $ 5,001,831 $ 5,894,883 $ (893,052) MFI/I TIER Total Cost of Electric Service (YTD Actual) Interest Expense, Net 8% Depreciation & Amortization 14% Admin, General and Other 8% Fuel & Purchase Power 53% Customer 2% Power Production 8% Distribution 5% Transmission 2% CHUGACH ELECTRIC ASSOCIATION 3

4 COMPARATIVE FINANCIAL REPORT STATEMENT OF OPERATIONS CURRENT TO PRIOR YTD ACTUAL YTD YTD CATEGORY ACTUAL ACTUAL Operating Revenue and Patronage Capital $ 76,098,886 $ 77,748,517 Fuel and Purchased Power Expense 37,705,611 41,689,064 Power Production Expense 5,209,197 4,707,220 Transmission Expense 1,568,005 1,625,181 Distribution Expense 3,408,284 2,938,379 Customer Expense 1,597,192 1,553,137 Administrative, General and Other 5,725,853 5,709,405 Depreciation and Amortization Expense 10,253,381 9,621,632 Interest Expense, Net 5,842,558 5,291,626 Total Cost of Electric Service $ 71,310,081 $ 73,135,644 Patronage Capital & Operating Margins $ 4,788,805 $ 4,612,873 Non-Operating Margins - Interest 167, ,253 Allowance for Funds Used During Construction 32,846 44,069 Non-Operating Margins - Other 12,351 12,381 Patronage Capital or Margins $ 5,001,831 $ 4,841,576 MFI/I TIER Cost of Electric Service (YTD) (in millions) CHUGACH ELECTRIC ASSOCIATION 4

5 FUNCTIONAL STATEMENT OF OPERATIONS MARCH 31, YTD YTD YTD YTD CATEGORY TOTAL GEN TRANS DIST Operating Revenues $ 76,098,886 $ 56,045,494 $ 5,868,522 $ 14,184,870 Fuel 33,437,251 33,437, Production 5,209,197 5,209, Purchased Power 4,268,360 4,268, Transmission 1,568, ,568,005 0 Distribution 3,408, ,408,284 Customer 1,597, ,597,192 Administrative, General and Other 5,725,853 2,101, ,268 2,822,874 Depreciation and Amortization 10,253,381 5,952,490 1,511,464 2,789,427 Interest Expense, Net 5,842,558 3,563,078 1,264,830 1,014,650 Total Cost of Electric Service $ 71,310,081 $ 54,532,087 $ 5,145,567 $ 11,632,427 Patronage Capital & Operating Margins $ 4,788,805 $ 1,513,407 $ 722,955 $ 2,552,443 Interest Income 167,829 88,421 23,564 55,844 Allowance Funds Used During Const. 32,846 8,566 4,765 19,515 Capital Credits, Patronage Dividends, Other 12,351 ($1,486) $3,184 $10,653 Patronage Capital or Margins $ 5,001,831 $ 1,608,908 $ 754,468 $ 2,638,455 Total Cost of Electric Service Transmission 7% Generation 77% Distribution 16% CHUGACH ELECTRIC ASSOCIATION 5

6 120.0 MWh Sales (MTD) HEA (In Thousands) Retail Wholesale Economy 2013 Actual 2014 Actual 2014 Budget Year MWh Sales Comparison (YTD) HEA HEA HEA HEA (In Thousands) Retail Wholesale Budget CHUGACH ELECTRIC ASSOCIATION 6

7 4.0 Margin Comparison (MTD) (In Millions) (1.0) (2.0) Jan Feb Mar Apr May June July Aug Sep Oct Nov Dec 5-Year Average 2014 Actual 2014 Budget 8.0 Margin Comparison (YTD) (In Millions) Jan Feb Mar Apr May June July Aug Sep Oct Nov Dec 5-Year Average 2014 Actual 2014 Budget CHUGACH ELECTRIC ASSOCIATION 7

8 3.00 MFI/I and TIER (YTD) MFI/I TIER 60.00% Equity Ratio (YTD) 50.74% 50.00% 40.00% 34.98% 30.00% 23.96% 25.63% 27.64% 20.00% 10.00% 0.00% CHUGACH ELECTRIC ASSOCIATION 8

9 VARIANCE REPORT MARCH 2014 ENERGY SALES (kwh) YTD Actual YTD Budget Retail Energy Sales 306,233, ,307,000 Wholesale Energy Sales 225,029, ,847,000 Total Firm Energy Sales 531,262, ,154,000 Economy Energy Sales 114,182, ,493,000 Total Energy Sales 645,444, ,647,000 Firm energy sales totaled 531,262,221 kwh, which were 4.0% under budget. Retail and wholesale energy sales were under budget by 4.7% and 2.9%, respectively, due primarily to warmer than anticipated weather. Economy energy sales to Golden Valley Electric Association (GVEA) totaled 114,182,000 kwh, which exceeded budget by 11.4%, due to increased sales under contract from greater hydro production than expected in ENERGY REVENUE (in millions) Retail Revenue $ 43.5 $ 44.7 Wholesale Revenue Total Firm Revenue Economy Energy Revenue Other Operating Revenue Total Revenue $ 76.1 $ 77.9 Firm revenue totaled $63.9 million compared to $65.7 million in the budget. Retail and wholesale revenue was lower than budget due primarily to lower kwh sales and lower fuel and purchased power costs recovered in revenue through the fuel and purchased power rate adjustment process. Economy energy revenue totaled $10.4 million compared to $10.6 million in the budget, due primarily to lower than anticipated cost of fuel associated with sales to GVEA. Other operating revenue includes late fees, pole rental, wheeling, microwave and miscellaneous service and other electric revenue. Other operating revenue totaled $1.8 million compared to $1.6 million in the budget. This variance was due primarily to higher than anticipated wheeling revenue associated with Bradley Lake and sales to GVEA. CHUGACH ELECTRIC ASSOCIATION 9

10 VARIANCE REPORT MARCH 2014 POWER PRODUCTION (in millions) Operating & Maintenance $ 5.2 $ 5.3 Fuel Total $ 38.6 $ 39.1 Power production operating and maintenance expense was $5.2 million compared to $5.3 million in the budget, with no significant variance. Fuel expense was $33.4 million compared to $33.8 million projected in the budget. This variance was due primarily to lower than anticipated fuel storage and transportation costs, caused in part by a tax credit refund. Actual fuel purchased for production was 5,577,194 MCF at an average effective delivered price of $5.74 per MCF, compared to 5,650,813 MCF in the budget at an average effective delivered price of $5.68 per MCF. PURCHASED POWER (in millions) Total Purchased Power $ 4.3 $ 4.3 Purchased power expense was $4.3 million compared to $4.3 million in the budget, with no significant variance. Energy purchased was 47,833 MWh of energy at an average effective price of 7.62 cents per kwh compared to 71,181 MWh of energy in the budget at an average effective price of 4.59 cents per kwh. While energy purchased was lower than anticipated, it was completely offset by a higher average effective price, due to lower than anticipated purchases from Bradley Lake. TRANSMISSION OPERATIONS AND MAINTENANCE (in millions) Total Transmission $ 1.6 $ 1.7 Transmission operations and maintenance expense was $1.6 million compared to $1.7 million in the budget, with no significant variance. DISTRIBUTION OPERATIONS AND MAINTENANCE (in millions) Total Distribution $ 3.4 $ 3.2 Distribution operations and maintenance expense was $3.4 million compared to $3.2 million in the budget. While not a significant overall variance, this variance was due primarily to higher than anticipated labor expense allocated to this financial statement category. CHUGACH ELECTRIC ASSOCIATION 10

11 VARIANCE REPORT MARCH 2014 CONSUMER ACCOUNTS / CUSTOMER INFORMATION (in millions) Total Consumer / Customer Information $ 1.6 $ 1.7 Consumer accounts and customer information expense was $1.6 million compared to $1.7 million in the budget, with no significant variance. ADMINISTRATIVE, GENERAL AND OTHER (in millions) Administrative, General and Other $ 5.7 $ 6.2 Administrative, general and other expense includes tax, donations, and other deductions associated with preliminary survey and investigation charges of abandoned projects and obsolete inventory write-offs that are not attributable to operating or maintenance accounts. Administrative, general and other expense was $5.7 million compared to $6.2 million in the budget. This variance was due primarily to lower than anticipated costs associated with legal and training initiatives. SUMMARY Depreciation, interest, and interest during construction expense totaled $16.1 million compared to $16.0 million in the budget, with no significant variance. All of the foregoing expenses resulted in total cost of electric service of $71.3 million compared to $72.1 million in the budget. Non-operating margins include interest income, allowance for funds used during construction (AFUDC), capital credit and patronage capital allocations and extraordinary items. Nonoperating margins totaled $213.0 thousand compared to $143.5 thousand in the budget. The variance was due primarily to higher than anticipated interest and gain in market value on marketable securities. The net result of revenue and expenses was margins of $5.0 million compared to projected margins of $5.9 million in the budget. The current forecast projects year-end margins of $6.0 million and an MFI/I of CHUGACH ELECTRIC ASSOCIATION 11

12 VARIANCE REPORT MARCH 2014 COMPARATIVE FINANCIAL REPORT STATEMENT OF OPERATIONS YEAR-END FORECAST APPROVED REVISED CATEGORY BUDGET FORECAST Operating Revenue and Patronage Capital $ 281,634,862 $ 279,954,948 Fuel and Purchased Power Expense 137,281, ,909,742 1 Power Production Expense 23,275,475 23,275,475 Transmission Expense 6,861,262 6,861,262 Distribution Expense 13,434,846 13,434,846 Customer Expense 6,901,597 6,901,597 Administrative, General & Other 24,563,307 24,091,810 1 Depreciation and Amortization Expense 40,666,938 40,666,938 Interest Expense, Net 22,803,184 22,731,666 1 Total Cost of Electric Service $ 275,787,867 $ 274,873,336 Patronage Capital & Operating Margins $ 5,846,995 $ 5,081,612 Non-Operating Margins - Interest 514, ,999 1 Allowance for Funds Used During Construction 109, ,167 1 Non-Operating Margins - Other - 12,351 1 Other Capital Credits and Patronage Dividends 285, ,000 Patronage Capital or Margins $ 6,756,000 $ 6,060,129 MFI/I TIER Forecast based on 3 months actual and 9 months forecast 2 Forecast has been adjusted to reflect known and measurable changes 1 2 CHUGACH ELECTRIC ASSOCIATION 12