Fitch Rts Chugach Electric Association's $150MM Bonds `A+'.

Business Editors

NEW YORK--(BUSINESS WIRE)--April 3, 2001

Fitch has assigned an 'A+' rating to Chugach Electric Association, Inc.'s (Chugach) $150 million 2001 series A bonds due 2011 and affirmed the 'A+' rating on the approximately $164.3 million of outstanding 1991 series A bonds. The Rating Outlook is Stable. Bond proceeds will be used to refinance outstanding indebtedness under existing lines of credit ($40 million) and bonds ($72.5 million), pay for capital expenditures and be used for general working capital. MBIA Insurance Corporation has issued a commitment to provide an insurance policy providing for the payment of principal and interest on the 2001 series A bonds when due.

The bonds are not redeemable prior to maturity and will initially be secured by a first lien on substantially all of Chugach's tangible and some intangible properties and assets, including generation, transmission and distribution properties. The first lien will be automatically released on the date on which all bonds issued under the existing indenture prior to the 2001 series A bonds cease to be outstanding or their holders consent to conversion to unsecured status. Chugach does not expect that the release date will occur prior to March 15, 2002. On the release date, the 2001 series A bonds will become general unsecured obligations and will rank equally and ratably with all other unsecured and unsubordinated obligations.

Organized as an electric generation, transmission and distribution cooperative, Chugach operates on a not-for-profit basis, and intentionally does not design rates to produce a return on equity. Generating assets are primarily fueled by natural gas and benefit from favorable longer-term fuel contracts. Competition for the gas supplies from other generators is not great given the remote location of the natural gas fields. Plant performance has been good and a stable and moderately growing area, tied largely to residential customers, provides economic support for Chugach's electricity. Generation is supported by a well-maintained transmission system. Financial performance of the utility has been favorable, with debt service coverage ranging between 1.50 times (x) to 2x, a times interest earned ratio of around 1.35x and equity of about 25%. Forecasted numbers project this trend to continue. Capital requirements could increase in future years to reflect the re-powering of part of the Beluga natural gas-fired power plant, new transmission projects and additional generation to meet load growth requirements. Future capital needs are expected to be mostly funded from internally generated cash flow.

Electric rates are competitive for the area, although one neighboring utility does enjoy slightly lower rates. With this financing, Chugach will be modifying its indenture to move away from a mortgage type structure to more of an unsecured, debenture model. Given the solid historical financial performance of Chugach, its experienced management team and the electric industry's move to similar indenture structures, the change is felt to be appropriate. While Chugach's remote location would seem to reduce the potential impact that sharply higher natural gas prices are having in the lower 48 states, a further increase in natural gas prices in Alaska from current levels cannot be dismissed over the longer-term. Efforts to pass deregulation language in Alaska have generally not been successful. A new general rate case is expected to be filed in mid-2001, which could result in certain structural changes to how Chugach would earn its future rate of return. Legal issues relating to disputes with major customers appear to have been resolved, but certain other general legal proceedings remain outstanding.

Chugach is the largest electric utility in Alaska, providing electricity either directly or though wholesale and economy-energy sales to approximately two-thirds of all electric customers in the state. The certificated service territory is expansive and for the year ended Dec. 31, 2000, about 64% of revenues were from sales to directly served retail customers, approximately 31% were from sales of firm power to three wholesale customers and the remaining 5% from economy sales. Chugach has an installed generating capacity of about 511 megawatts from four wholly owned power plants. This is in addition to purchase rights to a smaller amount of hydroelectric generation and a pooling arrangement with a cogeneration facility. The natural gas-fired Beluga power plant is by far the most significant Chugach generating facility and natural gas is supplied under long-term gas purchase contracts. Electric rates are approved by the Regulatory Commission of Alaska and Chugach is permitted to recover increases in fuel and purchased power costs through an automatic quarterly cost adjustment. Under Alaska law, financial covenants in the 2001 series A bonds and the existing and amended indenture are valid and enforceable and rates must be adequate to meet those covenants.