Company Quick10K Filing
Quick10K
Chugach Electric Association
10-Q 2019-06-30 Quarter: 2019-06-30
10-Q 2019-03-31 Quarter: 2019-03-31
10-K 2018-12-31 Annual: 2018-12-31
10-Q 2018-09-30 Quarter: 2018-09-30
10-Q 2018-06-30 Quarter: 2018-06-30
10-Q 2018-03-31 Quarter: 2018-03-31
10-K 2017-12-31 Annual: 2017-12-31
10-Q 2017-09-30 Quarter: 2017-09-30
10-Q 2017-06-30 Quarter: 2017-06-30
10-Q 2017-03-31 Quarter: 2017-03-31
10-K 2016-12-31 Annual: 2016-12-31
10-Q 2016-09-30 Quarter: 2016-09-30
10-Q 2016-06-30 Quarter: 2016-06-30
10-Q 2016-03-31 Quarter: 2016-03-31
10-K 2015-12-31 Annual: 2015-12-31
10-Q 2015-09-30 Quarter: 2015-09-30
10-Q 2015-06-30 Quarter: 2015-06-30
10-Q 2015-03-31 Quarter: 2015-03-31
10-K 2014-12-31 Annual: 2014-12-31
10-Q 2014-09-30 Quarter: 2014-09-30
10-Q 2014-06-30 Quarter: 2014-06-30
10-Q 2014-03-31 Quarter: 2014-03-31
10-K 2013-12-31 Annual: 2013-12-31
8-K 2019-10-01 Enter Agreement
8-K 2019-08-01 Enter Agreement, Off-BS Arrangement
8-K 2019-05-23 Officers, Amend Bylaw, Exhibits
8-K 2019-05-15 Enter Agreement, Off-BS Arrangement
8-K 2019-04-26
8-K 2019-03-20 Off-BS Arrangement
8-K 2018-12-28 Enter Agreement
8-K 2018-11-29
8-K 2018-10-25 Exhibits
8-K 2018-07-26
8-K 2018-06-21
8-K 2018-05-24 Amend Bylaw, Exhibits
8-K 2018-04-26
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C004 2019-06-30
Part I. Financial Information
Item 1. Financial Statements
Item 2. Management’S Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II. Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 5. Other Information
EX-4.34 c004-20190630xex4_34.htm
EX-4.35 c004-20190630xex4_35.htm
EX-4.36 c004-20190630xex4_36.htm
EX-10.78.1 c004-20190630xex10_781.htm
EX-31.1 c004-20190630xex31_1.htm
EX-31.2 c004-20190630xex31_2.htm
EX-32.1 c004-20190630xex32_1.htm
EX-32.2 c004-20190630xex32_2.htm

Chugach Electric Association Earnings 2019-06-30

C004 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

10-Q 1 c004-20190630x10q.htm 10-Q 20190630 10Q Q2



UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549





FORM 10-Q



QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2019

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934



Commission file number 33-42125

CHUGACH ELECTRIC ASSOCIATION, INC.

(Exact name of registrant as specifies in its charter)





 

 

 

 

 

 

 

 

 

State of Alaska

(State or other jurisdiction of

incorporation or organization)

92-0014224

(I.R.S. Employer

Identification No.)

5601 Electron Drive, Anchorage, AK

(Address of principal executive offices)

99518

(Zip Code)

(907) 563-7494

(Registrant’s telephone number, including area code)

None

(Former name, former address, and former fiscal year if changed since last report)

 

Securities registered pursuant to Section 12(b) of the Act:  None

Title of each classTrading Symbol(s)Name of each exchange on which registered

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes  No

(Note:  The registrant is a voluntary filer and not subject to the filing requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934.  Although not subject to these filing requirements, the registrant has filed all reports that would have been required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months had the registrant been subject to such requirements.)

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes  No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.



 

 

 

 



 

 

Large accelerated filer

 

Accelerated filer

Non-accelerated filer

 

Smaller reporting company



 

 

Emerging growth company



 

 

 

 



 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes  No

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

NONE

 

 


 



CHUGACH ELECTRIC ASSOCIATION, INC.

TABLE OF CONTENTS





 

 

 



Caution Regarding Forward-Looking Statements

Part I. Financial Information

 



Item 1.

Financial Statements (unaudited)

2



 

Consolidated Balance Sheets - as of June 30, 2019, and December 31, 2018

3



 

Consolidated Statements of Operations – Three and six months ended June  30, 2019, and June 30, 2018

5



 

Consolidated Statements of Changes in Equities and Margins – Three and six months ended June 30, 2019, and June 30, 2018

6



 

Consolidated Statements of Cash Flows - Six months ended June 30, 2019, and June 30, 2018



 

Notes to Financial Statements



Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

30 



Item 3.

Quantitative and Qualitative Disclosures About Market Risk

43 



Item 4.

Controls and Procedures

44 



 

 

 

Part II. Other Information

 



Item 1.

Legal Proceedings

44 



Item 1A.

Risk Factors

45 



Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

46 



Item 3.

Defaults Upon Senior Securities

46 



Item 4.

Mine Safety Disclosures

46 



Item 5.

Other Information

46 



Item 6.

Exhibits

47 



 

Signatures

48 







 

 


 





CAUTION REGARDING FORWARD-LOOKING STATEMENTS



Statements in this report that do not relate to historical facts, including statements relating to future plans, events or performance, are forward-looking statements that involve risks and uncertainties. Actual results, events or performance may differ materially. Readers are cautioned not to place undue reliance on these forward-looking statements that speak only as of the date of this report and the accuracy of which is subject to inherent uncertainty. It is suggested that these statements be read in conjunction with the audited financial statements for Chugach Electric Association Inc. (Chugach) for the year ended December 31, 2018, filed as part of Chugach’s annual report on Form 10-K. Chugach undertakes no obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances that may occur after the date of this report or the effect of those events or circumstances on any of the forward-looking statements contained in this report, except as required by law.



PART I. FINANCIAL INFORMATION



ITEM 1. FINANCIAL STATEMENTS



The unaudited financial statements and notes to the unaudited financial statements of Chugach as of and for the quarter ended June 30, 2019, follow.





 

2


 

Table Of Contents

 

Chugach Electric Association, Inc.

Consolidated Balance Sheets

(Unaudited)





























 

 

 

 

 

 



 

 

 

 

 

 

Assets

 

June 30, 2019

 

December 31, 2018



 

 

 

 

 

 

Utility plant:

 

 

 

 

 

 

Electric plant in service

 

$

1,236,459,969 

 

$

1,216,663,092 

Construction work in progress

 

 

14,170,391 

 

 

17,272,307 

Total utility plant

 

 

1,250,630,360 

 

 

1,233,935,399 

Less accumulated depreciation

 

 

(545,192,611)

 

 

(529,099,451)

Net utility plant

 

 

705,437,749 

 

 

704,835,948 



 

 

 

 

 

 

Other property and investments, at cost:

 

 

 

 

 

 

Nonutility property

 

 

76,889 

 

 

76,889 

Operating lease right-of-use assets

 

 

1,025,106 

 

 

Investments in associated organizations

 

 

8,155,603 

 

 

8,570,046 

Special funds

 

 

2,132,485 

 

 

1,890,221 

Restricted cash equivalents

 

 

108,000 

 

 

108,000 

Total other property and investments

 

 

11,498,083 

 

 

10,645,156 



 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

 

2,199,574 

 

 

6,106,995 

Special deposits

 

 

54,300 

 

 

54,300 

Restricted cash equivalents

 

 

1,225,258 

 

 

1,213,974 

Marketable securities

 

 

 

 

6,316,583 

Accounts receivable, net

 

 

25,600,024 

 

 

31,165,249 

Materials and supplies

 

 

16,559,823 

 

 

16,223,477 

Fuel stock

 

 

10,003,214 

 

 

11,952,086 

Prepayments

 

 

3,557,760 

 

 

2,227,117 

Other current assets

 

 

303,381 

 

 

241,279 

Total current assets

 

 

59,503,334 

 

 

75,501,060 



 

 

 

 

 

 

Other non-current assets:

 

 

 

 

 

 

Deferred charges, net

 

 

39,288,829 

 

 

37,668,424 

Total other non-current assets

 

 

39,288,829 

 

 

37,668,424 



 

 

 

 

 

 

Total assets

 

$

815,727,995 

 

$

828,650,588 



 

 

 

 

 

 



 

 

 

 

 

(Continued)

























 

3


 

Table Of Contents

 

Chugach Electric Association, Inc.

Consolidated Balance Sheets (continued)

(Unaudited)





 

 

 

 

 

 



 

 

 

 

 

 



Liabilities, Equities and Margins

 

June 30, 2019

 

December 31, 2018



 

 

 

 

 

 

Equities and margins:

 

 

 

 

 

 

Memberships

 

$

1,761,182 

 

$

1,748,172 

Patronage capital

 

 

173,370,711 

 

 

177,823,597 

Other

 

 

15,079,726 

 

 

14,952,925 

Total equities and margins

 

 

190,211,619 

 

 

194,524,694 



 

 

 

 

 

 

Long-term obligations, excluding current installments:

 

 

 

 

 

 

Bonds payable

 

 

449,999,997 

 

 

398,416,664 

Notes payable

 

 

32,376,000 

 

 

33,972,000 

Less unamortized debt issuance costs

 

 

(2,780,509)

 

 

(2,425,247)

Operating lease liabilities

 

 

834,925 

 

 

Total long-term obligations

 

 

480,430,413 

 

 

429,963,417 



 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Current installments of long-term obligations

 

 

26,798,849 

 

 

26,608,667 

Commercial paper

 

 

8,000,000 

 

 

61,000,000 

Accounts payable

 

 

8,662,054 

 

 

9,538,749 

Consumer deposits

 

 

4,657,070 

 

 

4,845,611 

Fuel cost over-recovery

 

 

2,923,764 

 

 

3,388,295 

Accrued interest

 

 

5,719,982 

 

 

5,671,840 

Salaries, wages and benefits

 

 

8,170,284 

 

 

7,863,112 

Fuel

 

 

5,066,918 

 

 

5,844,856 

Other current liabilities

 

 

9,118,964 

 

 

10,085,556 

Total current liabilities

 

 

79,117,885 

 

 

134,846,686 



 

 

 

 

 

 

Other non-current liabilities:

 

 

 

 

 

 

Deferred compensation

 

 

1,573,178 

 

 

1,359,878 

Other liabilities, non-current

 

 

771,838 

 

 

580,841 

Deferred liabilities

 

 

752,523 

 

 

764,834 

Patronage capital payable

 

 

1,931,295 

 

 

3,393,253 

Cost of removal obligation / asset retirement obligation

 

 

60,939,244 

 

 

63,216,985 

Total other non-current liabilities

 

 

65,968,078 

 

 

69,315,791 



 

 

 

 

 

 

Total liabilities, equities and margins

 

$

815,727,995 

 

$

828,650,588 



See accompanying notes to financial statements.



 

4


 

Table Of Contents

 

Chugach Electric Association, Inc.

Consolidated Statements of Operations

(Unaudited)







 

 

 

 

 

 

 

 

 

 

 

 



 

Three months ended June 30,

 

Six months ended June 30,



 

2019

 

2018

 

2019

 

2018



 

 

 

 

 

 

 

 

 

 

 

 

Operating revenues

 

$

47,540,088 

 

$

45,988,583 

 

$

103,367,326 

 

$

102,045,861 



 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Fuel

 

 

12,788,246 

 

 

12,554,088 

 

 

27,526,795 

 

 

31,041,678 

Production

 

 

4,683,375 

 

 

4,183,286 

 

 

9,542,186 

 

 

8,607,205 

Purchased power

 

 

4,877,990 

 

 

4,212,015 

 

 

11,771,001 

 

 

8,294,903 

Transmission

 

 

1,634,714 

 

 

1,741,184 

 

 

4,022,783 

 

 

3,729,188 

Distribution

 

 

3,867,859 

 

 

3,885,589 

 

 

7,424,478 

 

 

7,621,549 

Consumer accounts

 

 

1,753,002 

 

 

1,651,942 

 

 

3,466,561 

 

 

3,517,651 

Administrative, general and other

 

 

6,620,509 

 

 

5,870,304 

 

 

12,946,367 

 

 

11,415,273 

Depreciation and amortization

 

 

7,724,380 

 

 

7,394,219 

 

 

15,550,749 

 

 

14,737,296 

Total operating expenses

 

 

43,950,075 

 

 

41,492,627 

 

 

92,250,920 

 

 

88,964,743 



 

 

 

 

 

 

 

 

 

 

 

 

Interest expense:

 

 

 

 

 

 

 

 

 

 

 

 

Long-term debt and other

 

 

5,590,422 

 

 

5,501,411 

 

 

11,147,036 

 

 

11,116,146 

Charged to construction

 

 

(84,099)

 

 

(67,498)

 

 

(185,057)

 

 

(124,861)

Interest expense, net

 

 

5,506,323 

 

 

5,433,913 

 

 

10,961,979 

 

 

10,991,285 

Net operating margins

 

 

(1,916,310)

 

 

(937,957)

 

 

154,427 

 

 

2,089,833 



 

 

 

 

 

 

 

 

 

 

 

 

Nonoperating margins:

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

142,663 

 

 

191,113 

 

 

311,815 

 

 

350,696 

Allowance for funds used during construction

 

 

37,950 

 

 

28,125 

 

 

83,507 

 

 

51,998 

Capital credits, patronage dividends and other

 

 

18,626 

 

 

(108,815)

 

 

118,757 

 

 

(192,101)

Total nonoperating margins

 

 

199,239 

 

 

110,423 

 

 

514,079 

 

 

210,593 



 

 

 

 

 

 

 

 

 

 

 

 

Assignable margins

 

$

(1,717,071)

 

$

(827,534)

 

$

668,506 

 

$

2,300,426 



See accompanying notes to financial statements.

 



 

5


 

Chugach Electric Association, Inc.

Consolidated Statements of Changes in Equities and Margins

(Unaudited)

 





 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 



 

Three months ended June 30,

 

 

Six months ended June 30,



 

2019

 

2018

 

 

2019

 

2018

Memberships:

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at beginning of period

 

$

1,753,742 

 

$

1,724,759 

 

 

$

1,748,172 

 

$

1,719,154 

Memberships and donations received

 

 

7,440 

 

 

7,903 

 

 

 

13,010 

 

 

13,508 

Balance at end of period

 

$

1,761,182 

 

$

1,732,662 

 

 

$

1,761,182 

 

$

1,732,662 

Other equities and margins:

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at beginning of period

 

 

15,035,783 

 

 

14,650,759 

 

 

 

14,952,925 

 

 

14,653,253 

Unclaimed capital credits retired

 

 

(4,341)

 

 

(10,889)

 

 

 

(5,918)

 

 

(13,459)

Memberships and donations received

 

 

48,284 

 

 

158,605 

 

 

 

132,719 

 

 

158,681 

Balance at end of period

 

$

15,079,726 

 

$

14,798,475 

 

 

$

15,079,726 

 

$

14,798,475 

Patronage capital:

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at beginning of period

 

 

175,198,092 

 

 

176,056,635 

 

 

 

177,823,597 

 

 

172,928,887 

Assignable margins

 

 

(1,717,071)

 

 

(827,534)

 

 

 

668,506 

 

 

2,300,426 

Retirement/net transfer of capital credits

 

 

(110,310)

 

 

(395,040)

 

 

 

(5,121,392)

 

 

(395,252)

Balance at end of period

 

$

173,370,711 

 

$

174,834,061 

 

 

$

173,370,711 

 

$

174,834,061 

Total equities and margins

 

$

190,211,619 

 

$

191,365,198 

 

 

$

190,211,619 

 

$

191,365,198 



 

 

 

 

 

 

 

 

 

 

 

 

 

See accompanying notes to financial statements

 

 

 

 

 

 

 

 

 

 

 

 

 







6


 

Table Of Contents

 

Chugach Electric Association, Inc.

Consolidated Statements of Cash Flow

(Unaudited)











 

 

 

 

 

 



Six months ended June 30,

 



2019

 

2018

 

Cash flows from operating activities:

 

 

 

 

 

 

Assignable margins

$

668,506 

 

$

2,300,426 

 

Adjustments to reconcile assignable margins to net cash provided by operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

15,550,749 

 

 

14,737,296 

 

Amortization and depreciation cleared to operating expenses

 

3,607,234 

 

 

2,517,243 

 

Allowance for funds used during construction

 

(83,507)

 

 

(51,998)

 

Write off of inventory, deferred charges and projects

 

484,649 

 

 

127,681 

 

Other

 

(112,604)

 

 

208,450 

 

(Increase) decrease in assets:

 

 

 

 

 

 

Accounts receivable, net

 

4,278,299 

 

 

9,255,648 

 

Fuel cost under-recovery

 

 

 

3,250,815 

 

Materials and supplies

 

(347,346)

 

 

(886,757)

 

Fuel stock

 

1,948,872 

 

 

(2,097,957)

 

Prepayments

 

(1,330,643)

 

 

1,736,547 

 

Other assets

 

(62,101)

 

 

76,595 

 

Deferred charges

 

(4,457,105)

 

 

(2,458,074)

 

Increase (decrease) in liabilities:

 

 

 

 

 

 

Accounts payable

 

(428,416)

 

 

1,280,213 

 

Consumer deposits

 

(188,541)

 

 

(251,886)

 

Fuel cost over-recovery

 

(464,531)

 

 

 

Accrued interest

 

48,142 

 

 

(308,527)

 

Salaries, wages and benefits

 

307,172 

 

 

987,178 

 

Fuel

 

(777,938)

 

 

(2,103,131)

 

Other current liabilities

 

(2,022,672)

 

 

(94,221)

 

Deferred liabilities

 

(17,313)

 

 

(3,698)

 

Net cash provided by operating activities

 

16,600,906 

 

 

28,221,843 

 

Cash flows from investing activities:

 

 

 

 

 

 

Return of capital from investment in associated organizations

 

414,443 

 

 

414,012 

 

Investment in special funds

 

(14,855)

 

 

(296,047)

 

Investment in marketable securities and investments-other

 

(22,430)

 

 

(1,423,399)

 

Proceeds from the sale of marketable securities

 

6,437,508 

 

 

1,672,465 

 

Extension and replacement of plant

 

(19,481,053)

 

 

(9,708,321)

 

Net cash used in investing activities

 

(12,666,387)

 

 

(9,341,290)

 

Cash flows from financing activities:

 

 

 

 

 

 

Payments for debt issue costs

 

(472,332)

 

 

 

Net increase (decrease) in short-term obligations

 

(53,000,000)

 

 

3,000,000 

 

Proceeds from long-term obligations

 

75,000,000 

 

 

 

Repayments of long-term obligations

 

(25,012,667)

 

 

(25,012,667)

 

Memberships and donations received

 

139,811 

 

 

158,730 

 

Retirement of patronage capital and estate payments

 

(6,583,350)

 

 

(395,252)

 

Proceeds from consumer advances for construction

 

2,097,882 

 

 

2,162,439 

 

Net cash used in financing activities

 

(7,830,656)

 

 

(20,086,750)

 

Net change in cash, cash equivalents, and restricted cash equivalents

 

(3,896,137)

 

 

(1,206,197)

 

Cash, cash equivalents, and restricted cash equivalents at beginning of period

$

7,428,969 

 

$

7,201,759 

 

Cash, cash equivalents, and restricted cash equivalents at end of period

$

3,532,832 

 

$

5,995,562 

 

Supplemental disclosure of non-cash investing and financing activities:

 

 

 

 

 

 

Cost of removal obligation

$

(2,277,741)

 

$

1,231,344 

 

Extension and replacement of plant included in accounts payable

$

1,657,083 

 

$

2,470,626 

 

Patronage capital retired/net transferred and included in other current liabilities

$

 

$

2,000,000 

 

Supplemental disclosure of cash flow information - interest expense paid, net of amounts capitalized

$

10,317,686 

 

$

10,725,424 

 



See accompanying notes to financial statements.

 

7


 

Table of Contents

 

Chugach Electric Association, Inc.

Notes to Consolidated Financial Statements

June 30, 2019 and 2018

 

1.      PRESENTATION OF FINANCIAL INFORMATION



The accompanying unaudited interim financial statements include the accounts of Chugach Electric Association, Inc. (Chugach) and have been prepared in accordance with generally accepted accounting principles for interim financial information. Accordingly, they do not include all of the information and footnotes required by United States of America generally accepted accounting principles (U.S. GAAP) for complete financial statements. They should be read in conjunction with Chugach’s audited financial statements for the year ended December 31, 2018, filed as part of Chugach’s annual report on Form 10-K. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. The results of operations for interim periods are not necessarily indicative of the results that may be expected for an entire year or any other period.



2.      DESCRIPTION OF BUSINESS



Chugach is one of the largest electric utilities in Alaska. Chugach is engaged in the generation, transmission and distribution of electricity in the Anchorage and upper Kenai Peninsula areas. Chugach is on an interconnected regional electrical system referred to as the Alaska Railbelt, a 400-mile-long area stretching from the coastline of the southern Kenai Peninsula to the interior of the state, including Alaska's largest cities, Anchorage and Fairbanks.



Chugach’s retail and wholesale members are the consumers of the electricity sold. Chugach supplies much of the power requirements of the City of Seward (Seward), as a wholesale customer. Occasionally, Chugach sells available generation, in excess of its own needs, to Matanuska Electric Association, Inc. (MEA), Homer Electric Association, Inc. (HEA), Golden Valley Electric Association, Inc. (GVEA) and Anchorage Municipal Light & Power (ML&P).



Chugach was organized as an Alaska electric cooperative in 1948 and operates on a not‑for‑profit basis and, accordingly, seeks only to generate revenues sufficient to pay operating and maintenance costs, the cost of purchased power, capital expenditures, depreciation, and principal and interest on all indebtedness and to provide for reserves. Chugach is subject to the regulatory authority of the Regulatory Commission of Alaska (RCA).



Chugach has three Collective Bargaining Agreements (CBA’s) with the International Brotherhood of Electrical Workers  (IBEW), representing approximately 70% of its workforce. Chugach also has an agreement with the Hotel Employees and Restaurant Employees (HERE). All three IBEW CBA’s are effective through June 30, 2021. The three CBA’s provide for wage increases in all years and include health and welfare premium cost sharing provisions. The HERE contract is effective through June 30, 2021, and provides for wage, pension contribution, and health and welfare contribution increases in all years.

 



8


 

Table Of Contents

 

Chugach Electric Association, Inc.

Notes to Consolidated Financial Statements

June 30, 2019 and 2018

 

3.      SIGNIFICANT ACCOUNTING POLICIES



a. Management Estimates



In preparing the financial statements in conformity with U.S. GAAP, the management of Chugach is required to make estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the balance sheet and revenues and expenses for the reporting period. Estimates include allowance for doubtful accounts, workers’ compensation liability, deferred charges and liabilities, unbilled revenue, estimated useful life of utility plant, cost of removal and asset retirement obligation (“ARO”), and remaining proved Beluga River Unit (“BRU”) reserves. Actual results could differ from those estimates.



b. Regulation



The accounting records of Chugach conform to the Uniform System of Accounts as prescribed by the Federal Energy Regulatory Commission (“FERC”). Chugach meets the criteria, and accordingly, follows the accounting and reporting requirements of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 980, “Topic 980 - Regulated Operations.” FASB ASC 980 provides for the recognition of regulatory assets and liabilities as allowed by regulators for costs or credits that are reflected in current rates or are considered probable of being included in future rates. Chugach’s regulated rates are established to recover all of the specific costs of providing electric service. In each rate filing, rates are set at levels to recover all of the specific allowable costs and those rates are then collected from retail and wholesale customers. The regulatory assets or liabilities are then reduced as the cost or credit is reflected in earnings and our rates.



c. Income Taxes



Chugach is exempt from federal income taxes under the provisions of Section 501(c)(12) of the Internal Revenue Code and for the six month periods ended June 30, 2019 and 2018 was in compliance with that provision.



Chugach applies a more-likely-than-not recognition threshold for all tax uncertainties. FASB ASC 740, “Topic 740 – Income Taxes,” only allows the recognition of those tax benefits that have a greater than 50% likelihood of being sustained upon examination by the taxing authorities. Chugach’s management reviewed Chugach’s tax positions and determined there were no outstanding or retroactive tax positions that were not highly certain of being sustained upon examination by the taxing authorities.



9


 

Table Of Contents

 

Chugach Electric Association, Inc.

Notes to Consolidated Financial Statements

June 30, 2019 and 2018

 

d. Cash, Cash Equivalents, and Restricted Cash Equivalents



The following table provides a reconciliation of cash, cash equivalents, and restricted cash equivalents reported within the Consolidated Balance Sheet that sum to the total of the same such amounts shown in the Consolidated Statements of Cash Flows.





 

 

 

 

 



 

 

 

 

 



June 30, 2019

 

December 31, 2018

Cash and cash equivalents

$

2,199,574 

 

$

6,106,995 

Restricted cash equivalents

 

1,225,258 

 

 

1,213,974 

Restricted cash equivalents included in other property and investments

 

108,000 

 

 

108,000 

Total cash, cash equivalents and restricted cash equivalents shown in the consolidated statements of cash flows

$

3,532,832 

 

$

7,428,969 



Restricted cash equivalents include funds on deposit for future workers’ compensation claims.



e. Marketable Securities



Chugach’s marketable securities had consisted of bond mutual funds, corporate bonds, and certificates of deposit with a maturity less than 12 months, classified as trading securities, reported at fair value with gains and losses in earnings. Interest and dividend income from marketable securities is included in nonoperating margins – interest income, and was $91.7 thousand and $196.0 thousand at June 30, 2019 and 2018, respectively.  Chugach sold all marketable securities and recognized a loss during the second quarter of 2019.  Net gains and losses on marketable securities are included in nonoperating margins – capital credits, patronage dividends and other, and are summarized as follows:





 

 

 

 

 



 

 

 

 

 



Six months ended
June 30, 2019

 

Six months ended
June 30, 2018

Net gains (losses) recognized during the period on trading securities

$

98,495 

 

$

(181,257)

Less: Net gains (losses) recognized during the period on trading securities sold during the period

 

98,495 

 

 

(77,597)

Unrealized gains (losses) recognized during the reporting period on trading securities still held at the reporting date

$

 

$

(103,660)



f. Accounts Receivable



Included in accounts receivable are amounts invoiced to ML&P for their proportionate share of current Southcentral Power Project (“SPP”) costs, which amounted to $1.0 million and $1.4 million at June 30, 2019 and December 31, 2018, respectively.



10


 

Table Of Contents

 

Chugach Electric Association, Inc.

Notes to Consolidated Financial Statements

June 30, 2019 and 2018

 

g. Fuel Stock



Fuel Stock is the weighted average cost of fuel injected into Cook Inlet Natural Gas Storage, LLC (“CINGSA”). Chugach’s fuel balance in storage amounted to $10.0 million and $12.0 million at June 30, 2019, and December 31, 2018, respectively.



h. Investments in Associated Organizations

Chugach’s investments in associated organizations are considered equity securities without readily determinable fair values, and as such are measured at cost minus impairment, if any. There were no impairments of these investments recognized during the six months ended June  30, 2019 or 2018.









4.      REVENUE FROM CONTRACTS WITH CUSTOMERS



a. Nature of goods and services



The following is a description of the contracts and customer classes from which Chugach generates revenue.



i. Energy Sales



Energy sales revenues are Chugach’s primary source of revenue, representing approximately 96.6% and 94.7% of total operating revenue during the six months ended June 30, 2019 and 2018, respectively. Energy sales revenues are recognized upon delivery of electricity, based on billing rates authorized by the RCA, which are applied to customers’ usage of electricity. Chugach’s rates are established, in part, on test period sales levels that reflect actual operating results. Chugach's tariffs include provisions for the recovery of gas costs according to gas supply contracts and costs associated with the BRU operations, as well as purchased power costs.



Expenses associated with electric services include fuel purchased from others and produced from Chugach’s interest in the BRU, both of which are used to generate electricity, as well as power purchased from others. Chugach is authorized by the RCA to recover fuel and purchased power costs through the fuel and purchased power adjustment process, which is adjusted quarterly to reflect increases and decreases of such costs. The amount of fuel and purchased power revenue recognized is equal to actual fuel and purchased power costs. We recognize differences between projected recoverable fuel and purchased power costs and amounts actually recovered through rates. The fuel cost under/over recovery on our balance sheet represents the net accumulation of any under- or over-collection of fuel and purchased power costs. Fuel cost under-recovery will appear as an asset on our balance sheet and will be collected from our members in subsequent periods. Conversely, fuel cost over-recovery will appear as a liability on our balance sheet and will be refunded to our members in subsequent periods.

11


 

Table Of Contents

 

Chugach Electric Association, Inc.

Notes to Consolidated Financial Statements

June 30, 2019 and 2018

 





 

Customer Class

Nature, timing of satisfaction of performance obligations, and significant payment terms

Retail

Retail energy customers can have up to four components of monthly billing included in revenue – energy, fuel and purchased power, demand and customer charge. The energy rate and fuel and purchased power surcharge are applied by kilowatt hour (kWh) usage. The demand charge is applied by kilowatt (kW). The customer charge is a monthly amount applied by meter.

Wholesale

Classified as firm energy sales. Four components of monthly billing are included in revenue – energy, fuel and purchased power, demand and customer charge. The energy rate and fuel and purchased power surcharge are applied by kWh usage. The demand charge is applied by kW.  The customer charge is a monthly amount applied by meter.

Economy

Classified as non-firm energy sales. Three components of monthly billing are included in revenue – fuel, operations and maintenance, and margin. The actual fuel costs are billed per thousand cubic feet (Mcf) used. The operations and maintenance and margin rates are applied by megawatt hour (MWh) usage.



Payment on energy sales invoices to all customer classes above are due within 15 to 30 days.



Chugach calculates unbilled revenue, for residential and commercial customers, at the end of each month to ensure the recognition of a full month of revenue. Chugach accrued $7,936,992 and $7,749,823 of unbilled retail revenue at June 30, 2019 and 2018, respectively, which is included in accounts receivable on the balance sheet. Revenue derived from wholesale and economy customers is recorded from metered locations on a calendar month basis, so no estimation is required.



The collectability of our energy sales is very high with typically 0.10% written off as bad debt expense, adjusted annually.



There were no costs associated with obtaining any of these contracts, therefore no asset was recognized or recorded associated with obtaining any contract.



ii. Wheeling



Wheeling represented 2.2% and 4.1% of our revenue during the six months ended June 30, 2019 and 2018, respectively.  Wheeling was recorded through the wheeling of energy across Chugach’s transmission lines at rates set by utility tariff and approved by the RCA. The rates are applied to MWh of energy wheeled. The collectability of wheeling is very high, with no adjustment required.



12


 

Table Of Contents

 

Chugach Electric Association, Inc.

Notes to Consolidated Financial Statements

June 30, 2019 and 2018

 

iii. Other Miscellaneous Services



Other miscellaneous services consist of various agreements including dispatch service and gas transfer agreements, pole rentals and microwave bandwidth. Revenue from these agreements is billed monthly and represented 1.1% and 1.2% of our total operating revenue during the six months ended June 30, 2019 and 2018, respectively. The revenue recognized from these agreements is recorded as the service is provided over a period of time. The collectability of these agreements is very high, with no adjustment required.



b. Disaggregation of Revenue



The table below details the revenue recognized by customer class and disaggregates base revenue from fuel and purchased power revenue recognized in the Consolidated Statement of Operations for the second quarter of 2019 and 2018 (in millions).





 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



Base Rate Sales Revenue

Fuel and Purchased Power Revenue

Total Revenue



 

2019

 

2018

 

% Variance

 

2019

 

2018

 

% Variance

 

2019

 

2018

 

% Variance

Retail

 

$

28.9 

 

$

27.9 

 

3.6 

%

 

$

15.2 

 

$

14.0 

 

8.6 

%

 

$

44.1 

 

$

41.9 

 

5.3 

%

Wholesale

 

$

0.5 

 

$

0.5 

 

0.0 

%

 

$

0.8 

 

$

0.8 

 

0.0 

%

 

$

1.3 

 

$

1.3 

 

0.0 

%

Economy

 

$

0.0 

 

$

0.0 

 

0.0 

%

 

$

0.0 

 

$

0.0 

 

0.0 

%

 

$

0.0 

 

$

0.0 

 

0.0 

%

Total Energy Sales

 

$

29.4 

 

$

28.4 

 

3.5 

%

 

$

16.0 

 

$

14.8 

 

8.1 

%

 

$

45.4 

 

$

43.2 

 

5.1 

%

Wheeling

 

$

0.0 

 

$

0.0 

 

0.0 

%

 

$

1.5 

 

$

2.2 

 

(31.8 

%)

 

$

1.5 

 

$

2.2 

 

(31.8 

%)

Gas Sales

 

$

0.0 

 

$

0.0 

 

0.0 

%

 

$

0.0 

 

$

0.0 

 

0.0 

%

 

$

0.0 

 

$

0.0 

 

0.0 

%

Other

 

$

0.6 

 

$

0.6 

 

0.0 

%

 

$

0.0 

 

$

0.0 

 

0.0 

%

 

$

0.6 

 

$

0.6 

 

0.0 

%

Total Miscellaneous

 

$

0.6 

 

$

0.6 

 

0.0 

%

 

$

1.5 

 

$

2.2 

 

(31.8 

%)

 

$

2.1 

 

$

2.8 

 

(25.0 

%)

Total Revenue

 

$

30.0 

 

$

29.0 

 

3.4 

%

 

$

17.5 

 

$

17.0 

 

2.9 

%

 

$

47.5 

 

$

46.0 

 

3.3 

%



The table below details the revenue recognized by customer class and disaggregates base revenue from fuel and purchased power revenue recognized in the Consolidated Statement of Operations for the six months ended June 30, 2019 and 2018 (in millions).







 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



Base Rate Sales Revenue

Fuel and Purchased Power Revenue

Total Revenue



 

2019

 

2018

 

% Variance

 

2019

 

2018

 

% Variance

 

2019

 

2018

 

% Variance

Retail

 

$

62.0 

 

$

60.2 

 

3.0 

%

 

$

35.1 

 

$

33.8 

 

3.8 

%

 

$

97.1 

 

$

94.0 

 

3.3 

%

Wholesale

 

$

1.1 

 

$

1.0 

 

10.0 

%

 

$

1.7 

 

$

1.6 

 

6.2 

%

 

$

2.8 

 

$

2.6 

 

7.7 

%

Economy

 

$

0.0 

 

$

0.0 

 

0.0 

%

 

$

0.0 

 

$

0.0 

 

0.0 

%

 

$

0.0 

 

$

0.0 

 

0.0 

%

Total Energy Sales

 

$

63.1 

 

$

61.2 

 

3.1 

%

 

$

36.8 

 

$

35.4 

 

4.0 

%

 

$

99.9 

 

$

96.6 

 

3.4 

%

Wheeling

 

$

0.0 

 

$

0.0 

 

0.0 

%

 

$

2.3 

 

$

4.2 

 

(45.2 

%)

 

$

2.3 

 

$

4.2 

 

(45.2 

%)

Gas Sales

 

$

0.0 

 

$

0.0 

 

0.0 

%

 

$

0.0 

 

$

0.0 

 

0.0 

%

 

$

0.0 

 

$

0.0 

 

0.0 

%

Other

 

$

1.2 

 

$

1.2 

 

0.0 

%

 

$

0.0 

 

$

0.0 

 

0.0 

%

 

$

1.2 

 

$

1.2 

 

0.0 

%

Total Miscellaneous

 

$

1.2 

 

$

1.2 

 

0.0 

%

 

$

2.3 

 

$

4.2 

 

(45.2 

%)

 

$

3.5 

 

$

5.4 

 

(35.2 

%)

Total Revenue

 

$

64.3 

 

$

62.4 

 

3.0 

%

 

$

39.1 

 

$

39.6 

 

(1.3 

%)

 

$

103.4 

 

$

102.0 

 

1.4 

%



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



13


 

Table Of Contents

 

Chugach Electric Association, Inc.

Notes to Consolidated Financial Statements

June 30, 2019 and 2018

 

c. Contract Balances



There were no contract assets at June 30, 2019, or at December 31, 2018. The table below provides information about contract receivables and contract liabilities.





 

 

 

 

 



 

 

 

 

 



June 30, 2019

 

December 31, 2018

Contract receivables, included in accounts receivable

$

22,961,370 

 

$

27,179,031 

Contract liabilities

 

4,579,376 

 

 

5,196,426 



Contract receivables represent amounts receivable from retail, wholesale, economy and wheeling.



Contract liabilities consist of credit balances and fuel cost over-recovery. Credit balances are reported as consumer deposits and represent the prepaid accounts of retail customers and are recognized in revenue as the customer uses electric service. Fuel cost over-recovery represents the over-collection of fuel and purchased power costs through the fuel and purchased power adjustment process, which will be refunded to customers through lower rates in the following quarter.



Significant changes in contract liabilities balances are as follows:





 

 

 

 

 



 

 

 

 

 



June 30, 2019

 

December 31, 2018

Contract liabilities at beginning of period

$

5,196,426 

 

$

1,581,481 

Cash received, excluding amounts recognized as revenue during the period

 

4,344,789 

 

 

5,196,426 

Revenue recognized that was included in the contract liability balance at the beginning of the period

 

(4,961,839)

 

 

(1,581,481)

Contract liabilities at end of period

$

4,579,376 

 

$

5,196,426 



d. Transaction Price Allocated to Remaining Performance Obligations



The table below includes estimated revenue to be recognized during the remainder of 2019 related to performance obligations that are unsatisfied (or partially unsatisfied) at June 30, 2019.





 

 



 

 



2019

Credit balances

$

1,655,612 

Fuel cost over-recovery

 

2,923,764 



Credit balances are primarily associated with Chugach’s LevelPay program. The program calculates the monthly amount to be collected from customers annually. It is anticipated the balance will be recognized in revenue within the following year as customers consume electricity.



Chugach’s fuel cost over- and under- recovery are adjusted quarterly, therefore, amounts over or under collected will be collected or refunded in the following quarter.

14


 

Table Of Contents

 

Chugach Electric Association, Inc.

Notes to Consolidated Financial Statements

June 30, 2019 and 2018

 



5.      REGULATORY MATTERS



Simplified Rate Filing



Chugach is a participant in the Simplified Rate Filing (SRF) process for adjustments to base demand and energy rates for Chugach retail customers and wholesale customer, Seward. SRF is an expedited base rate adjustment process available to electric cooperatives in the State of Alaska, with filings made either on a quarterly or semi-annual basis. Chugach is a participant on a quarterly filing schedule basis. Chugach is required to submit filings to the RCA for approval before any rate changes can be implemented. While there is no limitation on decreases, base rate increases under SRF are limited to 8% in a 12-month period and 20% in a 36-month period. 



Chugach submitted quarterly SRF filings which resulted in a system demand and energy rate increase of 2.7% effective November 1, 2018; an increase of 0.7% effective February 1, 2019; an increase of 0.8% effective May 1, 2019; and an increase of 2.5% effective August 1, 2019.



Operation and Regulation of the Alaska Railbelt Electric and Transmission System



In June 2016, the RCA opened a docket to “evaluate the reliability and security standards and practices of Alaska Electric Utilities.” In 2017, Chugach and several other Alaska Railbelt utilities entered into a contract with GDS Associates, Inc. (GDS). GDS’s role was to facilitate discussion among all six Alaska Railbelt utilities and various stakeholders with an end goal of submitting to the RCA a Railbelt Reliability Council (RRC), including a governance structure, that will be responsible for adoption and enforcement of uniform reliability and interconnection standards and integrated transmission resource planning and evaluation on transition to a single regional load balancing area. GDS presented to the RCA during technical conferences in January and March of 2018. Chugach and the other utilities provided GDS’s final recommendation of the RRC to the RCA in May 2018. During the fourth quarter of 2018, the utilities reviewed and adapted the memorandum of understanding with GDS (“GDS MOU”) with the RCA. The utilities are currently in discussions with non-utility stakeholders to include their input in the RRC formation process. In parallel, the utilities and an affiliate of American Transmission Company  (ATC) were in discussions regarding the formation of a transmission-only utility. ATC, GVEA, HEA, ML&P, and Seward Electric System collectively dba the Alaska Railbelt Transmission Co (“ART”) filed with the RCA for a Railbelt-wide Transco Certificate of Public Convenience (“CPCN”) on February 25, 2019. At that time Chugach’s primary focus was on filing with the RCA for the transfer of the ML&P CPCN to Chugach, and we were unable to complete our due diligence on the Transco filing prior to the filing date. Neither Chugach nor MEA were a  party to this filing.  On March 15, 2019 the RCA initiated an order requesting comments on proposed legislative language which would authorize the RCA to designate or develop an Electric Reliability Organization (“ERO”). Chugach submitted comments on this proposed legislative language seeking to delay adoption until the RRC Governance Board can be formed but continued to work with the RCA and stakeholders to craft acceptable legislation. Subsequently, Chugach completed its review of the ART filing, determined the model not to be

15


 

Table Of Contents

 

Chugach Electric Association, Inc.

Notes to Consolidated Financial Statements

June 30, 2019 and 2018

 

in the best interest of our membership; and therefore, declined to participate in the ART Transco. Following Chugach’s decision not to participate, ART withdrew its filing.



Chugach and the members of Alaska Railbelt Cooperative Transmission and Electric Company (“ARCTEC”) continue to work with the other utilities and stakeholders to arrive at legislation and RRC organization acceptable to all Railbelt utilities and stakeholders.



In June 2016, in response to Docket I-16-002, Railbelt Utility Information Technology and Operations Technology, leadership began meeting to discuss Railbelt Cybersecurity. The Railbelt Utilities Managers group designated the Cybersecurity Working Group to review industry standards and provide a statement of work to develop Railbelt Cybersecurity Standards. On June 21, 2018, Chugach posted a Request for Proposal to hire a consultant to write the standards. A final draft was presented to the Railbelt Utility Managers on February 15, 2019. On July 10, 2019 a status update was provided to the RCA from the Railbelt Utility Managers announcing the completion of Alaska Critical Infrastructure Protection (“AKCIP”) Cybersecurity Standards, and collective agreement to adopt them effective January 1, 2020 and implement them according to the implementation schedules contained in the specific standards.



ML&P Acquisition



In December 2017, the Mayor of Anchorage, Alaska, announced plans to place a proposition on the April 3, 2018 municipal ballot allowing the voters to authorize the sale of ML&P to Chugach. The proposition was approved by Anchorage voters 65.08% to 34.92% per the certified election results.  Chugach and the Municipality of Anchorage (“MOA”) negotiated final sales agreements and associated documents.  The sale of ML&P was approved by the Anchorage Assembly on December 4, 2018 and the Chugach Board of Directors gave its final approval on December 19, 2018.  The agreements and associated documents were executed on December 28, 2018.  Pursuant to these agreements and associated documents, on April 1, 2019, Chugach submitted the Joint Request for Necessary Approvals for Acquisition of Anchorage Municipal Light and Power, and the Petition for Approvals Needed to Acquire Anchorage Municipal Light and Power and Application to Amend Certificate of Public Convenience and Necessity No. 8 to the RCA.  The RCA accepted the filing as complete on April 18, 2019, and the procedural conference was held on April 22, 2019.  On May 8, 2019, the RCA issued an order indicating that a final order in the case will be issued by November 19, 2019.  In addition, the RCA granted the petitions to intervene filed by MEA; Providence Health and Services (“Providence”); GVEA; the Federal Executive Agencies (“FEA”); and HEA / Alaska Electric and Energy Cooperative, Inc. Hearings on the acquisition are scheduled during August and September 2019.  



In June 2019, Chugach and GVEA entered into a Memorandum of Understanding (MOU) in which Chugach agreed to provide GVEA non-firm energy, wheeling and ancillary services for a 3-year period under terms and conditions consistent with its operating tariff, and will make available 5 MW of Bradley Lake capacity to GVEA for a 5-year period.  Excluding fuel, the MOU is expected to provide over $10 million of additional revenue to the Chugach system over the term of the agreement.  GVEA has withdrawn its petition to intervene regarding the ML&P acquisitionFor more information, see “Note 10 – ML&P ACQUISITION.”   

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Chugach Electric Association, Inc.

Notes to Consolidated Financial Statements

June 30, 2019 and 2018

 



Petition to Increase Times Interest Earned Ratio (“TIER”)



On January 15, 2019, Chugach submitted a Petition to the RCA requesting to increase its system target TIER from 1.35 to 1.55. If approved, and assuming no other changes on the system, this change would increase annual margins by approximately $4.0 million.  The RCA opened a docket to review the petition, and invited the Office of the Attorney General, Regulatory Affairs and Public Advocacy Section (“RAPA”) to participate.  Chugach and RAPA entered a into stipulation that no disputed issues exist in this Docket. A hearing was held on July 15, 2019, and a decision by the RCA on the stipulation is expected by October 14, 2019.

     

6.      DEBT



Lines of Credit



Chugach maintains a $50.0 million line of credit with National Rural Utilities Cooperative Finance Corporation (NRUCFC). Chugach did not utilize this line of credit in the six months ended June 30, 2019. In addition, Chugach did not utilize this line of credit during 2018 and had no outstanding balance at December 31, 2018.  The borrowing rate is calculated using the total rate per annum and may be fixed by NRUCFC. The borrowing rate was 4.00% at June  30, 2019, and 3.75% at December 31, 2018. The NRUCFC Revolving Line Of Credit Agreement requires that Chugach, for each 12-month period, for a period of at least five consecutive days, pay down the entire outstanding principal balance. The NRUCFC line of credit was renewed September 29, 2017, and expires September 29, 2022. This line of credit is immediately available for unconditional borrowing.



Commercial Paper



On June 13, 2016, Chugach entered into a $150.0 million senior unsecured credit facility (“The Credit Agreement”) which is used to back Chugach’s commercial paper program. The pricing included an all-in drawn spread of one month London Interbank Offered Rate (LIBOR) plus 90.0 basis points, along with a 10.0 basis points facility fee (based on an A/A2/A unsecured debt rating).  The commercial paper can be repriced between one day and 270 days.  The participating banks included NRUCFC, KeyBank National Association, Bank of America, N.A.,  and CoBank, ACB.  The Credit Agreement was due to expire on June 13, 2021.



On July 30, 2019, Chugach entered into the First Amendment to the Credit Agreement, increasing the senior unsecured credit facility to $300.0 million and adding Wells Fargo Bank, N.A. as a participating bank and extending the Credit Agreement to July 30, 2024.    For more information, see “Note 14Subsequent Events.”    



Chugach expects to continue issuing commercial paper in 2019, as needed. Chugach had $8.0 million and $61.0 million of commercial paper outstanding at June 30, 2019, and December 31, 2018, respectively.



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Chugach Electric Association, Inc.

Notes to Consolidated Financial Statements

June 30, 2019 and 2018

 

The following table provides information regarding average commercial paper balances outstanding for the quarter ended June 30, 2019, and 2018 (dollars in millions), as well as corresponding weighted average interest rates:



 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

2019