UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-K

                 Annual Report Pursuant to Section 13 or 15 (d)
                     of the Securities Exchange Act of 1934

                  For the calendar year ended December 31, 2003
                          Commission File No. 001-12995

                   CE CASECNAN WATER AND ENERGY COMPANY, INC.
                   ------------------------------------------
             (Exact name of registrant as specified in its charter)

                      Philippines                        Not applicable
         --------------------------------              -------------------
         (State or other jurisdiction of                  (IRS Employer
         incorporation or organization)                Identification No.)


      24th Floor, 6750 Building, Ayala Avenue
      ---------------------------------------
               Makati, Manila, Philippines               Not applicable
               ---------------------------             -------------------
       (Address of principal executive offices)            (Zip Code)

                                 (632) 892-0276
                                 --------------
              (Registrant's telephone number, including area code)

         Securities registered pursuant to Section 12(b) of the Act: N/A
         Securities registered pursuant to Section 12(g) of the Act: N/A

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 [X]   No [ ]

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation S-K is not contained  herein and will not be contained,  to be the
best of each of the registrants'  knowledge,  in definitive proxy or information
statements  incorporated  by  reference  in Part  III of this  Form  10-K or any
amendment to this Form 10-K. [X]

Indicate  by check mark  whether  the  registrant  is an  accelerated  filer (as
defined by Rule 12b-2 of the Act). Yes [ ] No [X]

All of the shares of CE Casecnan  Water and Energy  Company,  Inc. are held by a
limited group of private  investors.  As of January 31, 2004,  767,162 shares of
Common Stock, $0.038 par value, were outstanding.


<PAGE>


                                TABLE OF CONTENTS
                                -----------------

                                     PART I
Item 1.   Business.............................................................3
Item 2.   Properties..........................................................13
Item 3.   Legal Proceedings...................................................13
Item 4.   Submission of Matters to a Vote of Security Holders.................14

                                     PART II

Item 5.   Market for Registrant's Common Equity and Related
          Stockholder Matters.................................................15
Item 6.   Selected Financial Data.............................................15
Item 7.   Management's Discussion and Analysis of Financial Condition and
          Results of Operations...............................................15
Item 7A.  Qualitative and Quantitative Disclosures about Market Risk..........23
Item 8.   Financial Statements and Supplementary Data.........................24
Item 9.   Changes in and Disagreements with Accountants on Accounting and
          Financial Disclosures...............................................42
Item 9A.  Controls and Procedures.............................................42

                                    PART III

Item 10.  Directors and Executive Officers of the Registrant..................43
Item 11.  Executive Compensation..............................................44
Item 12.  Security Ownership of Certain Beneficial Owners and Management
          and Related Stockholder Matters.....................................45
Item 13.  Certain Relationships and Related Transactions......................46
Item 14.  Principal Accountant Fees and Services..............................46

                                     PART IV

Item 15.  Exhibits, Financial Statement Schedules and Reports on Form 8-K.....47
Signatures....................................................................48
Exhibit Index.................................................................49

                                      -2-
<PAGE>

                                     PART I

ITEM 1. BUSINESS.

GENERAL

CE Casecnan Water and Energy Company, Inc. (the "Company" or "CE Casecnan") is a
privately held Philippine  corporation  formed indirectly by MidAmerican  Energy
Holdings  Company  ("MidAmerican")  in  September  of 1994  solely  to  develop,
construct,  own and operate the Casecnan Project, a multi-purpose irrigation and
hydroelectric  power  facility  with  a  rated  capacity  of  approximately  150
Megawatts  ("MW")  located  on  the  island  of  Luzon  in the  Republic  of the
Philippines (the "Casecnan Project").  The Casecnan Project commenced commercial
operations on December 11, 2001.

The Securities (described herein) are recourse only to the Company.  MidAmerican
has not  guaranteed  directly or indirectly  the payment or  performance  of any
Company obligations.

The  Company's  principal  executive  office  is  located  at 24th  Floor,  6750
Building,  Ayala Avenue, Makati City,  Philippines,  and its telephone number is
(632) 892-0276.  The Company's principal office is located at Pantabangan in the
Province of Nueva Ecija, Philippines.

DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS

This report contains  statements  that do not directly or exclusively  relate to
historical facts. These statements are  "forward-looking  statements" within the
meaning  of the  Private  Securities  Litigation  Reform  Act of  1995.  You can
typically  identify  forward-looking  statements  by the use of  forward-looking
words,  such as "may",  "will",  "could",  "project",  "believe",  "anticipate",
"expect", "estimate",  "continue",  "potential",  "plan", "forecast" and similar
terms. These statements represent the Company's intentions,  plans, expectations
and beliefs and are subject to risks,  uncertainties and other factors.  Many of
these factors are outside the Company's  control and could cause actual  results
to  differ  materially  from  such  forward-looking  statements.  These  factors
include, among others:

     o    general   economic,   political   and  business   conditions   in  the
          Philippines;

     o    governmental,  statutory,  regulatory  or  administrative  initiatives
          affecting the Company or the power generation industry;

     o    weather effects on sales and revenues;

     o    general industry trends;

     o    increased competition in the power generation industry;

     o    availability of qualified personnel;

     o    financial or regulatory  accounting  principles or policies imposed by
          the  Public  Company   Accounting   Oversight   Board,  the  Financial
          Accounting  Standards  Board  ("FASB"),  the  Securities  and Exchange
          Commission ("SEC") and similar entities with regulatory oversight; and

     o    other business or investment considerations that may be disclosed from
          time  to  time in the  Company's  SEC  filings  or in  other  publicly
          disseminated written documents.

                                      -3-
<PAGE>

The  Company   undertakes  no  obligation  to  publicly  update  or  revise  any
forward-looking  statements,  whether  as a result  of new  information,  future
events or otherwise.  The foregoing review of factors should not be construed as
exclusive.

THE CASECNAN PROJECT

The Casecnan  Project is located in the central part of the island of Luzon.  It
consists generally of diversion  structures in the Casecnan and Taan rivers that
capture and divert excess water in the Casecnan  watershed by means of concrete,
in-stream diversion weirs and transfer that water through a transbasin tunnel of
approximately   23  kilometers.   During  the  water  transfer,   the  elevation
differences  between the two watersheds allow electrical  energy to be generated
at an  approximately  150 MW rated capacity power plant,  which is located in an
underground  powerhouse  cavern at the end of the  transbasin  water  tunnel.  A
tailrace  discharge  tunnel then  delivers  water to the existing  underutilized
water  storage  reservoir  at  Pantabangan,   providing   additional  water  for
irrigation and increasing the potential electrical  generation at two downstream
existing  hydroelectric  facilities of the Philippine National Power Corporation
("NPC"),  the  government-owned  and controlled  corporation that is the primary
supplier  of  electricity  in  the   Philippines.   Once  in  the  reservoir  at
Pantabangan,  the  water  is  under  the  control  of  the  Philippine  National
Irrigation Administration ("NIA").

The  Casecnan  Project was  developed on a  build-own-operate-transfer  ("BOOT")
basis,  that is, an  arrangement  under  which the  Company  agreed to build and
thereafter  own and operate the Casecnan  Project for a twenty-year  cooperation
period (the  "Cooperation  Period"),  after which ownership and operation of the
Project  will  be  transferred  to NIA at no  cost on an  "as-is"  basis.  After
conclusion of a public solicitation for competing proposals, NIA and the Company
entered into a project  agreement in June 1995 (the "Project  Agreement")  which
set  forth  the  terms  of  the  BOOT  arrangement.  The  Casecnan  Project  was
subsequently  designated a high priority  project under  Republic Act No. 529 by
the  National  Economic  and  Development  Authority  of  the  Philippines.  The
twenty-year Cooperation Period under the Project Agreement commenced on December
11, 2001, the start of the Project's commercial operations.

Upon the occurrence and during the  continuance of certain force majeure events,
including  those  associated  with  Philippine  political  action,  NIA  may  be
obligated  to buy the  Casecnan  Project  from CE  Casecnan  at a  buyout  price
expected to be in excess of the aggregate principal amount of the outstanding CE
Casecnan debt securities, together with accrued but unpaid interest.

The Republic of the Philippines  ("ROP") has provided a Performance  Undertaking
under which NIA's  obligations under the Project Agreement are guaranteed by the
full faith and credit of the Republic of the Philippines.  The Project Agreement
and the  Performance  Undertaking  provide  for the  resolution  of  disputes by
binding arbitration in Singapore under international arbitration rules.

NIA's payment  obligations  under the Project  Agreement are the Company's  sole
source of operating  revenues.  Because of the Company's  dependence on NIA, any
material failure of NIA to fulfill its obligations  under the Project  Agreement
and any  material  failure of the  Republic  of the  Philippines  to fulfill its
obligations  under the Performance  Undertaking would  significantly  impair the
ability of the Company to meet its obligations under the Securities.

CE Casecnan  financed a portion of the costs of the Casecnan Project through the
issuance of $125 million of its 11.45%  Senior  Secured  Series A Notes due 2005
(the "Series A Notes"),  $171.5  million of its 11.95% Senior  Secured  Series B
Bonds due 2010 (the  "Series B Bonds")  and $75  million of its  Senior  Secured
Floating Rate Notes due 2002 ("FRNs"),  pursuant to an indenture  dated November
27, 1995 (as amended to date, the "Trust  Indenture").  During 2002, the Company
repaid all amounts due under the FRNs.

                                      -4-
<PAGE>

THE CASECNAN PROJECT SUPPLEMENTAL AGREEMENT

Under  the  terms  of the  Project  Agreement,  NIA had  the  option  of  timely
reimbursing CE Casecnan  directly for certain taxes CE Casecnan paid. If NIA did
not so reimburse CE Casecnan,  certain taxes paid by CE Casecnan would result in
an increase in the Water  Delivery Fee. The payment of certain other taxes by CE
Casecnan would have resulted  automatically in an increase in the Water Delivery
Fee. As of September 30, 2003, CE Casecnan had paid approximately  $59.1 million
in taxes, which pursuant to the foregoing provisions had resulted in an increase
in the  Water  Delivery  Fee.  NIA had  failed to pay the  portion  of the Water
Delivery Fee each month related to the payment of these taxes by CE Casecnan. As
a  result  of the  non-payment  of the tax  compensation  portion  of the  Water
Delivery  Fees,  on August 19,  2002,  CE Casecnan  filed a  Statement  of Claim
against NIA pursuant to the Rules of Arbitration of the International Chamber of
Commerce (the "NIA  Arbitration"),  seeking payment of such portion of the Water
Delivery Fee and enforcement of the relevant  provision of the Project Agreement
going forward.

NIA filed its Answer and  Counterclaim  on March 31,  2003.  In its Answer,  NIA
asserted,  among other  things,  that most of the taxes  which CE  Casecnan  had
factored into the Water  Delivery Fee  compensation  formula did not fall within
the  scope  of  the  relevant  section  of  the  Project  Agreement,   that  the
compensation mechanism itself was invalid and unenforceable under Philippine law
and that the Project  Agreement was  inconsistent  with Philippine law. As such,
NIA sought dismissal of CE Casecnan's claims and a declaration from the arbitral
tribunal that the taxes which had been taken into account in the Water  Delivery
Fee  compensation  mechanism were not recoverable  thereunder and that, at most,
certain taxes might be directly  reimbursed (rather than compensated for through
the Water Delivery Fee) by NIA. NIA also  counterclaimed  for  approximately  $7
million  which it alleges is due to it as a result of the delayed  completion of
the Casecnan Project.  On April 23, 2003, NIA filed a Supplemental  Counterclaim
in which it asserted that the Project  Agreement was contrary to Philippine  law
and public  policy and by way of relief  sought a  declaration  that the Project
Agreement was void from the beginning or should be cancelled,  or alternatively,
an order for  reformation  of the Project  Agreement or any portions or sections
thereof which may be determined to be contrary to such law and or public policy.
On May 23, 2003, CE Casecnan filed its reply to NIA's counterclaims.

On  October  15,  2003,  the  Company  closed  a  transaction  settling  the NIA
Arbitration.  In connection  with the  settlement,  the Company  entered into an
agreement  (the  "Supplemental  Agreement")  with  NIA  which,  in  addition  to
providing  for the  dismissal  with  prejudice  of all claims by CE Casecnan and
counterclaims by NIA in the NIA Arbitration,  supplements and amends the Project
Agreement in certain respects as summarized below.

Payment in Cash and Delivery of Note
------------------------------------

As part of the settlement,  on October 15, 2003, NIA paid to CE Casecnan the sum
of $17.7 million plus Philippine pesos 39.9 million (approximately $0.7 million)
and delivered to CE Casecnan a ROP $97.0 million  8.375% Note due 2013 (the "ROP
Note").  The Company had the option,  between  January 14, 2004 and February 14,
2004, to put the ROP Note to the ROP, for a price of par plus accrued  interest.
Also at closing,  the Company paid to the Philippine  Bureau of Internal Revenue
("BIR") approximately $24.4 million in respect of Philippine income taxes on the
foregoing  consideration and paid to NIA $1.6 million in respect of alleged late
completion of the Casecnan Project.

On January 14, 2004, the Company exercised its option to put the ROP Note to the
ROP and, in  accordance  with the terms of the put, the Company  received  $99.2
million  (representing  the $97.0 million par value plus accrued  interest) from
the ROP on January 21, 2004.

                                      -5-

<PAGE>

Modifications to Water Delivery Fee
-----------------------------------

Under the Project  Agreement,  the Water Delivery Rate increased by $0.00043 per
cubic  meter for each  $1,000,000  of  certain  taxes paid by CE  Casecnan.  The
Supplemental Agreement amends the per cubic meter Water Delivery Fee calculation
by eliminating this increase,  such that the per cubic meter Water Delivery Rate
remains at $0.029 per cubic meter,  escalated at 7.5%  annually  from January 1,
1994 through the first five years of the Cooperation  Period,  extending through
December 25, 2006. In lieu of such increase,  the Company will be reimbursed for
certain taxes it pays during the remainder of the Cooperation Period.

Under the Project Agreement,  the Water Delivery Fee payable monthly was a fixed
monthly payment based on an average water delivery of 801.9 million cubic meters
per year,  pro-rated  to  approximately  66.8  million  cubic  meters per month,
multiplied  by  the  per  cubic  meter  rate  as  described  above.   Under  the
Supplemental  Agreement the Water Delivery Fee is equal to the Guaranteed  Water
Delivery  Fee plus the  Variable  Delivered  Water  Delivery Fee minus the Water
Delivery Fee Credit.

Guaranteed Water Delivery Fee. For the sixty-month period from December 25, 2003
through  December 25, 2008,  the  Guaranteed  Water Delivery Fee shall equal the
Water  Delivery  Rate,  as described  above,  multiplied by  approximately  66.8
million cubic meters (corresponding to the 801.9 million cubic meters per year).
For each month  beginning  after  December 25, 2008 through the remainder of the
Cooperation  Period,  the  Guaranteed  Water  Delivery Fee shall equal the Water
Delivery   Rate   multiplied   by   approximately   58.3  million  cubic  meters
(corresponding to 700.0 million cubic meters per year).

Variable  Delivered Water Delivery Fee.  Variable  Delivered Water Delivery Fees
will be earned for months  beginning  after  December 25,  2008.  For each month
beginning after December 25, 2008 through the end of the Cooperation Period, the
Variable  Delivered  Water Delivery Fee shall be payable only from the date when
the  cumulative  Total  Available  Water (total  delivered  water plus the water
volume  not  delivered  to NIA as a result of NIA's  failure  to  accept  energy
deliveries  at a capacity up to 150 MW) for each  contract  year  exceeds  700.0
million cubic meters.  Variable  Delivered Water Delivery Fees will be earned up
to an  aggregate  maximum of 1,324.7  million  cubic  meters for the period from
December  25, 2008  through the end of the  Cooperation  Period.  No  additional
Variable  Delivered  Water Delivery Fees will be earned over the 1,324.7 million
cubic meter threshold.

Water Delivery  Credit.  The Water Delivery  Credit shall be applicable only for
each of the  sixty-months  from December 25, 2008 through  December 25, 2013 and
shall equal the Water  Delivery  Rate as of December 25, 2008  multiplied by the
sum of each Annual  Water Credit  divided by sixty.  The Annual Water Credit for
each  contract  year  starting from December 25, 2003 and ending on December 25,
2008 shall equal 801.9 million cubic meters minus the Total  Available Water for
each contract year. The Total Available Water in any such year will equal actual
deliveries with a minimum threshold of 700.0 million cubic meters.

Modifications to Excess Energy Delivery Fee
-------------------------------------------

Under the  Project  Agreement,  the Excess  Energy  Delivery  Fee was a variable
amount based on actual electrical energy delivered in each month in excess of 19
gigawatt-hours  ("GWh"),  payable  at a rate  of  $0.1509  per  kWh.  Under  the
Supplemental  Agreement,  the per kWh rate for energy deliveries in excess of 19
GWh per month has been reduced, commencing in 2009, to $0.1132 (escalating at 1%
per annum  thereafter),  provided that any deliveries of energy in excess of 490
GWh but less  than  550 GWh per  year  are paid for at a rate of 1.3  Philippine
pesos  per kWh and  deliveries  in  excess of 550 GWh per year are at no cost to
NIA.

For periods after September 28, 2003, the Supplemental  Agreement  provides that
if the  Casecnan  Project  is not  dispatched  up to 150 MW  whenever  water  is
available, NIA will pay for excess energy that could have been generated but was
not as a result of such dispatch constraint.

                                      -6-
<PAGE>

Other Provisions of the Supplemental Agreement
----------------------------------------------

The  Company  received  an  opinion  from the  Philippine  Office of  Government
Corporate  Counsel  as to  the  due  authorization  and  enforceability  of  the
Supplemental Agreement.  The Company also received written confirmation from the
Private Sector Assets and  Liabilities  Management  Corporation  that the issues
with  respect to the Casecnan  Project  that had been raised by the  interagency
review  of  independent  power  producers  in the  Philippines  or that may have
existed with respect to the Project  under  certain  provisions  of the Electric
Power Industry Reform Act of 2001 calling for renegotiation of contracts such as
the Project  Agreement have been  satisfactorily  addressed by the  Supplemental
Agreement.

The Guaranteed Energy Delivery Fee, Force Majeure, Buyout and Dispute Resolution
provisions  of the Project  Agreement,  as well as the  Performance  Undertaking
provided by the ROP, remain unaffected by the Supplemental Agreement and in full
force and effect.

CONCENTRATION OF RISK

NIA's  payments of  obligations  under the Project  Agreement are  substantially
denominated  in U.S.  Dollars and are the  Company's  sole  source of  operating
revenues.  Because of the Company's  dependence on NIA, any material  failure of
NIA to fulfill its  obligations  under the Project  Agreement  and any  material
failure of the ROP to fulfill its obligations under the Performance  Undertaking
would  significantly  impair the ability of the Company to meet its existing and
future  obligations.  No  stockholders,  partners or  affiliates of the Company,
including  MidAmerican,  and no directors,  officers or employees of the Company
will guarantee or be in any way liable for payment of the Company's obligations.
As a result,  payment of the Company's obligations depends upon the availability
of  sufficient  revenues  from the  Company's  business  after  the  payment  of
operating expenses.

TERMS OF THE SECURITIES

General
-------

In November 1995,  the Company issued and sold (i) the Series A Notes,  (ii) the
Series B Bonds, and (iii) the FRNs. The Series A Notes,  Series B Bonds and FRNs
are herein  referred to  collectively  as the  "Securities".  During  2002,  the
Company repaid all amounts due under the FRNs.

The  Securities  are direct  obligations  of the Company,  secured solely by the
Company's collateral.

Payment of Principal and Interest
---------------------------------

Interest  on the Series A Notes and the  Series B Bonds is payable  semiannually
every May 15 and November 15 (the  "Securities  Interest  Payment Date"),  which
commenced on May 15, 1996,  to the  registered  Holders  thereof at the close of
business on May 1 and November 1, as the case may be,  preceding each Securities
Interest  Payment Date. The initial  average life of the Series A Notes was 8.84
years, and the initial average life of the Series B Bonds was 11.57 years.

The remaining  balance of the $125 million principal Series A Notes due November
15, 2005 is payable in semiannual installments as follows:

                                      -7-
<PAGE>


                                             PERCENTAGE OF PRINCIPAL
              PAYMENT DATE                       AMOUNT PAYABLE
              ------------                       --------------

              May and November 15, 2004              17.00%
              May and November 15, 2005              19.50%

The remaining  balance of the $171.5 million principal of the Series B Bonds due
November 15, 2010 is payable in semiannual installments as follows:

                                             PERCENTAGE OF PRINCIPAL
             PAYMENT DATE                        AMOUNT PAYABLE
             ------------                        --------------

             May and November 15, 2004               2.00%
             May and November 15, 2005               1.75%
             May and November 15, 2006              10.50%
             May and November 15, 2007              11.00%
             May and November 15, 2008              11.00%
             May and November 15, 2009               4.00%
             May and November 15, 2010               5.00%

The $75.0  million  principal  of the FRNs due  November 15, 2002 was payable in
semiannual installments, which commenced on November 15, 2000, and was completed
on November 15, 2002. The FRNs bore interest at LIBOR plus 3.00% per annum.

Priority of Payments
--------------------

Except as otherwise provided for with respect to mandatory  redemptions and loss
proceeds,  all revenues  received by the Company from the Casecnan  Project have
been  and  will  continue  to be  paid to the  Revenue  Fund  maintained  by the
Depositary  (other than  payments  required  to be used for VAT  payments to the
ROP).  Amounts  paid to the  Revenue  Fund  have  been and will  continue  to be
distributed  in the  following  order  of  priority:  (a) to pay  operating  and
maintenance costs; (b) to pay certain administrative costs of the agents for the
Secured Parties under the Financing Documents;  (c) to pay principal of, premium
(if any) and interest on the Securities (including any increased costs necessary
to gross up such payments for certain  withholding  taxes and other  assessments
and  charges),  and  principal and interest on other senior debt, if any; (d) to
cause the Debt  Service  Reserve  Fund to equal the Debt  Service  Reserve  Fund
Required  Balance,  as defined below;  (e) to pay  indemnification  expenses and
other  expenses to the Secured  Parties and certain other costs,  and (f) to the
Distribution Fund or Distribution Suspense Fund, as applicable.

Debt Service Reserve Fund
-------------------------

The  Company  established  a Debt  Service  Reserve  Fund for the benefit of the
Holders of the Securities, which will be funded in cash from operating revenues,
subject to cash being  available,  as  described  under  "Priority  of Payments"
above. Such amounts will be deposited to the Debt Service Reserve Fund from time
to time to the extent  required  to cause it to equal the Debt  Service  Reserve
Fund Required Balance which is intended to approximate the highest amount of the
payments  of  principal  and  interest to be made on the  Securities  during any
semiannual period over the next three years from the last debt service payment.

Optional Redemption
-------------------

The Series A Notes are subject to optional  redemption by the Company,  in whole
and not in part, at par plus accrued interest to the Redemption Date.

                                      -8-
<PAGE>

The Series B Bonds are subject to optional  redemption  by the  Company,  at any
time,  in whole or in part,  pro  rata,  at par  plus  accrued  interest  to the
redemption  date plus a premium,  calculated to "make whole" to comparable  U.S.
treasury securities plus 150 basis points.

The Company also has the option to redeem the  Securities,  in whole or in part,
at par plus  accrued  interest  at any time if,  as a result  of any  change  in
Philippine tax law or in the application or interpretation of Philippine tax law
occurring after the date of issuance of the Securities,  the Company is required
to pay certain additional amounts described in the Trust Indenture.

Mandatory Redemption
--------------------

The  Securities  are  subject to  mandatory  redemption,  pro rata,  at par plus
accrued  interest to the redemption date; (a) upon the receipt by the Company of
loss proceeds  that exceed $15 million in respect of certain  events of property
or casualty loss or similar  events,  unless the funds are to be utilized by the
Company for an Approved Restoration Plan; or (b) upon the receipt by the Company
of proceeds realized in connection with a Project Agreement Buyout.

Change in Control Put
---------------------

When a Change in Control occurs,  each Holder will have the right to require the
Company to  repurchase  all or any part of such  Holder's  Securities  at a cash
purchase  price equal to 101% of the  principal  amount  thereof,  plus  accrued
interest to the date of repurchase in accordance  with the  procedures set forth
in the Trust Indenture.  There is no assurance that upon a Change in Control the
Company will have sufficient funds to repurchase the Securities.

Profit Distributions
--------------------

Profit  distributions  may be made only from and to the  extent  of  amounts  on
deposit in the Distribution  Fund or Distribution  Suspense Fund.  Distributions
are subject to the prior satisfaction of the following conditions:

(a)  The amounts  contained in the Principal  Fund and the Interest Fund will be
     equal to or greater than the  aggregate  scheduled  principal  and interest
     payments next due on the Securities;

(b)  No  Default  or Event of  Default  under the  Trust  Indenture  shall  have
     occurred and be continuing;

(c)  The Debt Service Coverage Ratio for the preceding  12-month period is equal
     to or greater than 1.35 to 1 as certified by an officer of the Company;

(d)  The  projected  Debt  Service  Coverage  Ratio  of the  Securities  for the
     succeeding  12-month  period  is equal  to or  greater  than  1.35 to 1, as
     certified by an officer of the Company; and,

(e)  The Debt Service  Reserve  Fund has a balance  equal to or greater than the
     Debt Service Reserve Fund Required Balance.

There were no profit distributions to the Company or its stockholders in 2003 or
2002.  On January 22,  2004,  the Company  made a profit  distribution  of $38.0
million.  Due to the dispute with a minority shareholder as described in Item 3.
Legal  Proceedings  -  Stockholder  Litigation,  15%  or  $5.7  million  of  the
distribution is being held in an unsecured account of the Company.

Ranking and Security for the Securities
---------------------------------------

The  Securities  are  senior  debt  of the  Company  and are  secured  by (a) an
assignment  of all revenues  received by the Company from the Casecnan  Project;
(b) a  collateral  assignment  of all  material  contracts;  (c) a  lien  on any
accounts

                                      -9-
<PAGE>

and  funds  on  deposit  under  the  Depositary  Agreement;   (d)  a  pledge  of
approximately  100% of the capital  stock of the Company,  subject to release in
certain  circumstances  relating to accessing  political  risk insurance for the
benefit of the  stockholders;  and (e) a lien on all other  material  assets and
property interests of the Company.  The Securities will rank pari passu with and
will share the  Collateral on a pro rata basis with certain other senior secured
debt,  if any  (provided  that the Debt  Service  Reserve  Fund shall be held as
collateral solely for the obligations under the Securities). The proceeds of any
political risk insurance covering the capital investment will not be part of the
collateral for the  Securities.  While under the Trust Indenture the Company may
incur  certain  permitted  debt  senior  to the  Securities,  it has no  present
intention to do so.

Ratings
-------

On April 24, 2003, Standard & Poor's Ratings Services ("S&P") lowered its rating
of CE Casecnan to BB from BB+ as a result of S&P's  downgrade of debt securities
issued by the ROP. The downgrade of the ROP debt securities by S&P reflected the
country's  growing  debt  burden  and fiscal  rigidity.  On June 13,  2003,  S&P
downgraded  CE Casecnan's  senior  secured notes rating to B+ from BB and stated
that the outlook for the rating was negative. On December 12, 2003, S&P affirmed
the rating of B+ and changed the outlook to positive from negative.

On May 8, 2003,  Moody's  Investors  Service  ("Moody's")  placed the Ba2 senior
secured  notes  rating of CE Casecnan on review for possible  downgrade,  noting
NIA's supplemental  counterclaim  seeking to have the Project Agreement declared
void.  Moody's  noted  that  actions  by  government  related  agencies  and the
resulting instability of contractual arrangements was becoming inconsistent with
their rating approach that attaches  significant benefit to offtake arrangements
with those government supported entities. On June 6, 2003, Moody's downgraded CE
Casecnan's  senior  secured  notes  rating  to B2 from Ba2 and  stated  that the
outlook for the rating was negative.  On November 21, 2003, Moody's affirmed the
rating of B2 and  changed the outlook to stable.  On January 27,  2004,  Moody's
downgraded the long-term debt of the ROP to Ba3 from Ba2.

Nature of Recourse on the Securities
------------------------------------

The Company's  obligations to make payments of principal,  premium,  if any, and
interest on the Securities are obligations  solely of the Company secured solely
by the  collateral.  Neither the  stockholders of the Company nor any affiliates
(including MidAmerican), incorporators, officers, directors or employees thereof
or of the  Company,  guaranteed  the  payment  of, or have any  obligation  with
respect to payment of the Securities,  except to the extent that stockholders of
the Company have pledged their  stockholdings in the Company as security for the
notes and bonds issued by the  Company.  As a result,  payment of the  Company's
obligations  depends  upon the  availability  of  sufficient  revenues  from the
Company's business after the payment of operating expenses.

Incurrence of Additional Debt
-----------------------------

The Company  shall not incur any debt other than  "Permitted  Debt."  "Permitted
Debt" means:

(a)  The Securities;

(b)  Debt incurred to finance the  construction  of capital  improvements to the
     Casecnan  Project,  which are required to ensure compliance with applicable
     law or  anticipated  changes  therein;  provided  that no such  debt may be
     incurred  unless at the time of  incurrence  of such debt,  an  independent
     engineer confirms the  reasonableness of (i) a certification by the Company
     (containing  customary  assumptions and  qualifications)  that the proposed
     capital improvements are reasonably expected to enable the Casecnan Project
     to comply with applicable or anticipated  legal  requirements  and (ii) the
     calculations  of the Company that  demonstrate,  after giving effect to the
     incurrence  of such debt,  that the minimum  project Debt Service  Coverage
     Ratio (x) for the next four consecutive  fiscal  quarters,  commencing with
     the quarter in which such debt is incurred,

                                     -10-
<PAGE>


     taken as one annual period, and (y) for each subsequent fiscal year through
     the final maturity date, will not be less than 1.3 to 1;

(c)  Debt incurred to finance the  construction  of capital  improvements to the
     Casecnan  Project not required by  applicable  law, so long as after giving
     effect to the  incurrence  of such debt (i) no  default or event of default
     has  occurred  and is  continuing,  and  (ii)(A) the  independent  engineer
     confirms  the   reasonableness  of  (I)  a  certification  by  the  Company
     (containing  customary  assumptions and  qualifications)  that the proposed
     capital  improvements  are  technically  feasible  and prudent and (II) the
     calculations  of the Company that  demonstrate,  after giving effect to the
     incurrence  of such debt,  (x) the minimum  project Debt  Service  Coverage
     Ratio for the next four consecutive  fiscal  quarters,  commencing with the
     quarter in which such debt is incurred,  taken as one annual period, and in
     every  fiscal year  thereafter,  will not be less than 1.4 to 1 and (y) the
     average  projected Debt Service  Coverage  Ratio for all succeeding  fiscal
     years until the final  maturity date will not be less than 1.7 to 1, or (B)
     the  rating  agencies  confirm  that the  incurrence  of such debt will not
     result in a rating downgrade;

(d)  Working capital debt in an aggregate amount  outstanding at any time not to
     exceed $5 million;

(e)  Debt  incurred in  connection  with  certain  permitted  interest  rate and
     currency hedging arrangements;

(f)  Subordinated debt from affiliates in an aggregate amount not to exceed $150
     million prior to completion and $100 million after completion,  which shall
     be used to finance  capital,  operating  or other costs with respect to the
     Casecnan Project;

(g)  Debt incurred for purposes for which permitted liens may be incurred;

(h)  Debt   contemplated  to  be  incurred  pursuant  to  the  Casecnan  Project
     documents, including obligations in connection with any letter of credit in
     an aggregate amount outstanding at any time not to exceed $15 million;

(i)  Purchase  money debt and other debts in the ordinary  course of business to
     support the  operation  and  maintenance  of the  Casecnan  Project,  in an
     aggregate amount not to exceed $35 million at any time; and

(j)  Permitted  refinancing  debt, if, as certified by an authorized  officer of
     the Company at the time of  incurrence,  (A)(i) after giving  effect to the
     incurrence of such debt, (x) the minimum  projected  Debt Service  Coverage
     Ratio for the next four  consecutive  fiscal quarters in which such debt is
     incurred,  taken as one annual period, and in every fiscal year thereafter,
     will not be less  than 1.5 to 1, and (y) for each  subsequent  fiscal  year
     through the final maturity date, the average project Debt Service  Coverage
     Ratio  will not be less  than 2.0 to 1, and  (ii) the  final  maturity  and
     average life of the debt incurred each exceed those of the debt  remaining,
     (B) each  principal  payment  equals that of each  corresponding  principal
     payment of the debt being replaced or (C) the rating agencies  confirm that
     the incurrence of such debt will not result in a rating downgrade.

Principal Covenants
-------------------

Principal  covenants under the Trust Indenture  require the Company,  subject to
certain  exceptions  and  qualifications,  (a) not to incur (i) any debt  except
Permitted Debt or (ii) any lien upon any of its assets except  permitted  liens;
(b) not to enter into any  transaction  of merger or  consolidation,  change its
form of organization,  liquidate,  wind-up or dissolve itself;  (c) not to enter
into non-arm's  length  transactions or agreements with  affiliates;  (d) not to
engage in any business other than as  contemplated by the Trust  Indenture;  (e)
not to amend,  terminate or otherwise  modify any material  Project  Document to
which it is a party,  except as permitted under the Trust Indenture;  (f) not to
sell,  lease or transfer any property or assets material to the Casecnan Project
except in the  ordinary  course of  business;  (g) to operate and  maintain  the
Casecnan  Project in  accordance  with the Approved  Operation  and  Maintenance
Budget; (h)

                                      -11-
<PAGE>

to maintain  insurance as required under the Trust  Indenture;  and (i) to enter
into an interest rate  agreement for the Floating Rate Notes,  within 30 days of
Closing, at a LIBOR cap of up to 7.5%.

Insurance
---------

The Company  maintains  insurance with respect to the Casecnan Project of a type
and in such amounts as are  generally  carried by  companies  engaged in similar
businesses  and owning similar  projects that are financed in a similar  manner.
This  coverage  includes  casualty  insurance,  including  flood and  earthquake
coverage,   business  interruption  insurance,   primary  and  excess  liability
insurance, automobile insurance and workers compensation insurance. However, the
proceeds  of such  insurance  may not be  adequate  to cover  reduced  revenues,
increased  expenses  or  other  liabilities   arising  from  the  occurrence  of
catastrophic  events.  Moreover,  there can be no assurance  that such insurance
coverage  will be available in the future at  commercially  reasonable  rates or
that the  amounts  for which the  Company  is  insured  will  cover all  losses.
Nevertheless,  the  Company  will not  reduce  or  cancel  the  coverage  if the
Insurance  Consultant  determines it is not reasonable to do so and insurance is
available on commercially reasonable terms.

Regulatory Matters
------------------

The Philippine  Congress has passed the Electric  Power  Industry  Reform Act of
2001 ("EPIRA"),  which is aimed at restructuring  the Philippine power industry,
privatizing  the NPC and  introducing a competitive  electricity  market,  among
other  initiatives.  The  implementation  of  EPIRA  may have an  impact  on the
Company's  future  operations  in the  Philippines  and  the  Philippines  power
industry as a whole, the effect of which is not yet determinable or estimable.

In connection with an interagency  review of approximately 40 independent  power
project  contracts in the Philippines  pursuant to EPIRA,  the Casecnan  Project
(together  with four other  unrelated  projects)  was  reportedly  identified as
raising  legal and  financial  questions  and,  with  those  projects,  had been
prioritized  for  renegotiation.  In connection  with the  settlement of the NIA
Arbitration and as part of the Supplemental Agreement  transaction,  the Company
received  written  confirmation  from the Private Sector Assets and  Liabilities
Management Corporation that the issues with respect to the Casecnan Project that
had been raised by the interagency review of independent power project contracts
in the Philippines or that may have existed with respect to the Casecnan Project
under certain provisions of EPIRA calling for renegotiation of contracts such as
the Project  Agreement have been  satisfactorily  addressed by the  Supplemental
Agreement.  Company  representatives,  together with certain  current and former
government officials, also were requested to and did appear, during 2002 and the
first  half of 2003,  before a  Philippine  Senate  committee  which had  raised
questions and made  allegations  with respect to the Casecnan  Project's  tariff
structure  and  implementation.  The  Company  believes  that as a result of the
settlement  of the NIA  Arbitration  and the entering  into of the  Supplemental
Agreement (see Item 1. Business - The Casecnan Project Supplemental  Agreement),
the questions and  allegations  raised by the Philippine  Senate  committee have
been  addressed,  although  there can be no  assurance  the  committee  does not
schedule  additional  hearings or that  additional  inquiries by the  Philippine
Congress  or any  agency of the  Philippine  government  will not be made in the
future.

Employees
---------

At December  31,  2003,  the Company had 43 full-time  employees  consisting  of
operations,  maintenance,  logistics,  compliance, and engineering personnel. At
the  powerhouse  control  room,  personnel  monitor,   direct  and  control  the
operations and  maintenance of the whole Casecnan  Project.  The control room is
staffed 24 hours per day and is the  contact  point for the  Casecnan  Project's
customers and others. At the diversion structures,  personnel are responsible to
ensure that the trash racks at the tunnel  intakes are kept clean and maintained
and that excessive sediment build-up behind the structure is prevented.

                                      -12-

<PAGE>

ITEM 2. PROPERTIES.

CE Casecnan's principal property is the approximately 150 MW hydroelectric power
facility that was completed in December 2001.

ITEM 3. LEGAL PROCEEDINGS.

NIA ARBITRATION

The NIA  Arbitration was settled on October 15, 2003. See Item 1. Business - The
Casecnan Project Supplemental Agreement.

CONSTRUCTION CONTRACT ARBITRATION

The Casecnan Project was initially being constructed  pursuant to a fixed-price,
date-certain,  turnkey  construction  contract (the "Hanbo Contract") on a joint
and several  basis by Hanbo  Corporation  ("Hanbo")  and Hanbo  Engineering  and
Construction Co., Ltd. ("HECC"), both of which are South Korean corporations. As
of May 7, 1997,  the Company  terminated  the Hanbo  Contract due to defaults by
Hanbo and HECC including the insolvency of both companies. On the same date, the
Company  entered into a new  fixed-price,  date  certain,  turnkey  engineering,
procurement  and  construction  contract to  complete  the  construction  of the
Casecnan Project (the  "Replacement  Contract").  The work under the Replacement
Contract was  conducted  by a  consortium  consisting  of  Cooperativa  Muratori
Cementisti CMC di Ravenna and Impresa Pizzarotti & C. Spa.,  (collectively,  the
"Contractor"),  working  together with Siemens A.G.,  Sulzer Hydro Ltd., Black &
Veatch and Colenco Power Engineering Ltd.

On  November  20,  1999,  the  Replacement  Contract  was  amended to extend the
Guaranteed  Substantial  Completion  Date for the Casecnan  Project to March 31,
2001. This amendment was approved by the lenders' independent engineer under the
Trust Indenture.

On February 12, 2001, the Contractor  filed a Request for  Arbitration  with the
ICC seeking  schedule relief of up to 153 days through August 31, 2001 resulting
from various alleged force majeure  events.  In its March 20, 2001 Supplement to
Request for  Arbitration,  the Contractor  also seeks  compensation  for alleged
additional  costs of approximately $4 million it incurred from the claimed force
majeure events to the extent it is unable to recover from its insurer.  On April
20,  2001,  the  Contractor  filed a further  supplement  seeking an  additional
compensation  for damages of  approximately  $62  million for the alleged  force
majeure  event (and  geologic  conditions)  related to the collapse of the surge
shaft. The Contractor has alleged that the circumstances surrounding the placing
of the Casecnan Project into commercial operation in December 2001 amounted to a
repudiation of the  Replacement  Contract and has filed a claim for  unspecified
quantum  meruit  damages,  and has  further  alleged  that the delay  liquidated
damages  clause which  provides for payments of $125,000 per day for each day of
delay in  completion  of the  Casecnan  Project  for  which  the  Contractor  is
responsible is  unenforceable.  The arbitration is being conducted  applying New
York law and pursuant to the rules of the ICC.

Hearings  have  been held in  connection  with this  arbitration  in July  2001,
September 2001,  January 2002, March 2002,  November 2002, January 2003 and July
2003. As part of those  hearings,  on June 25, 2001,  the  arbitration  tribunal
temporarily enjoined CE Casecnan from making calls on the demand guaranty posted
by Banca di Roma in support of the  Contractor's  obligations to CE Casecnan for
delay  liquidated  damages.  As a  result  of  the  continuing  nature  of  that
injunction,  on April 26, 2002, CE Casecnan and the Contractor  mutually  agreed
that no  demands  would be made on the  Banca  di Roma  demand  guaranty  except
pursuant to an arbitration award. As of December 31, 2003,  however, CE Casecnan
has received  approximately $6.0 million of liquidated damages from demands made
on the demand guarantees posted by Commerzbank on behalf of the Contractor.  The
$6.0  million was  recorded as a reduction  in  construction  costs in 2002.  On
November 7, 2002, the ICC issued the arbitration  tribunal's  partial award with
respect to the Contractor's  force majeure and geologic  conditions  claims. The

                                      -13-
<PAGE>

arbitration  panel  awarded the  Contractor  18 days of  schedule  relief in the
aggregate for all of the force majeure  events and awarded the  Contractor  $3.8
million with respect to the cost of the collapsed surge shaft.  The $3.8 million
is shown as part of the accrued  liquidated damages balance at December 31, 2003
and 2002. All of the Contractor's other claims with respect to force majeure and
geologic conditions were denied.

If the Contractor were to prevail on its claim that the delay liquidated damages
clause is unenforceable, CE Casecnan would not be entitled to collect such delay
damages for the period from March 31, 2001 through  December  11,  2001.  If the
Contractor  were to prevail in its  repudiation  claim and prove quantum  meruit
damages in excess of amounts paid to the Contractor, CE Casecnan could be liable
to make additional payments to the Contractor.  CE Casecnan believes all of such
allegations  and claims  are  without  merit and is  vigorously  contesting  the
Contractor's  claims.  CE Casecnan  believes that an award will be issued by the
ICC in 2004.

STOCKHOLDER LITIGATION

Pursuant  to the  share  ownership  adjustment  mechanism  in  the  CE  Casecnan
stockholder  agreement,  which is based upon pro forma financial  projections of
the Casecnan Project prepared following  commencement of commercial  operations,
in February 2002,  MidAmerican's  indirect  wholly owned  subsidiary CE Casecnan
Ltd.,   advised  the   minority   stockholder,   LaPrairie   Group   Contractors
(International) Ltd., ("LPG"), that MidAmerican's indirect ownership interest in
CE Casecnan had  increased to 100%  effective  from  commencement  of commercial
operations.  In April 2002,  CE Casecnan  Ltd. and LPG entered into a status quo
agreement  pursuant to which CE Casecnan  Ltd.  agreed not to take any action to
exercise control over or transfer LPG's shares in the Company.  On July 8, 2002,
LPG filed a complaint in the Superior Court of the State of California, City and
County of San Francisco against, among others, CE Casecnan Ltd. and MidAmerican.
In the  complaint,  LPG seeks  compensatory  and  punitive  damages  for alleged
breaches of the stockholder  agreement and alleged  breaches of fiduciary duties
allegedly  owed by CE Casecnan Ltd. and  MidAmerican  to LPG. The complaint also
seeks injunctive  relief against all defendants and a declaratory  judgment that
LPG is entitled to maintain a 15% interest in CE Casecnan.  On January 21, 2004,
CE Casecnan Ltd., LPG and the Company entered into a second status quo agreement
pursuant to which the parties agreed to set aside certain  distributions related
to the shares subject to the LPG dispute and CE Casecnan  agreed not to take any
further  actions  with respect to such  distributions  without at least 15 days'
prior notice to LPG.  Accordingly,  15% of the dividend distribution declared on
January 21, 2004 was set aside in an unsecured account of the Company.

In February  2003,  San Lorenzo Ruiz Builders and  Developers  Group Inc.  ("San
Lorenzo"),  an original  shareholder  substantially  all of whose  shares in the
Company were  purchased by  MidAmerican  in 1998,  threatened to initiate  legal
action in the  Philippines in connection  with certain  aspects of its option to
repurchase such shares. The Company believes that San Lorenzo has no valid basis
for any claim and, if named as a defendant  in any action that may be  commenced
by San Lorenzo, will vigorously defend such action.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

Not Applicable.

                                      -14-
<PAGE>

                                     PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

Not Applicable.

ITEM 6. SELECTED FINANCIAL DATA.

The following table sets forth selected historical  financial data, which should
be read in conjunction with the Company's  financial  statements and the related
notes to those statements  included in this annual report and with "Management's
Discussion  and  Analysis of  Financial  Condition  and  Results of  Operations"
appearing in Item 7. of this annual  report.  The selected  financial data as of
and for the five years  ended  December  31,  2003,  has been  derived  from the
Company's audited historical financial statements.

                             SELECTED FINANCIAL DATA
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>

                                                                 YEAR ENDED DECEMBER 31,
                                               ----------------------------------------------------------
                                                 2003        2002      2001(1)        2000        1999
                                               --------    --------    --------     --------    ---------

<S>                                            <C>         <C>         <C>          <C>         <C>
Total revenue .............................    $129,921    $138,264    $  8,174     $      -    $      -
Operating income (loss) ...................      91,539      93,415       4,252         (451)          -
Net income to common stockholders .........      59,765      44,956       2,867        4,857         699
Net income per share ......................       77.90       58.60        3.74         6.33        0.91
Total assets ..............................     565,313     541,507     515,192      482,373     522,398
Notes payable .............................      51,263      51,263      40,763            -           -
Long-term debt, including current portion..     246,458     287,925     323,125      352,750     371,500
Stockholders' equity ......................     211,686     151,921     106,965      104,098      99,241
</TABLE>

     (1)  Commercial operations commenced on December 11, 2001.

ITEM 7.  MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS.

The following is  management's  discussion  and analysis of certain  significant
factors which have affected the financial condition and results of operations of
the  Company  during the  periods  included in the  accompanying  statements  of
operations.  This  discussion  should  be read  in  conjunction  with  "Selected
Financial Data" in Item 6. and the Company's historical financial statements and
the notes to those statements included elsewhere in this report.

CRITICAL ACCOUNTING POLICIES

The  preparation of financial  statements and related  disclosures in conformity
with accounting  principles  generally  accepted in the United States of America
requires management to make judgments, assumptions and estimates that affect the
amounts reported in the Financial  Statements and accompanying  notes. Note 2 to
the Financial  Statements  describes  the  significant  accounting  policies and
methods used in the preparation of the financial statements.  Estimates are used
for, but not limited to, the accounting for the allowance for doubtful accounts.
Actual  results  could  differ  from these  estimates.  The  following  critical
accounting  policies are impacted  significantly  by judgments,  assumptions and
estimates used in the preparation of the financial statements.

                                      -15-
<PAGE>

Allowance for Doubtful Accounts
-------------------------------

The allowance for doubtful accounts is based on the Company's  assessment of the
collectibility of payments from NIA. This assessment requires judgment regarding
the  outcome of pending  disputes  and the  ability of the  customer  to pay the
amounts  owed to the  Company.  Any change in the  Company's  assessment  of the
collectibility of accounts receivable that was not previously provided for could
significantly  impact  the  calculation  of such  allowance  and the  results of
operations.

FACTORS AFFECTING THE RESULTS OF OPERATIONS

The Casecnan  Project is wholly  dependent upon sufficient  rainfall to generate
electricity  and deliver water.  The  seasonality  of rainfall  patterns and the
variability  of rainfall from year to year, all of which are outside the control
of the Company,  have a material impact on the amounts of electricity  generated
and water delivered by the Casecnan Project.

RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002

The following table provides certain  operating data of the Casecnan Project for
the years ended December 31, 2003 and 2002:

                                                      2003     2002
                                                      -----    -----

        Electricity produced (GWh) .............      382.2    351.0
        Calculated Output (GWh) ................       13.7      7.5
        Water delivered (million cubic meters)..      620.6    551.0
        Spilled water ..........................       25.1     12.2

Calculated  Output is the energy that could have been delivered in circumstances
where the Project was not dispatched at its full capacity.

For  accounting  purposes,  the  Project  Agreement  with NIA  contains  both an
operating lease and a service contract, which the Company accounted for pursuant
to  provisions  of  Statement  of  Financial  Accounting   Standards,   No.  13,
"Accounting  for Leases".  However,  pursuant to the  provisions  of the Project
Agreement,  the Company billed to NIA water and energy  delivery fees as follows
(in millions):

                                                            2003      2002
                                                           ------    ------

   Water delivery fees..................................   $ 71.5    $ 82.6
   Electricity fees.....................................     58.4      55.7
                                                           ------    ------
     Total lease rentals and service contracts revenue..   $129.9    $138.3
                                                           ======    ======

Lease rental and service  contract  revenue  decreased by $8.4 million to $129.9
million for the year ended  December  31, 2003 from $138.3  million for the year
ended  December 31, 2002.  The decrease in water delivery fees was primarily due
to the  elimination  of the tax  compensation  portion of the water delivery fee
pursuant to the NIA settlement on October 15, 2003,  partially  offset by a 7.5%
increase in the Water  Delivery Fee rate as a result of the  contractual  annual
escalation  factor.  The  increase  in  electricity  fees was due  primarily  to
increased  generation  resulting from higher water flows in 2003.  Revenues from
water  delivery,  guaranteed  energy  and excess  energy  are 55%,  28% and 17%,
respectively,  of the total  revenue for the year ended  December 31, 2003,  and
60%, 26% and 14%, respectively for the year ended December 31, 2002.

                                      -16-
<PAGE>

Operating  expenses  decreased to $38.4 million for the year ended  December 31,
2003 from $44.8 million for the year ended  December 31, 2002.  Included  within
operating expenses for the year ended December 31, 2003 are depreciation,  plant
operations and doubtful  accounts  expense of $23.2  million,  $13.2 million and
$2.0 million,  respectively.  Plant operations expense increased by $3.1 million
and doubtful accounts expense  decreased by $9.5 million.  The increase in plant
operations  expense was caused by higher local  business  taxes,  insurance  and
legal costs. The decrease in doubtful accounts is primarily  attributable to the
NIA  Arbitration  Settlement.  The  December  31, 2003  allowance  for  doubtful
accounts relates to Calculated Output.

Settlement  income of $31.9  million  resulted  from the  settlement  of the NIA
Arbitration.

Interest expense decreased to $39.8 million for the year ended December 31, 2003
from $42.5 million for the year ended  December 31, 2002. The primary reason for
the decrease was the scheduled repayment of debt.

Interest  income  increased to $1.9 million for the year ended December 31, 2003
from $0.2 million for the year ended  December 31, 2002.  The primary reason for
the  increase  was  interest  earned on the ROP Note  issued to the  Company  in
connection with the NIA Arbitration Settlement.

Tax expense increased to $25.7 million for the year ended December 31, 2003 from
$6.1 million for the year ended  December  31,  2002.  The increase in 2003 is a
result of $24.4  million in taxes  paid on the NIA  Arbitration  Settlement  and
amounts paid to the BIR in settlement of audit assessments for the years 1996 to
1998 and  2000 to 2001.  Tax  expense  in 2002  consisted  of a  payment  to the
Philippine  BIR for the  settlement of taxes related to interest  income for the
years 2001, 2000 and 1999.

RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001

The following table provides certain  operating data of the Casecnan Project for
the years ended December 31, 2002 and 2001:

                                                               2002    2001
                                                              -----    ----

         Electricity produced (GWh)......................     351.0    21.6
         Calculated Output (GWh) ........................       7.5       -
         Water delivered (million cubic meters)..........     551.0    36.5
         Spilled water...................................      12.2       -

For  accounting  purposes,  the  Project  Agreement  with NIA  contains  both an
operating lease and a service contract, which the Company accounted for pursuant
to  provisions  of  Statement  of  Financial  Accounting   Standards,   No.  13,
"Accounting  for Leases".  However,  pursuant to the  provisions  of the Project
Agreement,  the Company billed to NIA water and energy  delivery fees as follows
(in millions):

                                                              2002     2001
                                                             ------    ----

     Water delivery fees ................................    $ 82.6    $4.1
     Electricity fees ...................................      55.7     4.1
                                                             ------    ----
       Total lease rentals and service contracts revenue.    $138.3    $8.2
                                                             ======    ====

Lease rental and service contract revenue  increased by $130.1 million to $138.3
million  for the year ended  December  31,  2002 from $8.2  million for the year
ended  December  31,  2001.  The increase in both sources of revenue is due to a
full year of operations  during 2002 as the Casecnan  Project  began  commercial
operations on December 11, 2001. Revenues from water delivery, guaranteed energy
and excess energy generated and delivered

                                      -17-
<PAGE>

are 60%,  26% and 14%,  respectively,  of the total  revenue  for the year ended
December  31,  2002,  and 50%,  26% and  24%,  respectively  for the year  ended
December 31, 2001.

The 2001 figure for electricity  produced includes all energy for the year, both
commissioning  and  cooperation  period  revenues.   The  2001  capacity  factor
calculation,  however,  only  includes  the 21.6 GWh of energy  produced  during
December 11-31,  2001, the part of the year in which the plant was in commercial
operation.  The 2002 figure for energy  produced  includes 7.5 GWh of energy for
which the Company was paid pursuant to the terms of the Project  Agreement which
provided  for  payment in respect of energy  that could have been  delivered  in
circumstances where the Project was not dispatched at its full capacity. For the
same reason,  the 2002 figure for water  delivered  includes  12.2 million cubic
meters of water spilled.

Operating  expenses  increased to $44.8 million for the year ended  December 31,
2002 from $3.9  million for the year ended  December 31, 2001 due to a full year
of operations during 2002. Included within operating expenses for the year ended
December 31, 2002, are  depreciation,  plant  operations  and doubtful  accounts
expense of $23.2 million, $10.1 million and $11.5 million,  respectively.  These
expenses  increased  from prior year amounts of $1.2  million,  $2.2 million and
$0.5 million, respectively.

Interest expense decreased to $42.5 million for the year ended December 31, 2002
from $44.2 million for the year ended  December 31, 2001. The primary reason for
the decrease was the scheduled repayment of debt.

In connection with the completion of the Casecnan  Project on December 11, 2001,
capitalization of interest expense to the carrying value of the Casecnan Project
ceased. Interest totaling $41.7 million for the year ended December 31, 2001 was
capitalized.

Interest  income  decreased to $0.2 million for the year ended December 31, 2002
from $1.5 million for the year ended  December 31, 2001.  The primary reason for
the decrease was the declining cash balances as by the end of 2001 most escrowed
funds had been used for the construction activities.

Tax  expense in 2002 of $6.1  million  consists  of a payment to the BIR for the
settlement  of taxes  related to interest  income for the years  2001,  2000 and
1999.

LIQUIDITY AND CAPITAL RESOURCES

NIA's  payments of  obligations  under the Project  Agreement are  substantially
denominated  in U.S.  Dollars and are the  Company's  sole  source of  operating
revenues.  Because of the Company's  dependence on NIA, any material  failure of
NIA to fulfill its  obligations  under the Project  Agreement  and any  material
failure of the ROP to fulfill its obligations under the Performance  Undertaking
would  significantly  impair the ability of the Company to meet its existing and
future  obligations.  No  stockholders,  partners or  affiliates of the Company,
including  MidAmerican,  and no directors,  officers or employees of the Company
will guarantee or be in any way liable for payment of the Company's obligations.
As a result,  payment of the Company's obligations depends upon the availability
of  sufficient  revenues  from the  Company's  business  after  the  payment  of
operating expenses.

The Company's  cash and cash  equivalents  were $4.5 million and $0.7 million at
December 31, 2003 and 2002, respectively. At December 31, 2003, the Company also
owned a $97.0 million ROP note which was put to the ROP on January 14, 2004.

The Company  generated  cash flows from  operations  of $65.2  million and $36.9
million  for the years  ended  December  31,  2003 and 2002,  respectively.  The
increase  from 2002 was  primarily  due to increased net income of $14.8 million
and changes in working capital activities of $21.2 million.

The Company used $10.3 million and $11.4 million for  investing  activities  for
the years ended December 31, 2003 and 2002, respectively.  Capital expenditures,
the main component of investing activities,  were $4.3

                                      -18-
<PAGE>

million  and $10.3  million  for the years  ended  December  31,  2003 and 2002,
respectively.  During 2003, the Company paid a net amount of $6.0 million to the
ROP in connection with the settlement of the NIA Arbitration.

The Company used $51.1 million and $25.9 million for  financing  activities  for
the years ended  December  31, 2003 and 2002,  respectively.  During  2003,  the
Company  repaid  long-term debt of $41.5 million and increased  restricted  cash
related to debt service  obligations by $11.0 million.  During 2002, the Company
repaid  long-term  debt of $35.2  million  and  issued  new notes  payable to an
affiliate of $10.5 million.

Under the terms of the  Project  Agreement  between  the  Company  and NIA,  the
Company  developed,  financed  and  constructed  the  Casecnan  Project over the
construction period. Under the Project Agreement and the Supplemental  Agreement
(defined below under NIA Arbitration Settlement),  the Company owns and operates
the  Casecnan  Project  for  a  twenty-year   Cooperation  Period.   During  the
Cooperation  Period,  NIA is obligated to accept certain deliveries of water and
energy,  and so long as the Casecnan Project is physically  capable of operating
and  delivering  in  accordance  with  agreed  levels  set forth in the  Project
Agreement and the  Supplemental  Agreement  (defined below under NIA Arbitration
Settlement), NIA is obligated to pay the Company a fixed fee for the delivery of
a  threshold  volume of water and a fixed fee for the  delivery  of a  threshold
amount  of  electricity.  In  addition,  NIA is  obligated  to pay a fee for all
electricity delivered in excess of the threshold amount up to a specified amount
and will be  obligated  to pay a fee for all  water  delivered  in excess of the
threshold amount up to a specified amount beginning after December 25, 2008.

NIA ARBITRATION SETTLEMENT

On  October  15,  2003,  the  Company  closed  a  transaction  settling  the NIA
Arbitration.  In connection  with the  settlement,  the Company  entered into an
agreement  (the  "Supplemental  Agreement")  with  NIA  which,  in  addition  to
providing  for the  dismissal  with  prejudice  of all claims by CE Casecnan and
counterclaims by NIA in the NIA Arbitration,  supplements and amends the Project
Agreement in certain respects as summarized below.

Payment in Cash and Delivery of Note
------------------------------------

As part of the settlement,  on October 15, 2003, NIA paid to CE Casecnan the sum
of $17.7 million plus Philippine pesos 39.9 million (approximately $0.7 million)
and delivered to CE Casecnan a ROP $97.0 million  8.375% Note due 2013 (the "ROP
Note").  The Company had the option,  between  January 14, 2004 and February 14,
2004, to put the ROP Note to the ROP, for a price of par plus accrued  interest.
Also at closing,  the Company paid to the Philippine  Bureau of Internal Revenue
("BIR") approximately $24.4 million in respect of Philippine income taxes on the
foregoing  consideration and paid to NIA $1.6 million in respect of alleged late
completion of the Project.

On January 14, 2004, the Company exercised its option to put the ROP Note to the
ROP and, in  accordance  with the terms of the put, the Company  received  $99.2
million  (representing  the $97.0 million par value plus accrued  interest) from
the ROP on January 21, 2004.

Modifications to Water Delivery Fee
-----------------------------------

Under the Project  Agreement,  the Water Delivery Rate increased by $0.00043 per
cubic  meter for each  $1,000,000  of  certain  taxes paid by CE  Casecnan.  The
Supplemental Agreement amends the per cubic meter Water Delivery Fee calculation
by eliminating this increase,  such that the per cubic meter Water Delivery Rate
remains at $0.029 per cubic meter,  escalated at 7.5%  annually  from January 1,
1994 through the first five years of the Cooperation  Period,  extending through
December 25, 2006. In lieu of such increase,  the Company will be reimbursed for
certain taxes it pays during the remainder of the Cooperation Period.

Under the Project Agreement,  the Water Delivery Fee payable monthly was a fixed
monthly payment based on an average water delivery of 801.9 million cubic meters
per year,  pro-rated  to  approximately  66.8  million  cubic


                                      -19-
<PAGE>

meters per month,  multiplied  by the per cubic meter rate as  described  above.
Under  the  Supplemental  Agreement  the  Water  Delivery  Fee is  equal  to the
Guaranteed  Water  Delivery Fee plus the Variable  Delivered  Water Delivery Fee
minus the Water Delivery Fee Credit.

Guaranteed Water Delivery Fee. For the sixty-month period from December 25, 2003
through  December 25, 2008,  the  Guaranteed  Water Delivery Fee shall equal the
Water  Delivery  Rate,  as described  above,  multiplied by  approximately  66.8
million cubic meters (corresponding to the 801.9 million cubic meters per year).
For each month  beginning  after  December 25, 2008 through the remainder of the
Cooperation  Period,  the  Guaranteed  Water  Delivery Fee shall equal the Water
Delivery   Rate   multiplied   by   approximately   58.3  million  cubic  meters
(corresponding to 700.0 million cubic meters per year).

Variable  Delivered Water Delivery Fee.  Variable  Delivered Water Delivery Fees
will be earned for months  beginning  after  December 25,  2008.  For each month
beginning after December 25, 2008 through the end of the Cooperation Period, the
Variable  Delivered  Water Delivery Fee shall be payable only from the date when
the  cumulative  Total  Available  Water (total  delivered  water plus the water
volume  not  delivered  to NIA as a result of NIA's  failure  to  accept  energy
deliveries  at a capacity up to 150 MW) for each  contract  year  exceeds  700.0
million cubic meters.  Variable  Delivered Water Delivery Fees will be earned up
to an  aggregate  maximum of 1,324.7  million  cubic  meters for the period from
December  25, 2008  through the end of the  Cooperation  Period.  No  additional
variable water delivery fees will be earned over the 1,324.7 million cubic meter
threshold.

Water Delivery  Credit.  The Water Delivery  Credit shall be applicable only for
each of the  sixty-months  from December 25, 2008 through  December 25, 2013 and
shall equal the Water  Delivery  Rate as of December 25, 2008  multiplied by the
sum of each Annual  Water Credit  divided by sixty.  The Annual Water Credit for
each  contract  year  starting from December 25, 2003 and ending on December 25,
2008 shall equal 801.9 million cubic meters minus the Total  Available Water for
each contract year. The Total Available Water in any such year will equal actual
deliveries with a minimum threshold of 700.0 million cubic meters.

Modifications to Excess Energy Delivery Fee
-------------------------------------------

Under the  Project  Agreement,  the Excess  Energy  Delivery  Fee was a variable
amount based on actual electrical energy delivered in each month in excess of 19
gigawatt-hours  ("GWh"),  payable  at a rate  of  $0.1509  per  kWh.  Under  the
Supplemental  Agreement,  the per kWh rate for energy deliveries in excess of 19
GWh per month has been reduced, commencing in 2009, to $0.1132 (escalating at 1%
per annum  thereafter),  provided that any deliveries of energy in excess of 490
GWh but less  than  550 GWh per  year  are paid for at a rate of 1.3  Philippine
pesos  per kWh and  deliveries  in  excess of 550 GWh per year are at no cost to
NIA.

For periods after September 28, 2003, the Supplemental  Agreement  provides that
if the  Casecnan  Project  is not  dispatched  up to 150 MW  whenever  water  is
available, NIA will pay for excess energy that could have been generated but was
not as a result of such dispatch constraint.

Other
-----

The ROP has provided a  Performance  Undertaking  under which NIA's  obligations
under the Project  Agreement are  guaranteed by the full faith and credit of the
ROP.  The Project  Agreement  and the  Performance  Undertaking  provide for the
resolution of disputes by binding  arbitration in Singapore under  international
arbitration rules.

NIA's payment  obligations  under the Project  Agreement are the Company's  sole
source of operating  revenues.  Because of the Company's  dependence on NIA, any
material failure of NIA to fulfill its obligations  under the Project  Agreement
and any  material  failure  of the ROP to  fulfill  its  obligations  under  the
Performance Undertaking would significantly impair the ability of the Company to
meet its obligations under the Securities.

                                      -20-

<PAGE>

CONSTRUCTION CONTRACT ARBITRATION

The Casecnan Project was initially being constructed  pursuant to a fixed-price,
date-certain,  turnkey  construction  contract (the "Hanbo Contract") on a joint
and several  basis by Hanbo  Corporation  ("Hanbo")  and Hanbo  Engineering  and
Construction Co., Ltd. ("HECC"), both of which are South Korean corporations. As
of May 7, 1997,  the Company  terminated  the Hanbo  Contract due to defaults by
Hanbo and HECC including the insolvency of both companies. On the same date, the
Company  entered into a new  fixed-price,  date  certain,  turnkey  engineering,
procurement  and  construction  contract to  complete  the  construction  of the
Casecnan Project (the  "Replacement  Contract").  The work under the Replacement
Contract was  conducted  by a  consortium  consisting  of  Cooperativa  Muratori
Cementisti CMC di Ravenna and Impresa  Pizzarotti & C. Spa.  (collectively,  the
"Contractor"),  working  together with Siemens A.G.,  Sulzer Hydro Ltd., Black &
Veatch and Colenco Power Engineering Ltd.

On  November  20,  1999,  the  Replacement  Contract  was  amended to extend the
Guaranteed  Substantial  Completion  Date for the Casecnan  Project to March 31,
2001. This amendment was approved by the lenders' independent engineer under the
Trust Indenture.

On February 12, 2001, the Contractor  filed a Request for  Arbitration  with the
ICC seeking  schedule relief of up to 153 days through August 31, 2001 resulting
from various alleged force majeure  events.  In its March 20, 2001 Supplement to
Request for  Arbitration,  the Contractor  also seeks  compensation  for alleged
additional  costs of approximately $4 million it incurred from the claimed force
majeure events to the extent it is unable to recover from its insurer.  On April
20,  2001,  the  Contractor  filed a further  supplement  seeking an  additional
compensation  for damages of  approximately  $62  million for the alleged  force
majeure  event (and  geologic  conditions)  related to the collapse of the surge
shaft. The Contractor has alleged that the circumstances surrounding the placing
of the Casecnan Project into commercial operation in December 2001 amounted to a
repudiation of the  Replacement  Contract and has filed a claim for  unspecified
quantum  meruit  damages,  and has  further  alleged  that the delay  liquidated
damages  clause which  provides for payments of $125,000 per day for each day of
delay in  completion  of the  Casecnan  Project  for  which  the  Contractor  is
responsible is  unenforceable.  The arbitration is being conducted  applying New
York law and pursuant to the rules of the ICC.

Hearings  have  been held in  connection  with this  arbitration  in July  2001,
September 2001,  January 2002, March 2002,  November 2002, January 2003 and July
2003. As part of those  hearings,  on June 25, 2001,  the  arbitration  tribunal
temporarily enjoined CE Casecnan from making calls on the demand guaranty posted
by Banca di Roma in support of the  Contractor's  obligations to CE Casecnan for
delay  liquidated  damages.  As a  result  of  the  continuing  nature  of  that
injunction,  on April 26, 2002, CE Casecnan and the Contractor  mutually  agreed
that no  demands  would be made on the  Banca  di Roma  demand  guaranty  except
pursuant to an arbitration award. As of December 31, 2003,  however, CE Casecnan
has received  approximately $6.0 million of liquidated damages from demands made
on the demand guarantees posted by Commerzbank on behalf of the Contractor.  The
$6.0  million was  recorded as a reduction  in  construction  costs in 2002.  On
November 7, 2002, the ICC issued the arbitration  tribunal's  partial award with
respect to the Contractor's  force majeure and geologic  conditions  claims. The
arbitration  panel  awarded the  Contractor  18 days of  schedule  relief in the
aggregate for all of the force majeure  events and awarded the  Contractor  $3.8
million with respect to the cost of the collapsed surge shaft.  The $3.8 million
is shown  as part of the  accounts  payable  and  accrued  expenses  balance  at
December 31, 2003 and December 31, 2002.  All of the  Contractor's  other claims
with respect to force majeure and geologic conditions were denied.

If the Contractor were to prevail on its claim that the delay liquidated damages
clause is unenforceable, CE Casecnan would not be entitled to collect such delay
damages for the period from March 31, 2001 through  December  11,  2001.  If the
Contractor  were to prevail in its  repudiation  claim and prove quantum  meruit
damages in excess of amounts paid to the Contractor, CE Casecnan could be liable
to make additional payments to the Contractor.  CE Casecnan believes all of such
allegations  and claims  are  without  merit and is  vigorously  contesting  the
Contractor's  claims.  CE Casecnan  believes that an award will be issued by the
ICC in 2004.

                                      -21-
<PAGE>

CASECNAN STOCKHOLDER LITIGATION

Pursuant  to the  share  ownership  adjustment  mechanism  in  the  CE  Casecnan
stockholder  agreement,  which is based upon pro forma financial  projections of
the Casecnan Project prepared following  commencement of commercial  operations,
in February 2002, MidAmerican Energy Holdings Company's ("MidAmerican") indirect
wholly owned  subsidiary  CE Casecnan  Ltd.,  advised the minority  stockholder,
LaPrairie Group Contractors  (International)  Ltd. ("LPG"),  that  MidAmerican's
indirect  ownership interest in CE Casecnan had increased to 100% effective from
commencement of commercial  operations.  In April 2002, CE Casecnan Ltd. and LPG
entered into a status quo agreement  pursuant to which CE Casecnan  Ltd.  agreed
not to take any action to exercise  control over or transfer LPG's shares in the
Company.  On July 8, 2002,  LPG filed a complaint in the  Superior  Court of the
State of California,  City and County of San Francisco against, among others, CE
Casecnan Ltd. and  MidAmerican.  In the complaint,  LPG seeks  compensatory  and
punitive damages for alleged  breaches of the stockholder  agreement and alleged
breaches of fiduciary  duties allegedly owed by CE Casecnan Ltd. and MidAmerican
to LPG. The complaint also seeks injunctive  relief against all defendants and a
declaratory  judgment  that LPG is  entitled  to  maintain a 15%  interest in CE
Casecnan.  On January 21, 2004, CE Casecnan  Ltd.,  LPG and the Company  entered
into a second status quo agreement  pursuant to which the parties  agreed to set
aside certain distributions related to the shares subject to the LPG dispute and
CE  Casecnan  agreed  not to take  any  further  actions  with  respect  to such
distributions without at least 15 days' prior notice to LPG. Accordingly, 15% of
the  dividend  distribution  declared  on January  21,  2004 was set aside in an
unsecured account of the Company.

In February  2003, San Lorenzo Ruiz Builders and  Developers  Group,  Inc. ("San
Lorenzo"),  an original  shareholder  substantially  all of whose  shares in the
Company were  purchased by  MidAmerican  in 1998,  threatened to initiate  legal
action in the  Philippines in connection  with certain  aspects of its option to
repurchase such shares. The Company believes that San Lorenzo has no valid basis
for any claim and, if named as a defendant  in any action that may be  commenced
by San Lorenzo, will vigorously defend such action.

BIR AUDIT

The BIR has audited the Company for all taxes,  including  income taxes, for the
years 2000 and 2001 and issued  letters of authority to audit the tax years 1996
through 1998. In 2003, the Company paid an aggregate of $3.0 million in full and
final  settlement of the BIR assessments of deficiency  taxes for the years 2000
and 2001 and 1996 through  1998.  The Company  believes that it is in compliance
with applicable tax laws and regulations with respect to its tax filings.

OBLIGATIONS AND COMMITMENTS

The Company has  contractual  obligations  and commercial  commitments  that may
affect its financial condition.  Contractual obligations to make future payments
arise from long-term debt and notes payable. Material obligations as of December
31, 2003 are as follows (in thousands):
<TABLE>
<CAPTION>

                                                       PAYMENTS DUE BY PERIOD
                                         -------------------------------------------------
                                                      < 1        2-3       4-5       > 5
                                           TOTAL      YEAR      YEARS     YEARS     YEARS
                                         --------   -------   --------   -------   -------

<S>                                      <C>        <C>       <C>        <C>       <C>
Contractual cash obligations:
  Long-term debt .....................   $246,458   $49,360   $ 90,768   $75,460   $30,870
  Note payable .......................     51,263         -     51,263         -         -
                                         --------   -------   --------   -------   -------
    Total contractual cash obligations   $297,721   $49,360   $142,031   $75,460   $30,870
                                         ========   =======   ========   =======   =======
</TABLE>

                                      -22-

<PAGE>

ITEM 7A. QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK.

Interest Rate Risk
------------------

At  December  31,  2003,  the Company had  fixed-rate  long-term  debt of $246.5
million in  principal  amount and having a fair value of $255.1  million.  These
instruments  are  fixed-rate and therefore do not expose the Company to the risk
of earnings  loss due to changes in market  interest  rates.  However,  the fair
value of these  instruments  would  decrease by  approximately  $9.6  million if
interest  rates were to increase by 10% from their  levels at December 31, 2003.
In general,  such a decrease in fair value would impact  earnings and cash flows
only if the  Company  were to  reacquire  all or a portion of these  instruments
prior to their maturity.

Currency Risk
-------------

NIA's  payments of  obligations  under the Project  Agreement are  substantially
denominated  in U.S.  Dollars and are the  Company's  sole  source of  operating
revenues. NIA must obtain U.S. Dollars to fund its payment obligations.  Because
of the Company's  dependence on NIA, any material  failure of NIA to obtain U.S.
Dollars and fulfill its obligations under the Project Agreement and any material
failure of the ROP to fulfill its obligations under the Performance  Undertaking
would  significantly  impair the ability of the Company to meet its existing and
future  obligations.  No  stockholders,  partners or  affiliates of the Company,
including  MidAmerican,  and no directors,  officers or employees of the Company
will guarantee or be in any way liable for payment of the Company's obligations.
As a result,  payment of the Company's obligations depends upon the availability
of  sufficient  revenues  from the  Company's  business  after  the  payment  of
operating expenses.

                                      -23-
<PAGE>

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

Independent Auditors' Report..................................................25

Balance Sheets as of December 31, 2003 And 2002...............................26

Statements of Operations for Each of the Three Years in the Period
     Ended December 31, 2003..................................................27

Statements of Changes in Stockholders' Equity for Each of the Three Years
     in the Period Ended December 31, 2003....................................28

Statements of Cash Flows for Each of the Three Years in the Period
     Ended December 31, 2003..................................................29

Notes To Financial Statements.................................................30

                                      -24-
<PAGE>


                          INDEPENDENT AUDITORS' REPORT

To the Board of  Directors  and  Stockholders  of CE  Casecnan  Water and Energy
Company, Inc.


We have audited the accompanying  balance sheets of CE Casecnan Water and Energy
Company,  Inc. as of December 31, 2003 and 2002,  and the related  statements of
income,  of  changes in  stockholders'  equity and of cash flows for each of the
three years in the period ended December 31, 2003.  These  financial  statements
are the  responsibility of the Company's  management.  Our  responsibility is to
express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audit to obtain  reasonable  assurance  about  whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the financial  position of CE Casecnan Water and Energy
Company,  Inc.  as of  December  31,  2003  and  2002,  and the  results  of its
operations  and its cash flows for each of the three  years in the period  ended
December 31, 2003, in conformity with accounting  principles  generally accepted
in the United States of America.


/s/ Joaquin Cunanan & Co.

JOAQUIN CUNANAN & CO.
A Pricewaterhousecoopers member firm
Makati City, Philippines
February 9, 2004


                                      -25-

<PAGE>

                   CE CASECNAN WATER AND ENERGY COMPANY, INC.
                                 BALANCE SHEETS
            (Amounts in thousands of U.S. Dollars, except share data)

<TABLE>
<CAPTION>
                                                                  AS OF DECEMBER 31,
                                                                 ---------------------
                                                                   2003        2002
                                                                 --------    ---------
                                     ASSETS
<S>                                                              <C>         <C>
Current assets:
  Cash and cash equivalents .................................    $  4,513    $    705
  Trade receivable, net (Note 4) ............................      16,451      51,515
  Note receivable (Note 3) ..................................      97,000           -
  Accrued interest and other receivables ....................       8,229       7,009
  Prepaid insurance and other current assets ................       4,685       5,562
                                                                 --------    --------
    Total current assets ....................................     130,878      64,791
                                                                 --------    --------
Restricted cash and investments .............................      18,121       7,078
Bond issue costs, net .......................................       3,861       5,218
Property, plant and equipment, net (Note 5) .................     407,082     453,507
Deferred income tax (Note 7) ................................       5,371       5,371
Other assets ................................................           -       5,542
                                                                 --------    --------
TOTAL ASSETS ................................................    $565,313    $541,507
                                                                 ========    ========

                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Accounts payable ..........................................    $  7,395    $  3,463
  Accrued interest (Notes 6 and 8) ..........................       7,368       6,271
  Accrued liquidated damages ................................       3,800       5,420
  Other accrued expenses ....................................       1,702       1,902
  Payable to affiliates (Note 8) ............................      34,739      33,342
  Current portion of long-term debt (Note 6) ................      49,360      41,468
                                                                 --------    --------
    Total current liabilities ...............................     104,364      91,866
                                                                 --------    --------

Notes payable (Note 8) ......................................      51,263      51,263
Deferred revenue ............................................         902           -
Long-term debt, net of current portion (Note 6) .............     197,098     246,457
                                                                 --------    --------
  Total liabilities .........................................     353,627     389,586
                                                                 --------    --------


Commitments and contingencies (Note 9)

Stockholders' equity:
Capital stock
Authorized - 2,148,000 common shares, one Philippine peso
  ($0.038) par value; 767,162 shares issued and outstanding .          29          29
Additional paid-in capital ..................................     123,807     123,807
Retained earnings ...........................................      87,850      28,085
                                                                 --------    --------
  Total stockholders' equity ................................     211,686     151,921
                                                                 --------    --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ..................    $565,313    $541,507
                                                                 ========    ========
</TABLE>

   The accompanying notes are an integral part of these financial statements.

                                      -26-
<PAGE>

                   CE CASECNAN WATER AND ENERGY COMPANY, INC.
                            STATEMENTS OF OPERATIONS
            (Amounts in thousands of U.S. Dollars, except share data)
<TABLE>
<CAPTION>
                                                                     YEAR ENDED DECEMBER 31,
                                                               -------------------------------------
                                                                 2003          2002          2001
                                                               ---------     ---------     ---------
<S>                                                            <C>           <C>           <C>
REVENUE:
  Lease rental and service contract (Notes 1, 4 and 11)....    $ 129,921     $ 138,264     $   8,174
                                                               ---------     ---------     ---------

OPERATING EXPENSES:
  Depreciation ............................................       23,158        23,211         1,249
  Plant operations ........................................       13,180        10,093         2,152
  Doubtful accounts expense (Note 4) ......................        2,044        11,545           521
                                                               ---------     ---------     ---------
    Total operating expenses ..............................       38,382        44,849         3,922
                                                               ---------     ---------     ---------
OPERATING INCOME ..........................................       91,539        93,415         4,252
                                                               ---------     ---------     ---------

OTHER INCOME (EXPENSES):
  Settlement income (Note 3) ..............................       31,887             -             -
  Interest expense (Notes 6 and 8) ........................      (39,835)      (42,508)      (44,162)
  Capitalized interest ....................................            -             -        41,652
  Interest income .........................................        1,949           236         1,450
  Other ...................................................          (38)         (105)            -
                                                               ---------     ---------     ---------
    Total other expense, net ..............................       (6,037)      (42,377)       (1,060)
                                                               ---------     ---------     ---------

INCOME BEFORE PROVISION FOR INCOME TAX ....................       85,502        51,038         3,192
PROVISION FOR INCOME TAX (Notes 3 and 7) ..................       25,737         6,082           325
                                                               ---------     ---------     ---------
NET INCOME ................................................    $  59,765     $  44,956     $   2,867
                                                               =========     =========     =========

NET INCOME PER SHARE - BASIC AND DILUTED ..................    $   77.90     $   58.60     $    3.74
                                                               =========     =========     =========
Weighted average number of common shares outstanding ......      767,162       767,162       767,162
                                                               =========     =========     =========
</TABLE>

   The accompanying notes are an integral part of these financial statements.

                                      -27-
<PAGE>

                   CE CASECNAN WATER AND ENERGY COMPANY, INC.
                  STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                           (U.S. Dollars in thousands)

<TABLE>
<CAPTION>
                                            OUTSTANDING
                                              COMMON       COMMON     ADDITIONAL        RETAINED
                                              SHARES        STOCK    PAID-IN CAPITAL    EARNINGS      TOTAL
                                            -----------    ------    ---------------    --------     --------
<S>                                           <C>            <C>        <C>             <C>          <C>
BALANCE, JANUARY 1, 2001................      767,162        $29        $123,807        $(19,738)    $104,098
Net income..............................            -          -               -           2,867        2,867
-------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 2001..............      767,162         29         123,807         (16,871)     106,965
Net income..............................            -          -               -          44,956       44,956
-------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 2002..............      767,162         29         123,807          28,085      151,921
Net income..............................            -          -               -          59,765       59,765
-------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 2003..............      767,162        $29        $123,807         $87,850     $211,686
=============================================================================================================
</TABLE>

   The accompanying notes are an integral part of these financial statements.

                                      -28-

<PAGE>

                   CE CASECNAN WATER AND ENERGY COMPANY, INC.
                            STATEMENTS OF CASH FLOWS
                     (Amounts in thousands of U.S. Dollars)
<TABLE>
<CAPTION>
                                                                                     YEAR ENDED DECEMBER 31,
                                                                                --------------------------------
                                                                                  2003        2002        2001
                                                                                --------    --------    --------
<S>                                                                             <C>         <C>         <C>
Cash flows from operating activities:
Net income ..................................................................   $ 59,765    $ 44,956    $  2,867
Adjustments to reconcile net cash flows from operating activities:
  Depreciation ..............................................................     23,158      23,211       1,249
  Amortization of bond issue costs ..........................................      1,356       1,494       1,603
  Provision for deferred income tax .........................................          -           -         325
  Gain on settlement of arbitration, net of tax .............................     (7,500)          -           -
  Changes in other items:
    Trade receivable, net ...................................................    (20,132)    (43,503)     (8,012)
    Accrued interest and other receivables ..................................     (1,534)       (408)     (6,028)
    Prepaid insurance and other current assets ..............................        455      (2,277)     (3,243)
    Other assets ............................................................      5,542       6,158     (11,700)
    Accounts payable ........................................................      3,932       2,359      (3,137)
    Accrued interest ........................................................      1,097       1,065        (359)
    Accrued liquidated damages ..............................................     (1,620)      3,800       1,620
    Other accrued expenses ..................................................       (200)          -       1,902
    Deferred revenue ........................................................        902           -           -
                                                                                --------    --------    --------
      Net cash flows from operating activities ..............................     65,221      36,855     (22,913)
                                                                                --------    --------    --------

Cash flows from investing activities:
  Additions to property, plant and equipment ................................     (4,335)    (10,263)    (48,583)
  Arbitration settlement ....................................................     (5,965)          -           -
  Liquidated damages received ...............................................          -           -       5,978
  Decrease (increase) in restricted:
    Cash and short-term investments .........................................          -      (1,100)     (5,978)
    Investments .............................................................          -           -      41,945
   Change in accounts payable and accrued expenses related to development ...          -           -       3,281
                                                                                --------    --------    --------
     Net cash flows from investing activities ...............................    (10,300)    (11,363)     (3,357)
                                                                                --------    --------    --------

Cash flows from financing activities:
  Increase (decrease) in payable to affiliates ..............................      1,397      (1,165)     15,507
  Increase in restricted cash related to debt service obligations ...........    (11,043)          -           -
  Payment of long-term debt .................................................    (41,467)    (35,200)    (29,625)
  Proceeds from notes payable ...............................................          -      10,500      40,763
                                                                                --------    --------    --------
    Net cash flows from financing activities ................................    (51,113)    (25,865)     26,645
                                                                                --------    --------    --------

NET CHANGE IN CASH AND CASH EQUIVALENTS .....................................      3,808        (373)        375
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR ..............................        705       1,078         703
                                                                                --------    --------    --------
CASH AND CASH EQUIVALENTS AT END OF YEAR ....................................   $  4,513    $    705    $  1,078
                                                                                ========    ========    ========

Supplemental Disclosure:
  Interest paid, net of interest capitalized ................................   $ 36,205    $ 39,949    $  1,267
                                                                                ========    ========    ========
  Income taxes paid .........................................................   $ 24,387    $  6,080    $    325
                                                                                ========    ========    ========
  Non-cash transaction - ROP note received under NIA Arbitration Settlement .   $ 97,000    $      -    $      -
                                                                                ========    ========    ========
</TABLE>

   The accompanying notes are an integral part of these financial statements.

                                      -29-

<PAGE>

                   CE CASECNAN WATER AND ENERGY COMPANY, INC.
                          NOTES TO FINANCIAL STATEMENTS
                  (In U.S. Dollars, unless indicated otherwise)

1.   ORGANIZATION AND OPERATIONS

CE Casecnan Water and Energy Company, Inc. (the "Company" or "CE Casecnan") is a
privately held Philippine  corporation  formed indirectly by MidAmerican  Energy
Holdings  Company   ("MidAmerican")  and  was  registered  with  the  Philippine
Securities  and Exchange  Commission on September  21, 1994.  The purpose of the
Company is to design, develop, construct, erect, assemble,  commission,  operate
and own a  hydroelectric  power plant and the related  facilities for conversion
into  electricity  of water  provided by and under  contract with the Philippine
Government or any government-owned or controlled corporation.

The  Company  has  a  contract  with  the  Philippine  Government,  through  the
Philippine National Irrigation  Administration  ("NIA") (a government-owned  and
controlled corporation), for the development and construction of a hydroelectric
power plant and related facilities under a build-own-operate-transfer  agreement
("Project Agreement"),  covering a twenty-year  cooperation period ("Cooperation
Period") with "take-or-pay" obligations for water and electricity. At the end of
the Cooperation Period, the combined  irrigation and 150 megawatt  hydroelectric
power  generation  project (the  "Casecnan  Project") will be transferred to the
Philippine  Government at no cost on an "as is" basis. The Philippine Government
also signed a Performance  Undertaking,  which, among other things,  affirms and
guarantees  the  obligations  of NIA under  the  contract.  Construction  of the
Casecnan Project commenced in 1995.

The Company is registered  with the  Philippine  Board of  Investments  as a new
operator of  hydroelectric  power plant with  pioneer  status  under the Omnibus
Investments  Code of 1987  (Executive  Order  No.  226).  Under the terms of its
registration,  the Company is entitled to certain  incentives  which  include an
income  tax  holiday  for a minimum  of six years  from the start of  commercial
operations,  tax and duty-free importation of capital equipment,  tax credits on
domestic  capital  equipment,  and  exemption  from customs  duties and national
internal revenue taxes for the importation and unrestricted use of the consigned
equipment for the development,  construction, start-up, testing and operation of
the power  plant.  The  registration  also  requires,  among other  things,  the
maintenance of a debt-to-equity  ratio not exceeding 75:25 upon  commencement of
commercial operations.

The Casecnan Project commenced commercial operations on December 11, 2001. Prior
to this date, the Company was considered to be a development  stage  enterprise.
Pursuant  to the  share  ownership  adjustment  mechanism  in  the  CE  Casecnan
stockholder  agreement,  which is based upon pro forma financial  projections of
the Casecnan Project prepared following  commencement of commercial  operations,
in February 2002,  MidAmerican's  indirect  wholly owned  subsidiary CE Casecnan
Ltd.   advised   the   minority   stockholder,   LaPrairie   Group   Contractors
(International) Ltd., ("LPG"), that MidAmerican's indirect ownership interest in
CE Casecnan had  increased to 100%  effective  from  commencement  of commercial
operations.  In April 2002,  CE Casecnan  Ltd. and LPG entered into a status quo
agreement  pursuant to which CE Casecnan  Ltd.  agreed not to take any action to
exercise control over or transfer LPG's shares in the Company.  On July 8, 2002,
LPG filed a complaint in the Superior Court of the State of California, City and
County of San Francisco against, among others, CE Casecnan Ltd. and MidAmerican.
In the  complaint,  LPG seeks  compensatory  and  punitive  damages  for alleged
breaches of the stockholder  agreement and alleged  breaches of fiduciary duties
allegedly  owed by CE Casecnan Ltd. and  MidAmerican  to LPG. The complaint also
seeks injunctive  relief against all defendants and a declaratory  judgment that
LPG is entitled to maintain a 15% interest in CE Casecnan.

In April 2003, CE Casecnan Ltd. assigned a 70% stockholding in the Company to CE
Casecnan II, Inc.,  a Philippine  company,  in exchange for 100% of the latter's
shares of stock.  Consequently,  the Company became 70% owned by CE Casecnan II,
Inc.

                                      -30-

<PAGE>

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The financial  statements are prepared in accordance with accounting  principles
generally  accepted  in the  United  States  of  America.  The more  significant
accounting policies and practices of the Company are set forth below.

Basis of Presentation
---------------------

The  functional  and  reporting  currency  of the  Company is the United  States
Dollar.  Gains or losses  resulting  from  translation  of  monetary  assets and
liabilities  in foreign  currencies  are not material.  Transactions  in foreign
currencies  (Philippines  pesos) are recorded based on the  prevailing  rates of
exchange at transaction dates.  Foreign currency denominated monetary assets and
liabilities  are translated at the exchange rate prevailing at the balance sheet
date. The resulting  exchange  differences  from settlements of foreign currency
transactions and translations of monetary assets and liabilities are credited or
charged to operations.

The  Company's   operations  are  in  one  reportable  segment,  the  water  and
electricity generation industry.

Reclassifications
-----------------

Certain amounts in the fiscal 2002 and 2001 financial  statements and supporting
note  disclosures  have  been   reclassified  to  conform  to  the  fiscal  2003
presentation.  Such  reclassification  did not impact  previously  reported  net
income or retained earnings.

Use of Estimates
----------------

The preparation of financial statements in conformity with accounting principles
generally  accepted in the United States of America requires  management to make
estimates  and  assumptions  that  affect  the  reported  amounts  of assets and
liabilities  and disclosure of contingent  assets and liabilities at the date of
the financial statements and the reported amounts of revenue and expenses during
the reporting period. Actual results could differ from those estimates.

Cash Equivalents
----------------

Cash  equivalents are  short-term,  highly liquid  investments  that are readily
convertible to known amounts of cash with original maturities of three months or
less and that are subject to an insignificant risk of change in value.

Restricted Cash and Investments
-------------------------------

Restricted  cash and  investments  are composed of debt  service  funds that are
legally  restricted  as to their use and  require  the  maintenance  of specific
minimum  balances.  Such  cash  and  investments  are  primarily  in the form of
commercial paper and money market securities.

Since  the  Company  has the  positive  intent  and  ability  to hold all of its
investments  to maturity,  these are classified as held to maturity and recorded
at amortized  cost.  The carrying  amount of investments as of December 31, 2003
approximates  their  fair  value,  which is based on  quoted  market  prices  as
provided by the financial institution holding the investments.

Bond Issue Costs
----------------

Bond issue costs  consist of costs  incurred in the  issuance of senior  secured
notes and bonds and are  deferred and  amortized  over the term of the notes and
bonds using the effective interest rate method. Amortization of bond issue costs
is capitalized during the construction  period and charged to operations,  as an
interest expense, upon commercial operations of the Casecnan Project.

                                      -31-
<PAGE>

Property, Plant and Equipment, Net
----------------------------------

Property,   plant  and  equipment  are  stated  at  historical  cost  (including
capitalized  interest  costs) less  accumulated  depreciation.  Depreciation  is
computed on the straight-line method based on the twenty-year Cooperation Period
for the hydroelectric power plant and office and building structure,  and on the
estimated useful life of five years for other equipment.  Minor expenditures for
repairs and maintenance are charged to operations as incurred, while significant
renewals and improvements are capitalized.  Liquidated damages received relative
to the Casecnan  Project  construction  are recorded as reduction to the cost of
the  Project.  When an  asset is sold or  otherwise  disposed  of,  its cost and
related accumulated depreciation are removed from the accounts and the resulting
gain or loss is credited or charged to operations.

Deferred Income Taxes
---------------------

Deferred  income tax assets and  liabilities  are  recognized for the future tax
consequences  attributable to differences  between the financial reporting bases
of assets and  liabilities  and their  related  tax bases.  Deferred  income tax
assets and  liabilities  are  measured  using the tax rate  expected to apply to
taxable income in the years in which those temporary differences are expected to
be recovered or settled.  A valuation  allowance is provided for deferred income
tax  assets  if it is more  likely  than  not  that a tax  benefit  will  not be
realized.

Allowance for Doubtful Accounts
-------------------------------

Allowance  for doubtful  accounts is based on the  Company's  assessment  of the
collectibility of payments from NIA. This assessment requires judgment regarding
the  outcome of pending  disputes  and the  ability of the  customer  to pay the
amounts  owed to the  Company.  Any change in the  Company's  assessment  of the
collectibility of accounts receivable that was not previously provided for could
significantly  impact  the  calculation  of such  allowance  and the  results of
operations.

Net Income per Share
--------------------

Net income per share is based on the weighted  average  number of common  shares
outstanding during the period. As the Company does not have any potential common
shares outstanding such as stock options, warrants or convertible debt, there is
no calculation of diluted earnings per share.

Impairment of Long-Lived Assets
-------------------------------

Long-lived  assets are reviewed  for  impairment  whenever  events or changes in
circumstances  indicate  that  the  carrying  amount  of an  asset  may  not  be
recoverable.  An impairment  loss would be recognized  whenever  evidence exists
that the carrying value is not recoverable.

Revenue
-------

Pursuant to the Project Agreement,  the company bills on a monthly basis for the
delivery of water and electricity.  However, for accounting purposes the Project
Agreement is treated as an arrangement that contains both an operating lease and
a service contract to operate the plant. Both the lease rentals and service fees
are recognized straight line over the term of the Project Agreement.

The annual water  delivery  revenue is recorded on the basis of the  contractual
minimum guaranteed water delivery threshold for the respective contract year. If
and when  cumulative  deliveries  within a  contract  year  exceed  the  minimum
threshold, additional revenue is recognized and calculated as the product of the
water  deliveries  in excess of the minimum  threshold and the  applicable  unit
price up to the maximum contractually allowed water delivery volume.

                                      -32-
<PAGE>

Revenue from electricity  consists of guaranteed  energy fees with fixed monthly
amounts  and  is  recognized  based  on  the  contractually   guaranteed  energy
deliveries. Actual deliveries of energy less than the fixed, monthly contractual
amounts  will not result in any  reduction  of the  guaranteed  energy fee.  The
variable  energy  fee  is  recognized  when  deliveries  of  energy  exceed  the
guaranteed  energy in any contract  year.  The  variable  energy fee will not be
recognized until all cumulative  electrical energy shortfalls in previous months
have been made up. At December  31,  2003,  there was no  cumulative  electrical
energy  shortfall.  Pursuant to the  provisions  of the  Supplemental  Agreement
(defined in Note 3 below)  which took effect on October  15,  2003,  the Company
defers  revenue to the extent that the invoiced  unit price  exceeds the average
unit price over the remaining term of the contract.

3.   NIA SETTLEMENT AGREEMENT

Under  the  terms  of the  Project  Agreement,  NIA had  the  option  of  timely
reimbursing CE Casecnan  directly for certain taxes CE Casecnan paid. If NIA did
not so reimburse CE Casecnan,  certain taxes paid by CE Casecnan would result in
an increase in the Water  Delivery Fee. The payment of certain other taxes by CE
Casecnan would have resulted  automatically in an increase in the Water Delivery
Fee. As of September 30, 2003, CE Casecnan had paid approximately  $59.1 million
in taxes, which pursuant to the foregoing  provisions resulted in an increase in
the Water  Delivery Fee. NIA had failed to pay the portion of the Water Delivery
Fee each month related to the payment of these taxes by CE Casecnan. As a result
of the non-payment of the tax  compensation  portion of the Water Delivery Fees,
on August 19, 2002, CE Casecnan  filed a Statement of Claim against NIA pursuant
to the Rules of Arbitration of the  International  Chamber of Commerce (the "NIA
Arbitration"),  seeking  payment of such  portion of the Water  Delivery Fee and
enforcement of the relevant provision of the Project Agreement going forward.

NIA filed its Answer and  Counterclaim  on March 31,  2003.  In its Answer,  NIA
asserted,  among other  things,  that most of the taxes  which CE  Casecnan  had
factored into the Water  Delivery Fee  compensation  formula did not fall within
the  scope  of  the  relevant  section  of  the  Project  Agreement,   that  the
compensation mechanism itself was invalid and unenforceable under Philippine law
and that the Project  Agreement was  inconsistent  with Philippine law. As such,
NIA sought dismissal of CE Casecnan's claims and a declaration from the arbitral
tribunal that the taxes which had been taken into account in the Water  Delivery
Fee  compensation  mechanism were not recoverable  thereunder and that, at most,
certain taxes might be directly  reimbursed (rather than compensated for through
the Water Delivery Fee) by NIA. NIA also  counterclaimed  for  approximately  $7
million  which it alleges is due to it as a result of the delayed  completion of
the Casecnan Project.  On April 23, 2003, NIA filed a Supplemental  Counterclaim
in which it asserted that the Project  Agreement was contrary to Philippine  law
and public  policy and by way of relief  sought a  declaration  that the Project
Agreement was void from the beginning or should be cancelled,  or alternatively,
an order for  reformation  of the Project  Agreement or any portions or sections
thereof which may be determined to be contrary to such law and or public policy.
On May 23, 2003 CE Casecnan filed its reply to NIA's counterclaims.

On  October  15,  2003,  the  Company  closed  a  transaction  settling  the NIA
Arbitration.  As a result of the settlement,  the Company recorded $31.9 million
of settlement  income and $24.4 million of associated income tax. The settlement
income consisted of $115.4 million of  consideration  pursuant to the settlement
agreement, less $30.8 million of recoverable taxes previously capitalized during
the construction  period, less $8.4 million of taxes paid during operations and
less $44.3 million of net trade receivables and other adjustments  pertaining to
the disputed  amounts.  In connection with the  settlement,  the Company entered
into an agreement (the "Supplemental  Agreement") with NIA which, in addition to
providing  for the  dismissal  with  prejudice  of all claims by CE Casecnan and
counterclaims by NIA in the NIA Arbitration,  supplements and amends the Project
Agreement in certain respects as summarized below.

                                      -33-

<PAGE>

Payment in Cash and Delivery of Note
------------------------------------

As part of the settlement,  on October 15, 2003, NIA paid to CE Casecnan the sum
of $17.7 million plus Philippine pesos 39.9 million (approximately $0.7 million)
and delivered to CE Casecnan a ROP $97.0 million  8.375% Note due 2013 (the "ROP
Note").  The Company had the option,  between  January 14, 2004 and February 14,
2004, to put the ROP Note to the ROP, for a price of par plus accrued  interest.
Also at closing,  the Company paid to the Philippine  Bureau of Internal Revenue
("BIR") approximately $24.4 million in respect of Philippine income taxes on the
foregoing  consideration and paid to NIA $1.6 million in respect of alleged late
completion of the Casecnan Project.  The $1.6 million was accrued as of December
31, 2002.

On January 14, 2004, the Company exercised its put option to put the ROP Note to
the ROP and, in accordance with the terms of the put, the Company received $99.2
million  (representing  the $97.0 million par value plus accrued  interest) from
the ROP on January 21, 2004.

Modifications to Water Delivery Fee
-----------------------------------

Under the Project  Agreement,  the Water Delivery Rate increased by $0.00043 per
cubic  meter for each  $1,000,000  of  certain  taxes paid by CE  Casecnan.  The
Supplemental Agreement amends the per cubic meter Water Delivery Fee calculation
by eliminating this increase,  such that the per cubic meter Water Delivery Rate
remains at $0.029 per cubic meter,  escalated at 7.5%  annually  from January 1,
1994 through the first five years of the Cooperation  Period,  extending through
December 25, 2006. In lieu of such increase,  the Company will be reimbursed for
certain taxes it pays during the remainder of the Cooperation Period.

Under the Project Agreement,  the Water Delivery Fee payable monthly was a fixed
monthly payment based on an average water delivery of 801.9 million cubic meters
per year,  pro-rated  to  approximately  66.8  million  cubic  meters per month,
multiplied  by  the  per  cubic  meter  rate  as  described  above.   Under  the
Supplemental  Agreement the Water Delivery Fee is equal to the Guaranteed  Water
Delivery  Fee plus the  Variable  Delivered  Water  Delivery Fee minus the Water
Delivery Fee Credit.

Guaranteed Water Delivery Fee. For the sixty-month period from December 25, 2003
through  December 25, 2008,  the  Guaranteed  Water Delivery Fee shall equal the
Water  Delivery  Rate,  as described  above,  multiplied by  approximately  66.8
million cubic meters (corresponding to the 801.9 million cubic meters per year).
For each month  beginning  after  December 25, 2008 through the remainder of the
Cooperation  Period,  the  Guaranteed  Water  Delivery Fee shall equal the Water
Delivery   Rate   multiplied   by   approximately   58.3  million  cubic  meters
(corresponding to 700.0 million cubic meters per year).

Variable  Delivered Water Delivery Fee.  Variable  Delivered Water Delivery Fees
will be earned for months  beginning  after  December 25,  2008.  For each month
beginning after December 25, 2008 through the end of the Cooperation Period, the
Variable  Delivered  Water Delivery Fee shall be payable only from the date when
the  cumulative  Total  Available  Water (total  delivered  water plus the water
volume  not  delivered  to NIA as a result of NIA's  failure  to  accept  energy
deliveries  at a capacity up to 150 MW) for each  contract  year  exceeds  700.0
million cubic meters.  Variable  Delivered Water Delivery Fees will be earned up
to an  aggregate  maximum of 1,324.7  million  cubic  meters for the period from
December  25, 2008  through the end of the  Cooperation  Period.  No  additional
Variable  Delivered  Water Delivery Fees will be earned over the 1,324.7 million
cubic meter threshold.

Water Delivery  Credit.  The Water Delivery  Credit shall be applicable only for
each of the  sixty-months  from December 25, 2008 through  December 25, 2013 and
shall equal the Water  Delivery  Rate as of December 25, 2008  multiplied by the
sum of each Annual  Water Credit  divided by sixty.  The Annual Water Credit for
each  contract  year  starting from December 25, 2003 and ending on December 25,
2008 shall equal 801.9 million cubic meters minus the Total  Available Water for
each contract year. The Total Available Water in any such year will equal actual
deliveries with a minimum threshold of 700.0 million cubic meters.

                                      -34-
<PAGE>

Modifications to Excess Energy Delivery Fee
-------------------------------------------

Under the  Project  Agreement,  the Excess  Energy  Delivery  Fee was a variable
amount based on actual electrical energy delivered in each month in excess of 19
gigawatt-hours  ("GWh"),  payable  at a rate  of  $0.1509  per  kWh.  Under  the
Supplemental  Agreement,  the per kWh rate for energy deliveries in excess of 19
GWh per month has been reduced, commencing in 2009, to $0.1132 (escalating at 1%
per annum  thereafter),  provided that any deliveries of energy in excess of 490
GWh but less  than  550 GWh per  year  are paid for at a rate of 1.3  Philippine
pesos  per kWh and  deliveries  in  excess of 550 GWh per year are at no cost to
NIA.

For periods after September 28, 2003, the Supplemental  Agreement  provides that
if the  Casecnan  Project  is not  dispatched  up to 150 MW  whenever  water  is
available, NIA will pay for excess energy that could have been generated but was
not as a result of such dispatch constraint.

Other Provisions of the Supplemental Agreement
----------------------------------------------

The  Company  received  an  opinion  from the  Philippine  Office of  Government
Corporate Counsel as to the due authorization and enforceability of Supplemental
Agreement.  The Company  also  received  written  confirmation  from the Private
Sector  Assets and  Liabilities  Management  Corporation  that the  issues  with
respect to the Casecnan  Project that had been raised by the interagency  review
of independent  power producers in the Philippines or that may have existed with
respect to the Project under certain  provisions of the Electric  Power Industry
Reform  Act of 2001  calling  for the  renegotiation  of  contracts  such as the
Project  Agreement  have  been  satisfactorily  addressed  by  the  Supplemental
Agreement.

The Guaranteed Energy Delivery Fee, Force Majeure, Buyout and Dispute Resolution
provisions  of the Project  Agreement,  as well as the  Performance  Undertaking
provided by the ROP, remain unaffected by the Supplemental Agreement and in full
force and effect.

4.   TRADE RECEIVABLE, NET

Trade  receivable  pertains to the  receivable due for lease rentals and service
income which was billed pursuant to the provisions of the Project Agreement with
NIA, as follows (in thousands):

                                                    DECEMBER 31,
                                                --------------------
                                                  2003        2002
                                                --------    --------
          Water delivery fee ................   $ 11,988    $ 52,854
          Guaranteed energy delivery fee ....      3,676       6,709
          Variable energy delivery fee ......      2,831       4,018
                                                --------    --------
            Trade receivable, gross .........     18,495      63,581
          Allowance for doubtful accounts ...     (2,044)    (12,066)
                                                --------    --------
            Trade receivable, net ...........   $ 16,451    $ 51,515
                                                ========    ========

The  allowance  for  doubtful  accounts as of December 31, 2003  represents  the
Company's current estimate of the uncollectible portion of the calculated output
revenue recorded  subsequent to the Supplemental  Agreement through December 31,
2003,  while  the  2002  allowance  represents  the  Company's  estimate  of the
uncollectible portion of the unpaid Water Delivery Fees at December 31, 2002. On
October 15, 2003, the Company closed a transaction  settling the NIA Arbitration
described in Note 3 above and,  accordingly,  revised the allowance for doubtful
accounts  to reflect the net  collectible  amounts  based upon the  Supplemental
Agreement.

                                      -35-

<PAGE>

5.   PROPERTY, PLANT AND EQUIPMENT, NET

Property,  plant and equipment,  net at December 31 consist of the following (in
thousands):

                                                      DECEMBER 31,
                                                ------------------------
                                                   2003          2002
                                                ---------     ----------
        Hydroelectric power facility .......    $ 450,174     $ 476,786
        Office and building structures .....        1,090           244
        Transportation and other equipment .          640           501
                                                ---------     ---------
                                                  451,904       477,531
        Accumulated depreciation ...........      (44,840)      (24,460)
                                                ---------     ---------
                                                  407,064       453,071
        Construction in progress ...........           18           436
                                                ---------     ---------
        Property, plant and equipment, net..    $ 407,082     $ 453,507
                                                =========     =========

6.   LONG-TERM DEBT

On November 27, 1995,  the Company issued $371.5 million of notes and bonds (the
"Securities") to finance the construction of the Casecnan  Project.  These debts
consisted of $75.0 million Senior Secured  Floating Rate Notes ("FRNs")  bearing
interest at LIBOR plus 3.00%,  which were paid in installments  through November
15, 2002;  $125.0  million Senior Secured Series A Notes ("Series A Notes") with
interest at 11.45%  payable in semiannual  installments  up to 2005;  and $171.5
million Senior Secured Series B Bonds ("Series B Bonds") with interest at 11.95%
payable in semiannual  installments  up to 2010. For the year ended December 31,
2003,  the Series A Notes and  Series B Bonds had  effective  interest  rates of
13.13% and 13.57%, respectively,  inclusive of bond issue cost amortization. The
effective interest rate for the FRNs fluctuated between 5.59% and 10.72% in 2001
and 5.88% and 6.29% prior to being repaid in 2002.

The repayment schedule is as follows (in thousands):

                            SERIES A NOTES  SERIES B BONDS   TOTAL
                            --------------  --------------  --------

             2004 .......      $ 42,500        $  6,860     $ 49,360
             2005 .......        48,750           6,002       54,752
             2006 .......             -          36,016       36,016
             2007 .......             -          37,730       37,730
             2008 .......             -          37,730       37,730
             2009 .......             -          13,720       13,720
             2010 .......             -          17,150       17,150
                               --------        --------     --------
                               $ 91,250        $155,208     $246,458
                               ========        ========     ========

The  Securities  are senior debt of the Company and are secured by an assignment
of all revenues  that will be received from the Casecnan  Project,  a collateral
assignment  of all  material  contracts,  a lien on any  accounts  and  funds on
deposit  under a Deposit  and  Disbursement  Agreement,  a pledge of 100% of the
capital  stock  of the  Company  and a lien on all  other  material  assets  and
property interests of the Company.  The Securities rank pari passu with and will
share the collateral on a pro rata basis with other senior secured debt, if any.

The Securities are subject to certain optional and mandatory  redemption schemes
as  provided  for in the Trust  Indenture.  The  Series A Notes are  subject  to
optional  redemption  by the  Company,  in whole  and not in  part,  at par plus
accrued  interest  to the  Redemption  Date.  The Series B Bonds are  subject to
optional  redemption by the Company, at any time, in whole or in part, pro rata,
at par plus accrued  interest to the redemption date plus a premium,  calculated
to "make whole" to comparable  U.S.  Treasury  Securities plus 150 basis points.
The Company also had the option to redeem the  securities,  in whole or in part,
at par plus  accrued  interest  at any time if,  as a result

                                      -36-
<PAGE>

of any change in Philippine tax law or in the application or  interpretation  of
Philippine tax law occurring after the date of issuance of the  Securities,  the
Company is required to pay certain  additional  amounts  described  in the Trust
Indenture. The Securities are subject to mandatory redemption,  pro rata, at par
plus  accrued  interest  to the  redemption  date,  (a) upon the  receipt by the
Company of loss proceeds that exceed $15 million in respect of certain events of
property or casualty loss or similar events, unless the funds are to be utilized
by the Company for an Approved  Restoration Plan; or (b) upon the receipt by the
Company of proceeds realized in connection with a Project Agreement Buyout.

When a Change in Control occurs,  each holder of the Securities  ("Holder") will
have the right to  require  the  Company to  repurchase  all or any part of such
Holder's  Securities  at a cash  purchase  price equal to 101% of the  principal
amount  thereof,  plus accrued  interest to the date of repurchase in accordance
with the procedures set forth in the Trust Indenture. There is no assurance that
upon a Change in Control the Company will have  sufficient  funds to  repurchase
the Securities.

The debt covenants  contain certain  restrictions as to incurrence of additional
indebtedness;  merger, consolidation,  dissolution, or any significant change in
corporate   structure;   non-arm's   length   transactions  or  agreements  with
affiliates;  sale,  lease,  or transfer of  properties  material to the Casecnan
Project,  among others. In connection with the foregoing  secured  indebtedness,
the  Company,  on November 27,  1995,  entered  into a Deposit and  Disbursement
Agreement whereby Chemical Trust Company of California  ("Chemical  Trust") acts
as a depositary  and a collateral  agent.  As a depositary  agent,  it will hold
monies,  instruments  and  Securities  pledged by the Company to the  collateral
agent. The terms of this agreement  require the  establishment of several funds,
which include a Capital  Contribution  Fund.  Pursuant to this requirement,  the
Company's   stockholders   deposited  an  aggregate   capital   contribution  of
approximately  $123.3  million to the fund,  which was strictly used to fund the
construction  of the Casecnan  Project when the proceeds from the Series A Notes
and Series B Bonds were fully utilized.  The  contributions  are included in the
"Additional paid-in capital" account in the accompanying balance sheets.

7.   INCOME TAXES

Tax expense in 2003 of $25.7 million consists  primarily of the $24.4 million of
taxes paid in connection with the NIA Arbitration  Settlement and the settlement
of the  Philippine  BIR audits for 1996 to 1998 and 2000 to 2001. Tax expense in
2002 of $6.1  million  consisted  of a  payment  to the  Philippine  BIR for the
settlement  of taxes  related to interest  income for the years  2001,  2000 and
1999. Since commencing  commercial  operations in December 2001, the Company has
incurred  no income  tax  expense  on its  results  from  operations  due to the
availment of a six year income tax holiday received from the Philippine Board of
Investments.  The  Company's  deferred  income  tax asset of $5.4  million as of
December  31,  2003 and 2002  (net of a  valuation  allowance  of $2.4  million)
consists mainly of the difference between the financial  reporting basis and the
tax  reporting  basis for  development  and  construction  costs.  The valuation
allowance is  recognized  for the portion of the  deferred  income tax asset for
which it is more likely than not that the tax benefit  will not be realized  due
to the income tax holiday.

8.   RELATED PARTY TRANSACTIONS

In the normal course of business,  the Company  transacts with its affiliates in
the form of advances  for  construction  related  and  operating  expenses.  The
payable to  affiliates  was $34.7 million and $33.3 million at December 31, 2003
and 2002,  respectively.  Costs  incurred  by the Company in  transactions  with
related parties amounted to $2.3 million, $1.3 million and $0.5 million in 2003,
2002 and 2001, respectively.

As of December 31, 2003 and 2002, the Company has  outstanding  $51.3 million of
unsecured  subordinated  notes payable to CE Casecnan  Ltd.,  an affiliate,  due
November  15, 2005.  The  unsecured  notes bear  interest at LIBOR plus two (2%)
percent which is payable every May 15 and November 15.  Interest  expense on the
unsecured  notes was $1.7  million,  $1.9 million and $0.2 million for the years
ended December 31, 2003,  2002 and 2001,

                                      -37-
<PAGE>

respectively.  Any overdue payment of principal or interest payable on the notes
shall  increase the annual  interest by two (2%) percent.  At December 31, 2003,
the effective  interest rate on the notes was 3.27%. The notes may be prepaid at
any time  without  premium or penalty but with  accrued  interest,  if any.  The
unsecured  subordinated  notes and any and all  payments,  whether of principal,
interest  or  otherwise,  are  subject  in  all  respects  to the  terms  of the
Subordination Agreement dated November 15, 2001 between CE Casecnan Ltd. and the
Company in favor of the Trustee,  the Collateral Agent, the co-collateral agent,
the  Depositary,  any party  that  becomes  a  Permitted  Counterparty  under an
Interest  Rate/Currency  Protection Agreement,  any party that becomes a working
capital  facility  agent and any other Person that becomes a secured party under
the Intercreditor Agreement.

9.   COMMITMENTS AND CONTINGENCIES

Construction Contract Arbitration
---------------------------------

The Casecnan Project was initially being constructed  pursuant to a fixed-price,
date-certain,  turnkey  construction  contract (the "Hanbo Contract") on a joint
and several  basis by Hanbo  Corporation  ("Hanbo")  and Hanbo  Engineering  and
Construction Co., Ltd. ("HECC"), both of which are South Korean corporations. As
of May 7, 1997,  the Company  terminated  the Hanbo  Contract due to defaults by
Hanbo and HECC including the insolvency of both companies. On the same date, the
Company  entered into a new  fixed-price,  date  certain,  turnkey  engineering,
procurement  and  construction  contract to  complete  the  construction  of the
Casecnan Project (the  "Replacement  Contract").  The work under the Replacement
Contract was  conducted  by a  consortium  consisting  of  Cooperativa  Muratori
Cementisti CMC di Ravenna and Impresa  Pizzarotti & C. Spa.  (collectively,  the
"Contractor"),  working  together with Siemens A.G.,  Sulzer Hydro Ltd., Black &
Veatch and Colenco Power Engineering Ltd.

On  November  20,  1999,  the  Replacement  Contract  was  amended to extend the
Guaranteed  Substantial  Completion  Date for the Casecnan  Project to March 31,
2001. This amendment was approved by the lenders' independent engineer under the
Trust Indenture.

On February 12, 2001, the Contractor  filed a Request for  Arbitration  with the
International  Chamber of Commerce  ("ICC") seeking schedule relief of up to 153
days through  August 31, 2001  resulting  from  various  alleged  force  majeure
events.  In its March 20,  2001  Supplement  to  Request  for  Arbitration,  the
Contractor also seeks compensation for alleged additional costs of approximately
$4 million it incurred from the claimed force majeure events to the extent it is
unable to recover from its insurer.  On April 20, 2001, the  Contractor  filed a
further   supplement   seeking  an  additional   compensation   for  damages  of
approximately  $62 million for the alleged  force  majeure  event (and  geologic
conditions)  related to the  collapse of the surge  shaft.  The  Contractor  has
alleged that the  circumstances  surrounding the placing of the Casecnan Project
into  commercial  operation in December 2001  amounted to a  repudiation  of the
Replacement  Contract  and has  filed a claim  for  unspecified  quantum  meruit
damages,  and has further alleged that the delay liquidated damages clause which
provides for payments of $125,000 per day for each day of delay in completion of
the Casecnan  Project for which the Contractor is responsible is  unenforceable.
The  arbitration  is being  conducted  applying New York law and pursuant to the
rules of the ICC.

Hearings  have  been held in  connection  with this  arbitration  in July  2001,
September 2001,  January 2002, March 2002,  November 2002, January 2003 and July
2003. As part of those  hearings,  on June 25, 2001,  the  arbitration  tribunal
temporarily enjoined CE Casecnan from making calls on the demand guaranty posted
by Banca di Roma in support of the  Contractor's  obligations to CE Casecnan for
delay  liquidated  damages.  As a  result  of  the  continuing  nature  of  that
injunction,  on April 26, 2002, CE Casecnan and the Contractor  mutually  agreed
that no  demands  would be made on the  Banca  di Roma  demand  guaranty  except
pursuant to an arbitration award. As of December 31, 2003,  however, CE Casecnan
has received  approximately $6.0 million of liquidated damages from demands made
on the demand guarantees posted by Commerzbank on behalf of the Contractor.  The
$6.0  million was  recorded as a reduction  in  construction  costs in 2002.  On
November 7, 2002, the ICC issued the arbitration  tribunal's  partial award with
respect to the Contractor's  force majeure and geologic  conditions  claims. The

                                      -38-
<PAGE>

arbitration  panel  awarded the  Contractor  18 days of  schedule  relief in the
aggregate for all of the force majeure  events and awarded the  Contractor  $3.8
million with respect to the cost of the collapsed surge shaft.  The $3.8 million
is shown as part of the accrued  liquidated damages balance at December 31, 2003
and 2002. All of the Contractor's other claims with respect to force majeure and
geologic conditions were denied.

If the Contractor were to prevail on its claim that the delay liquidated damages
clause is unenforceable, CE Casecnan would not be entitled to collect such delay
damages for the period from March 31, 2001 through  December  11,  2001.  If the
Contractor  were to prevail in its  repudiation  claim and prove quantum  meruit
damages in excess of amounts paid to the Contractor, CE Casecnan could be liable
to make additional payments to the Contractor.  CE Casecnan believes all of such
allegations  and claims  are  without  merit and is  vigorously  contesting  the
Contractor's  claims.  CE Casecnan  believes that an award will be issued by the
ICC in 2004.

Stockholder Litigation
----------------------

Pursuant  to the  share  ownership  adjustment  mechanism  in  the  CE  Casecnan
stockholder  agreement,  which is based upon pro forma financial  projections of
the Casecnan Project prepared following  commencement of commercial  operations,
in February 2002, MidAmerican Energy Holdings Company's ("MidAmerican") indirect
wholly owned  subsidiary  CE Casecnan  Ltd.,  advised the minority  stockholder,
LaPrairie Group Contractors  (International)  Ltd. ("LPG"),  that  MidAmerican's
indirect  ownership interest in CE Casecnan had increased to 100% effective from
commencement of commercial  operations.  In April 2002, CE Casecnan Ltd. and LPG
entered into a status quo agreement  pursuant to which CE Casecnan  Ltd.  agreed
not to take any action to exercise  control over or transfer LPG's shares in the
Company.  On July 8, 2002,  LPG filed a complaint in the  Superior  Court of the
State of California,  City and County of San Francisco against, among others, CE
Casecnan Ltd. and  MidAmerican.  In the complaint,  LPG seeks  compensatory  and
punitive damages for alleged  breaches of the stockholder  agreement and alleged
breaches of fiduciary  duties allegedly owed by CE Casecnan Ltd. and MidAmerican
to LPG. The complaint also seeks injunctive  relief against all defendants and a
declaratory  judgment  that LPG is entitled to maintain  its 15%  interest in CE
Casecnan.  On January 21, 2004, CE Casecnan  Ltd.,  LPG and the Company  entered
into a second status quo agreement  pursuant to which the parties  agreed to set
aside certain distributions related to the shares subject to the LPG dispute and
CE  Casecnan  agreed  not to take  any  further  actions  with  respect  to such
distributions without at least 15 days' prior notice to LPG. Accordingly, 15% of
the  dividend  distribution  declared  on January  21,  2004 was set aside in an
unsecured account of the Company.

In February  2003, San Lorenzo Ruiz Builders and  Developers  Group,  Inc. ("San
Lorenzo"),  an original  shareholder  substantially  all of whose  shares in the
Company were  purchased by  MidAmerican  in 1998,  threatened to initiate  legal
action in the  Philippines in connection  with certain  aspects of its option to
repurchase such shares. The Company believes that San Lorenzo has no valid basis
for any claim and, if named as a defendant  in any action that may be  commenced
by San Lorenzo, will vigorously defend such action.

Concentration of Risk
---------------------

NIA's  payments of  obligations  under the Project  Agreement are  substantially
denominated  in U.S.  Dollars and are the  Company's  sole  source of  operating
revenues.  Because of the Company's  dependence on NIA, any material  failure of
NIA to fulfill its  obligations  under the Project  Agreement  and any  material
failure of the ROP to fulfill its obligations under the Performance  Undertaking
would  significantly  impair the ability of the Company to meet its existing and
future  obligations.  No  stockholders,  partners or  affiliates of the Company,
including  MidAmerican,  and no directors,  officers or employees of the Company
will guarantee or be in any way liable for payment of the Company's obligations.
As a result,  payment of the Company's obligations depends upon the availability
of  sufficient  revenues  from the  Company's  business  after  the  payment  of
operating expenses.

                                      -39-

<PAGE>

Regulatory environment
----------------------

The Philippine  Congress has passed the Electric  Power  Industry  Reform Act of
2001 (EPIRA),  which is aimed at  restructuring  the Philippine  power industry,
privatization of the NPC and introduction of a competitive  electricity  market,
among other  initiatives.  The implementation of EPIRA may have an impact on the
Company's  future  operations  in the  Philippines  and  the  Philippines  power
industry as a whole, the effect of which is not yet determinable and estimable.

10.  FAIR VALUE OF FINANCIAL INSTRUMENTS

Statement of Financial  Accounting  Standards No. 107,  "Disclosures  About Fair
Value of Financial Instruments", defines the fair value of financial instruments
as the  amount  at  which  the  instruments  could  be  exchanged  in a  current
transaction between willing parties.  Although management uses its best judgment
in estimating the fair value of these financial instruments,  there are inherent
limitations in any estimation  technique.  Therefore,  the fair value  estimates
presented herein are not necessarily  indicative of the amounts that the Company
could realize in a current transaction.

The methods and assumptions used to estimate fair value are as follows:

Cash and cash equivalents, trade receivable, note receivable, accounts payable
------------------------------------------------------------------------------
and accrued expenses
--------------------

The carrying amounts  reported in the balance sheets  approximate fair value due
to the liquidity, the short maturity and nature of such items.

Notes payable
-------------

The  Company has  outstanding  $51.3  million of  unsecured  subordinated  notes
payable to CE Casecnan Ltd., an affiliate,  due November 15, 2005. The unsecured
notes bear interest at LIBOR plus two (2%) percent which is payable every May 15
and November 15. Interest  expense on the unsecured notes was $1.7 milion,  $1.9
million and $0.2 million for the years ended  December 31, 2003,  2002 and 2001,
respectively. At December 31, 2003, the effective interest rate on the notes was
3.27%. It is not practicable to estimate the fair value of the notes payable for
a variety of  reasons,  including  the absence of quoted  market  prices for the
notes and their  subordination  provisions  to the  existing  senior debt of the
Company.

Long-term debt
--------------

The fair value of the  Company's  long-term  debt is  estimated  based on quoted
market  prices of similar  types of  arrangements.  At December  31,  2003,  the
Company had fixed-rate  long-term debt of $246.5 million in principal amount and
having a fair value of $255.5  million.  At December 31,  2002,  the Company had
fixed-rate  long-term  debt of $287.9  million in principal  amount and having a
fair value of $288.1 million.  These instruments are fixed-rate and,  therefore,
do not expose the Company to the risk of earnings  loss due to changes in market
interest rates.  However,  the fair value of these instruments would decrease by
approximately  $9.6 million if interest rates were to increase by 10% from their
levels at December  31,  2003.  In general,  such a decrease in fair value would
impact  earnings and cash flows only if the Company  were to reacquire  all or a
portion of these instruments prior to their maturity.

                                      -40-

<PAGE>

11.  OPERATING LEASE RENTALS AND SERVICE INCOME

The following is the minimum  lease rentals and service  income in the next five
years on the noncancelable operating lease as of December 31, 2003:

     YEAR ENDED DECEMBER 31                                AMOUNT
     ----------------------                                ------

               2004...................................... $79,647
               2005 .....................................  82,894
               2006......................................  86,382
               2007......................................  88,052
               2008......................................  88,052

Variable  lease  rentals  and  service  income  included  in the profit and loss
accounts  amounted to $22.0  million in 2003,  $19.3  million in 2002,  and $2.0
million in 2001.

12.  SUBSEQUENT EVENTS

On January 14, 2004, the Company exercised its put option to put the ROP Note to
the ROP and, in accordance with the terms of the put, the Company received $99.2
million  (representing  the $97.0 million par value plus accrued  interest) from
the ROP on January 21, 2004.

On January 21, 2004, the Company declared a cash dividend of $38.0 million. Also
on January 21, 2004, CE Casecnan Ltd., LPG and the Company entered into a second
status quo agreement  pursuant to which the parties  agreed to set aside certain
distributions  related to the shares  subject to the LPG dispute and CE Casecnan
agreed  not to take any  further  actions  with  respect  to such  distributions
without at least 15 days' prior notice to LPG. Accordingly,  15% of the dividend
distribution  declared on January 21, 2004 was set aside in an unsecured account
of the Company.

                                      -41-
<PAGE>


ITEM 9.  CHANGES  IN  AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
         FINANCIAL DISCLOSURES.

None

ITEM 9A. CONTROLS AND PROCEDURES

An evaluation was performed under the supervision and with the  participation of
the Company's  management,  including  the  respective  persons  acting as chief
executive  officer and chief financial  officer,  regarding the effectiveness of
the design and operation of the Company's disclosure controls and procedures (as
defined in Rule 13a-15(e)  promulgated  under the Securities and Exchange Act of
1934,  as  amended) as of  December  31,  2003.  Based on that  evaluation,  the
Company's management, including the respective persons acting as chief executive
officer and chief  financial  officer,  concluded that the Company's  disclosure
controls and procedures were effective.  There have been no significant  changes
in the Company's internal controls or in other factors that could  significantly
affect internal controls.

                                      -42-
<PAGE>

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

The following  table sets forth the names,  ages, and positions of the directors
and executive officers of the Company:

David L. Sokol                  47     Director and Chairman
Gregory E. Abel                 41     Vice Chairman
David A. Baldwin                39     Director, President and General Manager
James D. Stallmeyer             46     Vice President
Patrick J. Goodman              37     Director, Senior Vice President and
                                         Chief Financial Officer
Douglas L. Anderson             45     Director, Senior Vice President, General
                                         Counsel and Assistant Secretary
Brian K. Hankel                 41     Vice President and Treasurer
Jose Sandejas                   67     Director and Corporate Secretary
Jose Jaime Cruz                 33     Director and Assistant Corporate
                                         Secretary
Marivic Punzalan-Espiritu       36     Director
Scott LaPrairie                 46     Director
Linda Castillo                  44     Director

Directors of the Company are elected  annually and hold office until a successor
is elected. Executive officers are chosen from time to time by vote of the Board
of Directors.  Pursuant to the terms of the Stockholders  Agreement, CE Casecnan
Ltd. is entitled to elect seven of the directors,  and each minority investor is
entitled to elect one director.

DAVID L.  SOKOL.  In  addition  to  serving as a Director  and  Chairman  of the
Company,  Mr. Sokol has been Chief Executive  Officer of MidAmerican since April
19,  1993 and served as  President  of  MidAmerican  from  April 19,  1993 until
January 21, 1995.  Mr. Sokol has been  Chairman of the Board of Directors  since
May 1994 and a director of MidAmerican since March 1991.  Formerly,  among other
positions  held in the  independent  power  industry,  Mr.  Sokol  served as the
President and Chief Executive  Officer of Kiewit Energy  Company,  which at that
time was a wholly owned subsidiary of PKS, and Ogden Projects, Inc.

GREGORY E. ABEL.  In addition to serving as Vice  Chairman of the  Company,  Mr.
Abel is President and Chief Operating  Officer of  MidAmerican.  Mr. Abel joined
MidAmerican  in 1992.  Mr. Abel is a Chartered  Accountant and from 1984 to 1992
employed by Price Waterhouse.  As a Manager in the San Francisco office of Price
Waterhouse, he was responsible for clients in the energy industry.

DAVID A.  BALDWIN.  In addition to serving as  Director,  President  and General
Manager  for  the  Company,  Mr.  Baldwin  is  President  and  General  Manager,
Philippines for affiliates of the Company.  From December 1996 to June 1997, Mr.
Baldwin served as Vice  President,  Project  Development  for Asia Power Ltd. in
Hong Kong. From October 1994 to December 1996, Mr. Baldwin was Project  Director
at SouthPac Corporation Ltd. in New Zealand and, prior to that, he held a series
of project  management and engineering  positions at Shell  International in the
Netherlands and New Zealand.

JAMES D.  STALLMEYER.  In addition to serving as Vice  President of the Company,
Mr. Stallmeyer is Commercial  Director and General Counsel of Northern Electric.
Mr.  Stallmeyer  joined  affiliates  of the  Company  in  1993.  Mr.  Stallmeyer
practiced  in the public  finance  and  banking  areas at Chapman  and Cutler in
Chicago from 1984 to 1987 and in the corporate  finance  department from 1989 to
1993.  Prior to that,  Mr.  Stallmeyer  was an  attorney  in the public  finance
department of the Chicago office of Skadden, Arps, Slate, Meagher & Flom in 1987
and  1988 and was a legal  writing  instructor  at the  University  of  Illinois
College of Law in 1988 and 1989.

PATRICK J. GOODMAN.  In addition to serving as Director,  Senior Vice  President
and Chief  Financial  Officer  for the  Company,  Mr.  Goodman  is  Senior  Vice
President  and Chief  Financial  Officer for  MidAmerican.  Mr.

                                      -43-
<PAGE>

Goodman joined  MidAmerican  in June 1995,  and served as in various  accounting
positions,  including Senior Vice President and Chief Accounting Officer.  Prior
to joining  MidAmerican,  Mr.  Goodman  was a  financial  manager  for  National
Indemnity Company and a senior associate at Coopers & Lybrand.

DOUGLAS L. ANDERSON. In addition to serving as Director,  Senior Vice President,
General Counsel and Assistant Secretary for the Company,  Mr. Anderson is Senior
Vice  President,  General Counsel and Corporate  Secretary of  MidAmerican.  Mr.
Anderson joined MidAmerican in February 1993. Prior to that, Mr. Anderson was in
private practice.

BRIAN K. HANKEL.  In addition to serving as Vice President and Treasurer for the
Company, Mr. Hankel is Vice President and Treasurer for MidAmerican.  Mr. Hankel
joined  MidAmerican  in February  1992 as a Treasury  Analyst and served in that
position to December  1995.  Mr.  Hankel was  appointed  Assistant  Treasurer in
January 1996 and was appointed  Treasurer in January 1997.  Prior to joining the
Company,  Mr.  Hankel was a Money  Position  Analyst at FirsTier Bank of Lincoln
from 1988 to 1992.

JOSE SANDEJAS.  In addition to serving as a Director and Corporate  Secretary of
the Company, Mr. Sandejas is a partner with the law firm of Quisumbing Torres.

JOSE JAIME CRUZ.  In addition to serving as a Director and  Assistant  Corporate
Secretary  of the  Company,  Mr.  Cruz  is an  attorney  with  the  law  firm of
Quisumbing Torres.

MARIVIC PUNZALAN-ESPIRITU.  In addition to serving as a Director of the Company,
Ms. Punzalan-Espiritu is a partner with the law firm of Quisumbing Torres.

SCOTT  LAPRAIRIE.  In  addition  to serving as a Director  of the  Company,  Mr.
LaPrairie is President and Chief  Executive  Officer of the  LaPrairie  Group of
Companies.

LINDA B.  CASTILLO.  In addition to serving as a Director  of the  Company,  Ms.
Castillo is corporate counsel for the Company and certain of its affiliates.

ITEM 10. AUDIT COMMITTEE MATTERS

During  the  fiscal  year  ended  December  31,  2003 and as of the date of this
Report, the Board of Directors had no committees, including any audit committee.
The Company is not an issuer as defined in the  Sarbanes-Oxley  Act of 2002,  it
does not have a class of securities listed on any securities exchange, and it is
not  required to have an audit  committee.  Patrick J.  Goodman  qualifies as an
"audit committee  financial  expert".  Mr. Goodman is not independent within the
meaning of Item 7(d)(3)(iv) of Schedule 14A under the Exchange Act.

CODE OF ETHICS

The Company has adopted a code of ethics that applies to its principal executive
officer,  principal financial officer and to its controller.  The code of ethics
is filed as an exhibit to this annual report on Form 10-K.

ITEM 11. EXECUTIVE COMPENSATION.

None of the executive officers or directors of the Company receives compensation
from the Company for  services as officers  or  directors  of the  Company.  All
directors are  reimbursed  for their  expenses in attending  board and committee
meetings.

                                      -44-

<PAGE>

ITEM 12.  SECURITY  OWNERSHIP OF CERTAIN  BENEFICIAL  OWNERS AND  MANAGEMENT AND
          RELATED STOCKHOLDER MATTERS.

DESCRIPTION OF CAPITAL STOCK

As of December 31, 2003, the authorized  capital stock of the Company  consisted
of 2,148,000 shares of common stock, par value 1.00 Philippine peso ($0.038) per
share (the "Common Stock"),  of which 767,162 shares were outstanding.  There is
no public  trading  market for the Common  Stock.  As of December 31, 2003 there
were 11  holders  of record of the Common  Stock.  Holders  of Common  Stock are
entitled to one vote per share on any matter coming before the  stockholders for
a vote.

The Trust Indenture  contains  certain  restrictions on the payment of dividends
with respect to the Common Stock.

PRINCIPAL STOCKHOLDERS

The following table sets forth  information  with respect to all persons who own
beneficially  more than 5% of the common stock and by all directors and officers
of the Company as a group.

                                            NUMBER OF            % OF COMMON
NAME AND ADDRESS OF OWNER                 SHARES OWNED*          STOCK OWNED
-------------------------                 -------------          -----------

1.    CE Casecnan II, Inc. (1)              537,005              70% (1)

2.    CE Casecnan Ltd.                      230,148              30% (2) (3)

* In  addition,  each  director of the Company  owns one share in the Company as
  required by Philippine law.

(1)  In  April  2003,  CE  Casecnan  Ltd.,  a  Bermuda  registered  corporation,
     transferred  shares in CE Casecnan to CE Casecnan  II,  Inc.,  a Philippine
     corporation,  in exchange  for 100% of the stock of CE Casecnan II, Inc. CE
     Casecnan Ltd. and CE Casecnan II, Inc. are indirectly owned by MidAmerican.

(2)  Pursuant to the share  ownership  adjustment  mechanism in the  Stockholder
     Agreement,  which is based  upon  pro-forma  financial  projections  of the
     Casecnan  Project at commencement of commercial  operations,  MidAmerican's
     wholly owned  indirect  subsidiary CE Casecnan  Ltd.,  advised the minority
     stockholders that MidAmerican's ownership interest in the Company increased
     to 100%.  In April 2002, CE Casecnan Ltd. and LPG entered into a status quo
     agreement  pursuant to which CE Casecnan Ltd. agreed not to take any action
     to  exercise  control  over  or  transfer  LPG's  shares  in  the  Company.
     Accordingly,  these  shares have not been  transferred  on the books of the
     Company  and the  above  designation  reflects  the  ownership  percentages
     assuming CE Casecnan Ltd.  prevails in the pending  stockholder  litigation
     (see Item 3. Legal Proceedings - Stockholder Litigation).  On July 8, 2002,
     LPG filed a complaint  in the  Superior  Court of the State of  California,
     City and County of San Francisco  against,  among others,  CE Casecnan Ltd.
     and  MidAmerican.  In the complaint,  LPG seeks  compensatory  and punitive
     damages  for  alleged  breaches of the  stockholder  agreement  and alleged
     breaches  of  fiduciary  duties  allegedly  owed by CE  Casecnan  Ltd.  and
     MidAmerican to LPG. The complaint also seeks injunctive  relief against all
     defendants  and a  declaratory  judgment that LPG is entitled to maintain a
     15% interest in CE Casecnan. On January 21, 2004, CE Casecnan Ltd., LPG and
     the Company  entered into a second status quo  agreement  pursuant to which
     the parties agreed to set aside certain distributions related to the shares
     subject to the LPG dispute  and CE Casecnan  agreed not to take any further
     actions with respect to such distributions  without at least 15 days' prior
     notice to LPG.  Accordingly,  15% of the dividend  distribution declared on
     January 21, 2004 was set aside in an unsecured account of the Company.

                                      -45-
<PAGE>

(3)  Includes  rights to 115,000  shares,  which rights were  purchased from San
     Lorenzo  Ruiz  Builders and  Developers  Group,  Inc. in 1998.  The 115,000
     shares  are  subject  to  the   ownership   adjustment   mechanism  in  the
     Stockholders  Agreement  discussed  in Note (2).  San  Lorenzo  retained an
     option to  repurchase  the 115,000  shares,  if any,  remaining  after such
     ownership adjustment.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

Not Applicable.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

Aggregate  fees accrued by CE Casecnan  during the years ended December 31, 2003
and  2002  by  its  principal   accounting  firm,   Joaquin  Cunanan  &  Co.  (A
PricewaterhouseCoopers    Member   Firm)   and   their   respective   affiliates
(collectively, " Joaquin Cunanan & Co."), are set forth below (in thousands).

                                                 YEAR ENDED DECEMBER 31,
                                                 -----------------------
                                                      2003    2002
                                                      ----    ----
              Audit Fees (1) ....................     $222     $39
              Audit-Related Fees (2) ............        -       -
              Tax Fees (3) ......................      388      11
              All Other Fees (4) ................        -       -
                                                      ----     ---
                  Total aggregate fees billed ...     $610     $50
                                                      ----     ---

(1)  Includes  the  aggregate  fees for each of the last two  fiscal  years  for
     professional  services  rendered by Joaquin  Cunanan & Co. for the audit of
     the  Company's  financial  statements  and review of  financial  statements
     included in the Company's Form 10-K or services that are normally  provided
     by  Joaquin  Cunanan & Co. in  connection  with  statutory  and  regulatory
     filings or engagements for those fiscal years.

(2)  Includes  the  aggregate  fees in each of the last  two  fiscal  years  for
     assurance and related services by Joaquin Cunanan & Co. that are reasonably
     related  to the  performance  of the audit or  review  of the  registrant's
     financial statements.  Services included in this category include audits of
     benefit plans,  due diligence for possible  acquisitions  and  consultation
     pertaining to new and proposed accounting and regulatory rules.

(3)  Includes  the  aggregate  fees in each of the last  two  fiscal  years  for
     professional services rendered by Joaquin Cunanan & Co. for tax compliance,
     tax advice, and tax planning.

(4)  Includes  the  aggregate  fees in each of the last  two  fiscal  years  for
     products and  services  provided by Joaquin  Cunanan & Co.,  other than the
     services reported as "Audit Fees", "Audit-Related Fees", or "Tax Fees".

                                      -46-
<PAGE>


                                     PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.

     (a)  Financial Statements and Schedules

          (i)  Financial Statements

          Financial Statements are included in Part II of this Form 10-K.

          (ii) Financial Statement Schedules

               None.

     (b)  Reports on Form 8-K

     The  Company  filed the  following  Current  Reports on Form 8-K during the
     fourth quarter of 2003:

     The Company filed a Current Report on Form 8-K on October 9, 2003 reporting
     the execution of an agreement (the "Supplemental  Agreement")  settling the
     International Chamber of Commerce arbitration case initiated by CE Casecnan
     in August 2002 to enforce a provision in the Amended and  Restated  Project
     Agreement ("Project Agreement") between CE Casecnan and NIA.

     The  Company  filed a  Current  Report  on Form  8-K on  October  15,  2003
     disclosing  that  the  closing   conditions  to  the  previously   reported
     Supplemental  Agreement  settling disputes between the Company and NIA have
     been satisfied and the closing occurred on October 15, 2003.

     (c)  Exhibits

     The exhibits listed on the accompanying  Exhibit Index are filed as part of
     this Annual Report.

     (d)  Financial  statements  required by Regulation  S-X, which are excluded
          from the Annual Report by Rule 14a-3(b).

          Not  applicable.

                                      -47-
<PAGE>

                                   SIGNATURES

Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  the Company has duly caused this report to be signed on its behalf
by the undersigned,  thereunto duly authorized,  in the City of Omaha,  State of
Nebraska, on February 9, 2004.

                   CE CASECNAN WATER AND ENERGY COMPANY, INC.




                           By: /s/ * David A. Baldwin
                           --------------------------
                                     David A. Baldwin
                                     President

Pursuant to the requirements of the Securities Exchange Act of 1934, the Company
has caused this report to be signed by the following  persons in the  capacities
and on the dates indicated:

Signature                         Title                              Date
---------                         -----                              ----


/s/ David L. Sokol*            Director and Chairman            February 9, 2004
---------------------------    of the Board
David L. Sokol


/s/ David A. Baldwin*          Director, President              February 9, 2004
---------------------------    and General Manager
David A. Baldwin               (Principal Executive Officer)


/s/ Patrick J. Goodman*        Director, Senior Vice President  February 9, 2004
---------------------------    and Chief Financial Officer
Patrick J. Goodman             (Principal Financial Officer)


/s/ Douglas L. Anderson        Director, Senor Vice President,  February 9, 2004
---------------------------    General Counsel and
Douglas L. Anderson            Assistant Secretary


                               Director                         February 9, 2004
---------------------------
Jose R. Sandejas


                               Director                         February 9, 2004
---------------------------
Jose Jaime Cruz


                               Director                         February 9, 2004
---------------------------
Marivic Punzalan-Espiritu

                               Director                         February 9, 2004
---------------------------
Scott LaPrairie

/s/ Linda B. Castillo*         Director                         February 9, 2004
---------------------------
Linda B. Castillo



*By:/s/ Douglas L. Anderson
    -----------------------
        Douglas L. Anderson
        Attorney-in-Fact

                                      -48-
<PAGE>

                                  EXHIBIT INDEX
Exhibit No.
-----------

3.1       Articles of Incorporation of the Company (incorporated by reference to
          Exhibit  3.1 the  Company's  Registration  Statement  on Form S-4,  as
          amended, dated January 25, 1996 ("Form S-4")).

3.2       By-laws of the Company  (incorporated  by reference to Exhibit 3.2 the
          Company's Form S-4).

4.1(a)    Trust  Indenture,  dated as of November 27, 1995,  between  Chemical
          Trust Company of California and the Company (incorporated by reference
          to Exhibit 4.1(a) the Company's Form S-4).

4.1(b)    First  Supplemental  Indenture,  dated as of April 10, 1996, between
          Chemical Trust Company of California and the Company  (incorporated by
          reference to Exhibit 4.1(b) to the Company's Form S-4).

4.2       Exchange and Registration  Rights Agreement,  dated as of November 27,
          1995,  by and among CS First  Boston  Corporation,  Bear Stearns & Co.
          Inc., Lehman Brothers Inc. and the Company  (incorporated by reference
          to Exhibit 4.2 the Company's Form S-4).

4.3       Collateral  Agency and Intercreditor  Agreement,  dated as of November
          27, 1995, by and among Chemical Trust Company of California,  Far East
          Bank & Trust  Company and the Company  (incorporated  by  reference to
          Exhibit 4.3 the Company's Form S-4).

4.4       Mortgage and Security Agreement, dated as of November 10, 1995, by and
          among CE Casecnan Ltd., Kiewit Energy International (Bermuda) Ltd., La
          Prairie  Group  Contractors  (International)  Ltd.,  San Lorenzo  Ruiz
          Builders  and  Developers  Group,  Inc.,  Chemical  Trust  Company  of
          California,   Far  East  Bank  &  Trust   Company   and  the   Company
          (incorporated by reference to Exhibit 4.4 the Company's Form S-4).

4.6       Deposit and Disbursement Agreement,  dated as of November 27, 1995, by
          and among the Company,  Chemical Trust Company of  California,  Kiewit
          Energy  Company  and the Company  (incorporated  by  reference  to the
          Company's Form S-4).

4.7       Consent of NIA,  dated as of November 10, 1995,  to the  assignment of
          the Amended and Restated Casecnan Project  Agreement  (incorporated by
          reference to Exhibit 4.7 to the Company's Form S-4).

4.8       Consent of the Republic of  Philippines,  dated  November 10, 1995, to
          the  assignment  of the  Performance  Undertaking  and the Amended and
          Restated  Casecnan  Project  Agreement  (incorporated  by reference to
          Exhibit 4.8 to the Company's Form S-4).

4.9       Consent of Hanbo  Corporation and You One Engineering and Construction
          Company, Ltd., dated as of November 17, 1995, to the assignment of the
          Engineering,  Procurement and Construction  Contract  (incorporated by
          reference to Exhibit 4.9 to the Company's Form S-4).

4.10      Consent  of  Hanbo  Steel,  dated  as of  November  17,  1995,  to the
          assignment   of  the   Guaranty  of   Engineering,   Procurement   and
          Construction  Contract  (incorporated  by reference to Exhibit 4.10 to
          the Company's Form S-4).

4.11      Notification, dated as of November 27, 1995, from the Company to Korea
          FirstBank,  of the  assignment  of the  Irrevocable  Letter  of Credit
          (incorporated by reference to Exhibit 4.11 to the Company's Form S-4).

                                      -49-
<PAGE>

10.1      Amended and Restated Casecnan Project Agreement,  dated as of June 26,
          1995, between the National  Irrigation  Administration and the Company
          (incorporated by reference to Exhibit 10.1 the Company's Form S-4).

10.2      Performance  Undertaking,  dated as of July 20, 1995,  executed by the
          Secretary  of Finance  on behalf of the  Republic  of the  Philippines
          (incorporated by reference to Exhibit 10.2 to the Company's Form S-4).

10.3      Engineering,  Procurement  and  Construction  Contract,  dated  as  of
          October 10, 1995, by and among Hanbo Corporation,  You One Engineering
          and  Construction  Company,  Ltd.  and the  Company  (incorporated  by
          reference to Exhibit 10.3 the Company's Form S-4)

10.4      Master  Equipment  Lease  Agreement,  dated as of  November  1,  1995,
          between You One Engineering  and  Construction  Company,  Ltd. and the
          Company  (incorporated by reference to Exhibit 10.4 the Company's Form
          S-4).

10.5      Sublease  Agreement  No. 1, dated as of November 1, 1995,  between You
          One  Engineering  and  Construction  Company,  Ltd.  and  the  Company
          (incorporated by reference to Exhibit 10.5 the Company's Form S-4).

10.6      Guaranty of Engineering,  Procurement and Construction Contract, dated
          as of November 13, 1995, by Hanbo Steel  guaranteeing  the performance
          of the  obligations of Hanbo  Corporation  and You One Engineering and
          Construction  Company,  Ltd.  under the  Engineering  Procurement  and
          Construction  Contract  (incorporated  by reference to Exhibit 10.6 to
          the Company's Form S-4).

10.7      Korea First Bank Irrevocable Letter of Credit issued to the Company in
          the aggregate principal amount of  U.S.$117,850,000.00  to support the
          obligations  of  Hanbo   Corporation   and  You  One  Engineering  and
          Construction  Company,  Ltd. under the  Engineering,  Procurement  and
          Construction  Contract  (incorporated  by reference to Exhibit 10.7 to
          the Company's Form S-4).

10.8      Engineering,  Procurement and Construction  Contract dated May 7, 1997
          between  the Company and CP  Casecnan -  Consortium  (incorporated  by
          reference to Exhibit 10.8 to the  Company's  Form 10-K dated  December
          31, 1998).

10.9      Amendment Agreement dated November 20, 1999 between the Company and CP
          Casecnan -  Consortium  (incorporated  by reference to Exhibit 10.9 to
          the Company's Form 10-K dated December 31, 1999).

10.10     Supplemental  Agreement  between CE Casecnan Water and Energy Company,
          Inc. and the Philippines  National Irrigation  Administration dated as
          of September  29, 2003  (incorporated  by reference to Exhibit 99.1 to
          the Company's Form 8-K dated October 15, 2003).

14.1      CE Casecnan  Water and Energy  Company,  Inc. Code of Ethics for Chief
          Executive  Officer,  Chief  Financial  Officer  and  Chief  Accounting
          Officer

24        Power of Attorney

31.1      Chief Executive Officer's  Certificate  Pursuant to Section 302 of the
          Sarbanes-Oxley Act of 2002.

31.2      Chief Financial Officer's  Certificate  Pursuant to Section 302 of the
          Sarbanes-Oxley Act of 2002.

32.1      Chief Executive Officer's  Certificate  Pursuant to Section 906 of the
          Sarbanes-Oxley Act of 2002.

                                      -50-
<PAGE>

32.2      Chief Financial Officer's  Certificate  Pursuant to Section 906 of the
          Sarbanes-Oxley Act of 2002.

                                      -51-