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, 2002
                          Commission File No. 333-00608

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

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

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

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

    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 the
best of Registrant's  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 (or
defined in Exchange Act Rule 12b-2):

                Yes            No   X
                   --------      --------


     767,162 shares of Common Stock, $0.038 par value, were outstanding on March
15, 2003.

<PAGE>

                                TABLE OF CONTENTS
PART I.........................................................................3
ITEM 1.  BUSINESS..............................................................3
  General......................................................................3
  The Casecnan Project.........................................................3
    Terms of the Securities....................................................5
         General...............................................................5
         Payment of Principal and Interest.....................................6
         Priority of Payments..................................................7
         Debt Service Reserve Fund.............................................7
         Optional Redemption...................................................7
         Mandatory Redemption..................................................7
         Change in Control Put.................................................7
         Profit Distributions..................................................8
         Ranking and Security for the Securities...............................8
         Ratings...............................................................8
         Nature of Recourse on the Securities..................................8
         Incurrence of Additional Debt.........................................8
         Principal Covenants..................................................10
    Insurance.................................................................10
    Regulatory Matters........................................................10
    Employees.................................................................10
ITEM 2. PROPERTIES............................................................11
ITEM 3. LEGAL PROCEEDINGS.....................................................11
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS...................12
PART II.......................................................................13
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.13
ITEM 6. SELECTED FINANCIAL DATA...............................................13
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
          AND RESULTS OF OPERATIONS...........................................13
ITEM 7A. QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK...........19
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA...........................20
  Reports of Independent Public Accountants...................................21
  Balance  Sheets.............................................................22
  Statements of  Operations...................................................23
  Statements of Changes in Stockholders' Equity...............................24
  Statements of Cash Flows....................................................25
  Notes to Financial Statements...............................................26
ITEM 9: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
          AND FINANCIAL  DISCLOSURE...........................................34
PART III......................................................................35
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT...................35
ITEM 11. EXECUTIVE COMPENSATION...............................................36
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.......36
  Description of Capital Stock................................................36
  Principal Stockholders......................................................37
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTION........................38
ITEM 14. CONTROLS AND PROCEDURES..............................................38
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K......38
SIGNATURES....................................................................39
CERTIFICATIONS................................................................40
EXHIBIT INDEX.................................................................42

                                      -2-
<PAGE>

PART I

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 our  intentions,  plans,  expectations  and
beliefs and are subject to risks, uncertainties and other factors. Many of these
factors  are  outside  our  control  and could  cause  actual  results to differ
materially from such forward-looking  statements.  These factors include,  among
others:

     o    general economic and business conditions in the Philippines;

     o    governmental,  statutory,  regulatory  or  administrative  initiatives
          affecting us 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 our SEC  filings  or in  other  publicly  disseminated
          written documents.

We  undertake 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.

ITEM 1. BUSINESS

GENERAL
-------

CE Casecnan Water and Energy Company, Inc. (the "Company" or "CE Casecnan") is a
privately  held  Philippine  corporation  formed 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
Energy  Holdings  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 63
2 892 0276.  The Company's  principal  office is located at  Pantabangan  in the
Province of Nueva Ecija, Philippines.

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 (including the intake adit

                                      -3-
<PAGE>

from the Taan to the  Casecnan  river),  with a diameter  of  approximately  6.5
meters to an existing  underutilized  water  storage  reservoir at  Pantabangan.
During the water transfer,  the elevation differences between the two watersheds
allows electrical energy to be generated at a 150 MW rated capacity power plant,
which is located  in an  underground  powerhouse  cavern at the end of the water
tunnel. A tailrace discharge tunnel of approximately  three kilometers  delivers
water from the water tunnel and the new powerhouse to the Pantabangan reservoir,
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.  Since  the  water  has been  determined  to  remain  suitable  for
irrigation  throughout the Casecnan Project  operations of capturing,  diverting
and  transferring  the water,  other than  removing  sediments at the  diversion
structures, no treatment is required. Once in the reservoir at Pantabangan,  the
water  is under  the  control  of,  and for the use of the  Philippine  National
Irrigation Administration ("NIA").

In early 1994, then President Fidel Ramos  recognized the need for an irrigation
and  hydroelectric   project  that  would  provide  increased  water  flows  for
irrigation  to  the  rice  growing  area  of  Central  Luzon,   which  would  be
environmentally  sound,  technically feasible and economically viable, and would
involve no flooding or relocation of local residents.  At that time, he directed
the  Philippine  Department of  Agriculture  and NPC to work together with other
interested agencies to develop a combined irrigation and hydroelectric  project.
Shortly thereafter, the Philippine government was approached by the Company with
a  proposal  for  a  project  to  be  developed  in  the  Casecnan   area  on  a
build-own-operate-transfer  ("BOOT") basis,  that is, an arrangement under which
the Company,  as developer,  would agree to build during the construction period
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  would be  transferred  to NIA at no cost on an "as-is"
basis. After conclusion of a public  solicitation for competing  proposals,  NIA
selected the Company as the BOOT developer and entered into a project  agreement
with  the  Company  (the  "Project   Agreement").   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.

CE Casecnan constructed and operates the Casecnan Project under the terms of the
Project Agreement between CE Casecnan and NIA. Under the Project  Agreement,  CE
Casecnan  developed,  financed and constructed  the Casecnan  Project during the
construction  period and will own and  operate  the  Project  during the 20-year
Cooperation  Period.  During the Cooperation  Period, NIA is obligated to accept
all  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, NIA will pay CE Casecnan a fixed fee for the
delivery  of water and a fixed fee for the  delivery  of a  threshold  amount of
electricity.  In addition,  NIA will pay a fee for all electricity  delivered in
excess of the threshold amount up to a specified amount.  The water delivery fee
is a fixed  monthly  amount,  to be  received  in US  Dollars at the end of each
month, based on 801.9 million cubic meters of water flow past the water delivery
point per year, pro-rated to 66.8 million cubic meters per month. The unit price
for water is established at $0.029 per cubic meter (subject to adjustment as set
forth in the Project Agreement) as of January 1, 1994 and escalated at seven and
one-half percent (7.5%) per annum, pro-rated on a monthly basis, through the end
of the fifth year of the Cooperation Period and then kept flat at that level for
the last fifteen years of the Cooperation Period. The unit price for water is to
be adjusted by $.00043 for each $1.0  million of certain  taxes and fees paid by
the Company as specified in the Project Agreement. The unit price of water as of
December 31 2002 is $0.1017.  Actual  deliveries  of water  greater than or less
than 66.8 million cubic meters in any month will not result in any adjustment of
the water delivery fee. The guaranteed  energy fee is a fixed monthly amount, to
be received in US Dollars at the end of each month,  based on energy  deliveries
of 228.0 million  kilowatt-hour  ("kWh") per year, pro-rated to 19.0 million kWh
per month. Actual deliveries of energy less than 19.0 million kWh per month will
not result in any reduction of the  guaranteed  energy fee but will result in an
adjustment  to the excess  energy fee. The unit price for  guaranteed  energy is
$0.1596 per kWh. The excess energy fee is a variable  amount,  to be received in
US Dollars at the end of each month,  for  electrical  energy  delivered in that
month in excess of 19.0 million kWh. No excess  energy  delivery fee will be due
until all  cumulative  electrical  energy  shortfalls  below 19.0 million kWh in
previous  months  have been made up. The unit price of excess  energy is $0.1509
per kWh.  NIA will sell the  electricity  it purchases  to NPC,  although  NIA's
obligations  to CE Casecnan  under the Project  Agreement  are not  dependent on
NPC's  purchase of the  electricity  from NIA.  All fees to be paid by NIA to CE
Casecnan  are  payable in US  Dollars.  The fixed fees paid for the  delivery of
water and energy,  regardless  of the amount of  electricity  or water  actually
delivered,  are expected to provide approximately 78% of CE Casecnan's revenues.
At the end of the Cooperation  Period,  the Casecnan Project will be transferred
to NIA at no additional consideration on an "as is" basis.

                                      -4-
<PAGE>

The 20-year Cooperation Period under the Project Agreement commenced on December
11, 2001,  the start of the Project's  commercial  operations.  NIA has paid all
amounts  invoiced for energy  delivery fees under the Project  Agreement and all
amounts invoiced for water delivery fees under the Project  Agreement except the
tax compensation portion of the water delivery fees, none of which has been paid
(see "Casecnan NIA Arbitration").

The Project Agreement  provides for additional  compensation to CE Casecnan upon
the occurrence of certain events,  including  increases in Philippine  taxes and
adverse   changes  in  Philippine  law.  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  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.

CONCENTRATION OF RISK

NIA's  payments  under the Project  Agreement are  substantially  denominated in
United States Dollars and are the Company's  sole source of operating  revenues.
Any  material  failure  of NIA to  fulfill  its  obligations  under the  Project
Agreement and any material  failure of the Philippine  Government 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.

In connection with an interagency  review of approximately 40 independent  power
project  contracts in the Philippines,  the Casecnan Project (together with four
other  projects) has reportedly  been  identified as raising legal and financial
questions and, with those projects,  has been prioritized for renegotiation.  No
written report has yet been issued with respect to the interagency  review,  and
the timing and nature of steps,  if any that the Philippine  Government may take
in this regard are not known. Accordingly,  it is not known what, if any, impact
the  government's  review will have on the  operations  of the Company.  Company
representatives,  together with certain current and former government officials,
also have been  requested to appear,  and have  appeared  during 2002,  before a
Philippine Senate committee which has raised questions and made allegations with
respect to the  Casecnan  Project's  tariff  structure  and  implementation.  No
further Senate  hearings are scheduled at this time although  hearings  before a
Philippine House committee were scheduled for the first quarter of 2003.

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.

                                      -5-
<PAGE>

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 $125  million  principal  Series A Notes due November 15, 2005 is payable in
semiannual installments, commencing May 15, 2003, as follows:

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

              May 15, 2003                        13.50%
              November 15, 2003                   13.50%
              May 15, 2004                        17.00%
              November 15, 2004                   17.00%
              May 15, 2005                        19.50%
              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
                                               -------------
                                             INITIAL PRINCIPAL
                                             -----------------
                PAYMENT DATE                  AMOUNT PAYABLE
                ------------                  --------------

              May 15, 2003                         2.25%
              November 15, 2003                    2.25%
              May 15, 2004                         2.00%
              November 15, 2004                    2.00%
              May 15, 2005                         1.75%
              November 15, 2005                    1.75%
              May 15, 2006                        10.50%
              November 15, 2006                   10.50%
              May 15, 2007                        11.00%
              November 15, 2007                   11.00%
              May 15, 2008                        11.00%
              November 15, 2008                   11.00%
              May 15, 2009                         4.00%
              November 15, 2009                    4.00%
              May 15, 2010                         5.00%
              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.

                                      -6-

<PAGE>

PRIORITY OF PAYMENTS

Prior  to  completion  of the  Casecnan  Project  pursuant  to  the  Replacement
Contract, all net proceeds of the Securities and any liquidated damages proceeds
were  deposited  in the  Construction  Fund and  disbursed  to pay for  budgeted
construction or restoration  costs,  including  interest and, where  applicable,
principal on the Securities.

After completion of the Casecnan Project,  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 Republic of the  Philippines).  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

At the  completion  of the  Casecnan  Project,  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 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

On and after the  seventh  anniversary  of the  Closing (as defined 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 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.

                                      -7-
<PAGE>

PROFIT DISTRIBUTIONS

Prior to the completion of the Casecnan Project,  no profit  distributions  were
permitted to be made to the Company or its  stockholders  and there were no such
profits. After completion, 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 2002 or
2001.

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 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

Moody's and Standard & Poor's have assigned the Securities  ratings of "Ba2" and
"BB+",  respectively.  There is no  assurance  that any such credit  rating will
remain in effect for any given  period of time or that such  rating  will not be
lowered, suspended or withdrawn entirely by the applicable rating agency, if, in
such rating agency's judgment, circumstances so warrant.

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, incorporator, officer, director or employee thereof or of
the Company  guaranteed the payment of, nor have any obligation  with respect to
payment of the  Securities,  except to the extent that affiliates of MidAmerican
who are  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;

                                      -8-
<PAGE>

(b)  After the completion of the Casecnan Project,  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,  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)  After the completion of the Casecnan Project,  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)  After the completion of the Casecnan  Project,  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;

(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; and

(k)  Debt  incurred  by the  Company  prior to the  completion  of the  Casecnan
     Project as necessary for financing, engineering,  construction, completion,
     testing and start-up of the Casecnan Project in accordance with an Approved
     Completion Plan in order to achieve completion  ("Pre-Completion Additional
     Debt"),  provided that (i) the rating agencies  confirm that the incurrence
     of such  debt  will  not  result  in a rating  downgrade;  or  (ii)(A)  the
     independent  engineer has confirmed  (subject to customary  assumptions and
     qualifications)  as reasonable,  the technical  feasibility of the Approved
     Completion  Plan  including a  certification  that  (subject  to  customary
     assumptions  and  qualifications)  the net  proceeds of such Debt and other
     funds  available  to the  Company  (from  Liquidated  Damages  Proceeds  or
     otherwise)  are  reasonably  expected to be sufficient to fund the costs of
     reaching  completion;  and  (B)  the  Company  certifies  at  the  time  of
     incurrence  (with customary  assumptions and  qualifications)  that (x) the
     Approved  Completion  Plan is technically  feasible and prudent,  (y)

                                      -9-
<PAGE>

     after giving effect to the incurrence of such debt,  the minimum  projected
     Debt Service  Coverage Ratio for the four fiscal  quarters  commencing with
     the  quarter  that  commences  immediately  after  the  projected  date  of
     commercial  operation of the Casecnan Project,  taken as one annual period,
     and in every  fiscal year  thereafter,  will not be less than 1.3 to 1, and
     (z) after giving effect to incurrence of such debt,  the average  projected
     Debt Service  Coverage  Ratio for all  succeeding  Calendar Years until the
     final maturity date will not be less than 1.5 to 1.

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 enter into certain change orders under the Turnkey Construction  Contract
or  amend  the  Approved  Construction  Budget  and  Schedule  (or  an  Approved
Completion  Plan), or 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 construct the
Casecnan  Project  in  accordance  with the  Approved  Construction  Budget  and
Schedule;  (h) to operate and maintain the Casecnan  Project in accordance  with
the Approved  Operation and  Maintenance  Budget;  (i) to maintain  insurance as
required  under the Trust  Indenture;  and (j) 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,
privatization of the NPC and introduction of a competitive  electricity  market,
among other  initiatives.  The implementation of EPIRA may have an impact on the
Philippines power industry as a whole and the Company's future operations in the
Philippines, the effect of which is not yet determinable and estimable.

In connection with an interagency  review of approximately 40 independent  power
project  contracts in the Philippines,  the Casecnan Project (together with four
other  projects) has reportedly  been  identified as raising legal and financial
questions and, with those projects,  has been prioritized for renegotiation.  No
written report has yet been issued with respect to the interagency  review,  and
the timing and nature of steps,  if any that the Philippine  Government may take
in this regard are not known. Accordingly,  it is not known what, if any, impact
the  government's  review will have on the  operations  of the Company.  Company
representatives,  together with certain current and former government officials,
were  requested to appear and did appear during 2002 before a Philippine  Senate
committee which has raised  questions and made  allegations  with respect to the
Casecnan  Project's  tariff  structure  and  implementation.  No further  Senate
hearings are scheduled at this time although  hearings before a Philippine House
committee were scheduled for the first quarter of 2003.

EMPLOYEES
---------

At December  31,  2002,  the Company had 42 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

                                      -10-
<PAGE>

the trash  racks at the tunnel  intakes are kept clean and  maintained  and that
excessive sediment build-up behind the structure is prevented.

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

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  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
requested  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  also has  alleged  that the
circumstances  in which the Company assumed control of the Casecnan  Project and
placed  it  into  commercial  operation  on  December  11,  2001  amounted  to a
repudiation of the  Construction  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 Project for which the  Contractor is  responsible  is
unenforceable.  The arbitration is being conducted  applying New York law and in
accordance with the rules of the International Chamber of Commerce.

Hearings  have  been held in  connection  with this  arbitration  in July  2001,
September  2001,  January 2002,  March 2002,  November 2002 and January 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, 2002,  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.  On November 7,
2002, the  International  Chamber of Commerce 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 the end of December 31, 2002. All of the Contractor's  other
claims with respect to force majeure and geologic conditions were denied.

Further hearings on the Contractor's  repudiation and quantum meruit claims, the
alleged  unenforceability  of the delay  liquidated  damages  clause and certain
other matters had been  scheduled for March 24 through March 28, 2003,  but were
postponed  as a result of the  commencement  of  military  action  in Iraq.  The
arbitral  tribunal has requested  the parties to indicate the earliest  possible
date on which they are available and will then reschedule the hearings.

                                      -11-
<PAGE>

If the Contractor were to prevail on its claim that the delay liquidated damages
clause is unenforceable, the Company 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 already paid to the  Contractor,  the Company could
be liable to make additional  payments to the Contractor.  CE Casecnan  believes
all such  allegations and claims are without merit and is vigorously  contesting
the Contractor's claims.

CASECNAN NIA ARBITRATION

Under  the  terms  of the  Project  Agreement,  NIA has  the  option  of  timely
reimbursing CE Casecnan  directly for certain taxes CE Casecnan has paid. If NIA
does not so reimburse CE  Casecnan,  the taxes paid by CE Casecnan  result in an
increase in the Water  Delivery  Fee.  The payment of certain  other taxes by CE
Casecnan  results  automatically in an increase in the Water Delivery Fee. As of
December 31, 2002,  CE Casecnan has paid  approximately  $56.7  million in taxes
which as a result of the foregoing provisions has resulted in an increase in the
Water  Delivery Fee. NIA has failed to pay the portion of the Water Delivery Fee
each month  which  relates to the payment of these  taxes by CE  Casecnan.  As a
result of this non-payment,  on August 19, 2002, CE Casecnan filed a Request for
Arbitration  against NIA,  seeking payment of such portion of the Water Delivery
Fee and  enforcement of the relevant  provision of the Project  Agreement  going
forward.  The arbitration  will be conducted in accordance with the rules of the
International  Chamber of  Commerce.  NIA is expected to file its answer late in
the first  quarter  or early in the  second  quarter,  2003.  The  three  member
arbitration  panel has been confirmed by the  International  Chamber of Commerce
and an initial organizational hearing is scheduled for the second quarter, 2003.

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,  through its 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.  On July 8, 2002, LPG filed a complaint in the Superior Court of the
State of California,  City and County of San Francisco  against,  inter alia, 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.  The impact,  if any,  of this  litigation  on the  Company  cannot be
determined at this time.

In February  2003, San Lorenzo Ruiz Builders and  Developers  Group,  Inc. ("San
Lorenzo"),  an original  shareholder  substantially  all of whose  shares in the
Company  MidAmerican  purchased in 1998,  threatened to initiate legal action in
the  Philippines in connection  with certain aspects of its option to repurchase
such shares on or prior to  commercial  operation  of the  Project.  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 any such action.

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

Not Applicable.

                                      -12-

<PAGE>

PART II

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

Not Applicable.

ITEM 6. SELECTED FINANCIAL DATA

The  selected  data  presented  below are  derived  from the  Company's  audited
financial statements.

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

=============================================================================================
                                                      YEAR ENDED DECEMBER 31
---------------------------------------------------------------------------------------------
                                       2002         2001       2000        1999        1998
---------------------------------------------------------------------------------------------
<S>                                  <C>         <C>         <C>         <C>         <C>
Total revenue                        $138,264    $  8,174    $   --      $   --      $   --
Operating expenses                     44,849       3,922         451        --          --
Net income (loss) to common
  stockholders                         44,956       2,867       4,857         699         381
Net income (loss) per share          $  58.60    $   3.74    $   6.33    $   0.91    $   0.50
Total assets                          541,507     515,192     482,373     522,398     553,433
Notes payable                          51,263      40,763        --          --          --
Long-term debt, including current
    portion                           287,926     323,125     352,750     371,500     371,500
Total liabilities                     389,586     408,227     378,275     423,157     454,891
Stockholders' equity                  151,921     106,965     104,098      99,241      98,542
=============================================================================================
</TABLE>

(1) Commenced commercial operations 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" 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
and deferred income taxes. 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.

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

                                      -13-
<PAGE>

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.

Deferred Income Tax Assets and Liabilities
------------------------------------------

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.

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

Revenue  increased to $138.3  million for the year ended  December 31, 2002 from
$8.2  million for the year ended  December  31,  2001.  Water  delivery  revenue
increased  to $82.6  million  for the year  ended  December  31,  2002 from $4.1
million for the year ended  December  31,  2001 and  electricity  sales  revenue
increased  to $55.7  million  for the year  ended  December  31,  2002 from $4.1
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 are 60%, 26% and
14%,  respectively,  of the total  revenue for the year ended  December 31, 2002
while 50%, 26% and 24%, respectively for the year ended December 31, 2001.

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

     ----------------------------------------------------------------------
                                                        2002       2001
     ----------------------------------------------------------------------
     Capacity factor                                   26.9%       28.0%
     Nameplate rating (MW)                              153         153
     Electricity produced (kWh in millions)            360.1       26.2
     Water delivered (cubic meters in millions)        563.2       36.5

The 2001 figure for electricity  produced includes all energy for the year, both
commissioning  and  cooperation  period  revenues.   The  2001  capacity  factor
calculation  only includes the 21.6GWh of energy produced during December 11-31,
2001, the part of the year in which the plant was under  commercial  operations.
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 provide
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  payment  of the  FRNs as well as a 5%  reduction  in the
balance of the Series B bonds due to a payment of $8.6 million in 2002.

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.

                                    -14-
<PAGE>

Tax expense in 2002 of $6.1 million  consists 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 YEAR ENDED DECEMBER 31, 2001

The Casecnan Project commenced commercial operations on December 11, 2001.

The revenue of $8.2  million for the year ended  December  31, 2001  consists of
revenue for the  delivery of water and  generation  and  delivery of  electrical
energy.  Revenue  from water  delivery,  guaranteed  energy  and  excess  energy
generated and delivered are 50%, 26% and 24%, respectively, of the total revenue
for the year.

A total of $0.9 million was used to finance the costs of start-up  activities in
2001 compared to $0.5 million in 2000.  Plant  operations and doubtful  accounts
expense aggregating $2.7 million were incurred during 2001. Depreciation expense
of $1.2 million was for the period after  project  completion up to December 31,
2002.

Interest expense, including bond issue amortization, was $44.2 million and $48.3
million in 2001,  and 2000,  respectively  and such are related to the notes and
bonds  payable  issued by the  Company in the fourth  quarter of 1995.  Interest
capitalized during construction was $41.7 million and $47.5 million in 2001, and
2000, respectively. Interest earned on cash balances declined to $1.5 million in
2001 from $7.6 million in 2000 due to declining cash balances as funds were used
for the construction activities.

LIQUIDITY AND CAPITAL RESOURCES

The Company's cash and cash equivalents were $0.7 million, $1.1 million and $0.7
million at December 31, 2002, 2001 and 2000, respectively.

The Company  generated cash flows from  operations of $34.9 million for the year
ended  December  31,  2002,  compared  with a use of $22.9  million for the same
period in 2001 and cash flows of $10.0  million in 2000.  The increase from 2001
was primarily due to increased net income of $42.1 million and non-cash expenses
of $21.9 million partially offset by changes in working capital activities.  Net
income for the year 2001 was lower by $2.0 million compared to 2000.

The  Company  used $9.4  million  for  investing  activities  for the year ended
December 31, 2002, compared to $3.4 million and $1.9 million for the same period
in 2001 and 2000, respectively.  During 2001 and 2000, capital expenditures were
offset by using  investments  as well as  liquidated  damages  received.  In the
current year,  capital  expenditures were $8.3 million compared to $48.6 million
and $82.7 million in 2001 and 2000, respectively.

The Company used $25.9 million and $9.8 million for financing activities for the
years ended  December  31, 2002 and 2000,  respectively,  compared to  providing
$26.6  million  for the same period in 2001.  During  2002,  the Company  repaid
long-term  debt of $35.2  million and issued new notes  payable of $10.5 million
while in 2001 the Company repaid  long-term debt of $29.6 million and issued new
notes payable of $40.8 million and in 2000, the Company repaid long-term debt of
$18.8 million.

CE Casecnan constructed and operates the Casecnan Project under the terms of the
Project Agreement between CE Casecnan and NIA. Under the Project  Agreement,  CE
Casecnan  developed,  financed and  constructed  the  Casecnan  Project over the
construction  period,  and owns and operates  the Casecnan  Project for 20 years
(the "Cooperation  Period").  During the Cooperation Period, NIA is obligated to
accept all 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, NIA is obligated to pay CE Casecnan 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.

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.

                                     -15-
<PAGE>

The  Casecnan  Project was  initially  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. On
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  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
requested  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  also has  alleged  that the
circumstances  in which the Company assumed control of the Casecnan  Project and
placed  it  into  commercial  operation  on  December  11,  2001  amounted  to a
repudiation of the  Construction  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 Project for which the  Contractor is  responsible  is
unenforceable.  The arbitration is being conducted  applying New York law and in
accordance with the rules of the International Chamber of Commerce.

Hearings  have  been held in  connection  with this  arbitration  in July  2001,
September  2001,  January 2002,  March 2002,  November 2002 and January 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, 2002,  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.  On November 7,
2002, the  International  Chamber of Commerce 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 the end of December 31, 2002. All of the Contractor's  other
claims with respect to force majeure and geologic conditions were denied.

Further hearings on the Contractor's  repudiation and quantum meruit claims, the
alleged  unenforceability  of the delay  liquidated  damages  clause and certain
other matters had been  scheduled for March 24 through March 28, 2003,  but were
postponed  as a result of the  commencement  of  military  action  in Iraq.  The
arbitral  tribunal has requested  the parties to indicate the earliest  possible
date on which they are available and will then reschedule the hearings.

If the Contractor were to prevail on its claim that the delay liquidated damages
clause is unenforceable, the Company 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 already paid to the  Contractor,  the Company could
be liable to make additional  payments to the Contractor.  CE Casecnan  believes
all such  allegations and claims are without merit and is vigorously  contesting
the Contractor's claims.

CASECNAN NIA ARBITRATION

Under  the  terms  of the  Project  Agreement,  NIA has  the  option  of  timely
reimbursing CE Casecnan  directly for certain taxes CE Casecnan has paid. If NIA
does not so reimburse CE  Casecnan,  the taxes paid by CE Casecnan  result in an
increase

                                     -16-
<PAGE>

in the Water  Delivery  Fee.  The payment of certain  other taxes by CE
Casecnan  results  automatically in an increase in the Water Delivery Fee. As of
December 31, 2002,  CE Casecnan has paid  approximately  $56.7  million in taxes
which as a result of the foregoing provisions has resulted in an increase in the
Water  Delivery Fee. NIA has failed to pay the portion of the Water Delivery Fee
each month  which  relates to the payment of these  taxes by CE  Casecnan.  As a
result of this non-payment,  on August 19, 2002, CE Casecnan filed a Request for
Arbitration  against NIA,  seeking payment of such portion of the Water Delivery
Fee and  enforcement of the relevant  provision of the Project  Agreement  going
forward.  The arbitration  will be conducted in accordance with the rules of the
International  Chamber of  Commerce.  NIA is expected to file its answer late in
the first  quarter  or early in the  second  quarter,  2003.  The  three  member
arbitration  panel has been confirmed by the  International  Chamber of Commerce
and an initial organizational hearing is scheduled for the second quarter, 2003.

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,  through its 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.  On July 8, 2002, LPG filed a complaint in the Superior Court of the
State of California,  City and County of San Francisco  against,  inter alia, 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.  The impact,  if any,  of this  litigation  on the  Company  cannot be
determined at this time.

In February  2003, San Lorenzo Ruiz Builders and  Developers  Group,  Inc. ("San
Lorenzo"),  an original  shareholder  substantially  all of whose  shares in the
Company  MidAmerican  purchased in 1998,  threatened to initiate legal action in
the  Philippines in connection  with certain aspects of its option to repurchase
such shares on or prior to  commercial  operation  of the  Project.  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 any such action.

                                      -17-

<PAGE>

BIR AUDIT

The  Bureau  of  Internal  Revenue  ("BIR"),   consistent  with  the  Philippine
government's public statements to increase tax revenues,  has commenced auditing
the Company for all taxes,  including income taxes, for the years 2001, 2000 and
1999.  In  addition,  the BIR has issued  letters of  authority to audit the tax
years 1998,  1997 and 1996.  The only basis on which tax years prior to 1999 can
be audited is if the BIR successfully  argues in a Philippine  administrative or
court proceeding that the tax returns for those years are false or fraudulent in
some respect.  The Company  believes that any  allegations  that such tax years'
filings are false or fraudulent are without merit and accordingly that any audit
of such tax years is improper  and without  proper  legal  basis,  although  the
outcome  of  any  audit  by the  Philippine  tax  authorities  in  light  of the
government's  public  statements to increase tax revenues is  uncertain.  If the
Company is  ultimately  held liable the amounts  assessed may be  material.  The
Company further  believes that it currently is in compliance with applicable tax
laws and regulations with respect to all of its tax returns and filings.

CONTRACTUAL OBLIGATIONS

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, 2002 are as follows (in thousands):

<TABLE>
<CAPTION>

----------------------------------------------------------------------------------
                                      Payments Due by Period
----------------------------------------------------------------------------------
                                              Less Than    2-3      4-5    After 5
Contractual cash obligations          Total    1 Year     Years    Years    Years
----------------------------------------------------------------------------------
(in thousands)
<S>                                  <C>       <C>      <C>       <C>      <C>
Long-term debt                       $287,925  $41,468  $104,112  $73,745  $68,600
Other long-term obligations            51,263     --      51,263     --       --
--------------------------------------------------------------------------------
Total contractual cash obligations   $339,188  $41,468  $155,375  $73,745  $68,600
--------------------------------------------------------------------------------

</TABLE>

                                      -18-

<PAGE>
ITEM 7A. QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK

The  following  discussion  of the  Company's  exposure to various  market risks
contains  "forward-looking  statements"  that involve  risks and  uncertainties.
These  projected  results  have  been  prepared  utilizing  certain  assumptions
considered reasonable in the circumstances and in light of information currently
available to the Company.  Actual  results  could differ  materially  from those
projected in the forward-looking information.

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

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  $12.8 million if
interest  rates were to increase by 10% from their  levels at December 31, 2002.
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.

                                      -19-
<PAGE>

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     Report of Independent Accountants                                       21


     Balance Sheets as of December 31, 2002 and 2001                         22


     Statements of Income for Each of the Three Years in the Period
       Ended December 31, 2002                                               23

     Statements of Changes in Stockholders' Equity for Each of the Three
       Years in the Period Ended December 31, 2002                           24


     Statements of Cash Flows for Each of the Three Years in the Period
       Ended December 31, 2002                                               25


     Notes to Financial Statements                                           26

                                      -20-

<PAGE>


Report of Independent Accountants

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, 2002 and 2001,  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, 2002.  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,  2002  and  2001,  and the  results  of its
operations  and its cash flows for each of the three  years in the period  ended
December 31, 2002, 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
January 24, 2003

                                      -21-
<PAGE>

                   CE CASECNAN WATER AND ENERGY COMPANY, INC.

                                 BALANCE SHEETS
                           DECEMBER 31, 2002 and 2001
             (Amounts in thousands U.S. Dollars, except share data)
<TABLE>
<CAPTION>

====================================================================================
                                                                2002         2001
------------------------------------------------------------------------------------

                                      ASSETS

<S>                                                           <C>         <C>
Current assets:
  Cash and cash equivalents                                   $    705    $   1,078
  Trade receivable, net (Note 3)                                51,515        8,012
  Accrued interest and other receivable                          7,009        6,601
  Prepaid insurance                                              3,532        1,813
  Other current assets                                           2,030        1,472
------------------------------------------------------------------------------------
    Total current assets                                        64,791       18,976
Restricted cash and investments (Note 2)                         7,078        5,978
Bond issue costs, net (Note 2)                                   5,218        6,712
Property, plant and equipment, net (Notes 2 and 4)             453,507      466,455
Deferred income tax (Notes 2 and 6)                              5,371        5,371
Other assets                                                     5,542       11,700
------------------------------------------------------------------------------------
                                                              $541,507    $ 515,192
====================================================================================
                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Accounts payable and accrued expenses (Note 8)              $ 10,785    $   4,626
  Accrued interest on notes payable                              2,048          192
  Accrued interest on long-term debts                            4,223        5,014
  Payable to affiliates (Note 7)                                33,342       34,507
  Current portion of long-term debt (Notes 5)                   41,468       35,200
------------------------------------------------------------------------------------
    Total current liabilities                                   91,866       79,539
------------------------------------------------------------------------------------
Notes payable (Notes 7)                                         51,263       40,763
------------------------------------------------------------------------------------
Long-term debts, net of current portion (Notes 5)              246,457      287,925
------------------------------------------------------------------------------------
Commitments and contingencies (Note 9)
------------------------------------------------------------------------------------
Stockholders' equity
  Capital stock
  Authorized - 2,148,000 shares at one Philippine peso
       ($0.038) par value per share
    Issued and outstanding - 767,162 shares                         29           29
  Additional paid-in capital                                   123,807      123,807
  Retained earnings (deficit)                                   28,085      (16,871)
------------------------------------------------------------------------------------
                                                               151,921      106,965
------------------------------------------------------------------------------------
                                                              $541,507    $ 515,192
====================================================================================
</TABLE>

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

                                      -22-
<PAGE>

                   CE CASECNAN WATER AND ENERGY COMPANY, INC.

                              STATEMENTS OF INCOME
               FOR THE YEARS IN THE PERIOD ENDED DECEMBER 31, 2002
             (Amounts in thousands U.S. Dollars, except share data)
<TABLE>
<CAPTION>
====================================================================================
                                                  2002          2001         2000
------------------------------------------------------------------------------------
<S>                                            <C>           <C>           <C>
Revenues (Notes 2 and 3)
  Delivery of water                            $  82,564     $   4,114     $    --
  Sale of electricity                             55,700         4,060          --
------------------------------------------------------------------------------------
                                                 138,264         8,174          --
------------------------------------------------------------------------------------
Operating expenses
  Depreciation (Note 2)                           23,211         1,249          --
  Plant operations                                10,093         2,152           451
  Doubtful accounts expense (Note 3)              11,545           521          --
------------------------------------------------------------------------------------
                                                  44,849         3,922           451
------------------------------------------------------------------------------------
Operating income (loss)                           93,415         4,252          (451)
-------------------------------------------------------------------------------------
Other income (expenses)
  Interest expense (Notes 5 and 7)               (42,508)      (44,162)      (48,349)
  Capitalized interest (Note 2)                     --          41,652        47,454
  Interest income                                    236         1,450         7,605
  Other                                             (105)         --            --
------------------------------------------------------------------------------------
                                                 (42,377)       (1,060)        6,710
Income before provision for income tax            51,038         3,192         6,259
Provision for income taxes (Note 6 and Note 9)     6,082           325         1,402
Net income                                     $  44,956     $   2,867     $   4,857
====================================================================================

Net income per share (Note 2)                  $   58.60     $    3.74     $    6.33
====================================================================================
Average number of common shares outstanding      767,162       767,162       767,162
====================================================================================
</TABLE>

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

                                      -23-
<PAGE>

                   CE CASECNAN WATER AND ENERGY COMPANY, INC.

                  STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
        FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 2002
             (Amounts in thousands U.S. Dollars, except share data)
<TABLE>
<CAPTION>
==========================================================================================
                                Outstanding            Additional   Retained
                                  Common     Common     Paid-in     Earnings
                                  Shares      Stock      Capital    (Deficit)       Total
------------------------------------------------------------------------------------------
<S>                                <C>         <C>     <C>          <C>          <C>
Balance, January 1, 2000           767,162     $29     $123,807     $(24,595)     $ 99,241
Net income                            --        --         --          4,857         4,857
------------------------------------------------------------------------------------------
Balance, December 31, 2000         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
==========================================================================================
</TABLE>

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

                                      -24-
<PAGE>

                   CE CASECNAN WATER AND ENERGY COMPANY, INC.

                            STATEMENTS OF CASH FLOWS
        FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 2002
                       (Amounts in thousands U.S. Dollars)
<TABLE>
<CAPTION>
========================================================================================================
                                                                        2002         2001         2000
--------------------------------------------------------------------------------------------------------
<S>                                                                   <C>          <C>          <C>
Cash flows from operating activities
  Net income                                                          $ 44,956     $  2,867     $  4,857
  Adjustments to reconcile net income to
    net cash provided by (used in) operating  activities:
      Depreciation                                                      23,211        1,249         --
      Amortization of bond issue costs                                   1,494        1,603        2,270
      Provision for deferred income tax                                   --            325        1,402
    Changes in assets and liabilities
      Increase in trade receivable, net                                (43,503)      (8,012)        --
      Decrease (increase) in accrued interest and other receivable        (408)      (6,028)       1,177
      Increase in prepaid insurance                                     (1,719)      (1,813)        --
      Increase other current assets                                       (558)      (1,430)         (42)
      Increase in accounts payable and accrued expenses                  6,159          385          381
      Decrease in accrued interest on long-term debts                     (791)        (551)        --
      Increase in accrued interest on notes payable                      1,856          192         --
      Decrease (increase) in other assets                                6,158      (11,700)        --
--------------------------------------------------------------------------------------------------------
Net cash provided by (used in) operating activities                     36,855      (22,913)      10,045
--------------------------------------------------------------------------------------------------------
Cash flows from investing activities
  Additions to development and construction costs                      (10,263)     (48,583)     (82,713)
  Liquidated damages received                                             --          5,978         --
  Decrease (increase) in restricted:
    Cash and short-term investments                                     (1,100)      (5,978)      42,063
    Investments                                                           --         41,945       74,253
  Increase (decrease) in accounts payable and accrued
    expenses related to development and  construction costs               --          3,281      (35,489)
---------------------------------------------------------------------------------------------------------
Net cash used in investing activities                                  (11,363)      (3,357)      (1,886)
---------------------------------------------------------------------------------------------------------
Cash flows from financing activities
  Increase (decrease) in payable to affiliates                          (1,165)      15,507        8,976
  Payment of long-term debt                                            (35,200)     (29,625)     (18,750)
  Proceeds from notes payable                                           10,500       40,763         --
---------------------------------------------------------------------------------------------------------
Net cash provided by (used in) financing activities                    (25,865)      26,645       (9,774)
---------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash                                           (373)         375       (1,615)
Cash at beginning of year                                                1,078          703        2,318
--------------------------------------------------------------------------------------------------------
Cash at end of year                                                   $    705     $  1,078     $    703
========================================================================================================
Supplemental disclosure of cash flow information
  Interest paid during the period (net of
  amount capitalized)                                                 $ 39,949     $  1,267     $ (1,259)
=========================================================================================================
</TABLE>

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

                                      -25-
<PAGE>
CE CASECNAN WATER AND ENERGY COMPANY, INC.

NOTES TO FINANCIAL STATEMENTS
(Amounts in U.S. Dollars, unless indicated otherwise)


NOTE 1 - ORGANIZATION AND OPERATIONS
------------------------------------

CE Casecnan Water and Energy  Company,  Inc. (the "Company") 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 20-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  others,  affirms  and
guarantees  the  obligations  of NIA under  the  contract.  Construction  of the
Casecnan Project commenced in 1995.

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,  through its indirect wholly owned subsidiary CE
Casecnan Ltd.,  advised the minority  stockholder  LaPrairie  Group  Contractors
(International)  Ltd.,  ("LPG"),  that its  indirect  ownership  interest  in CE
Casecnan  had  increased  to 100%  effective  from  commencement  of  commercial
operations.  On July 8, 2002, LPG filed a complaint in the Superior Court of the
State of California,  City and County of San Francisco  against,  inter alia, 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.  The impact,  if any,  of this  litigation  on the  Company  cannot be
determined at this time.

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

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 others,  the maintenance
of a  debt-to-equity  ratio not exceeding 75:25 upon  commencement of commercial
operations.

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

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
---------------------------------------------------

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

                                      -26-
<PAGE>

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.

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, 2002
approximates  their  fair  value,  which is based on  quoted  market  prices  as
provided by the financial institution holding the investments.

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.

PROPERTY, PLANT AND EQUIPMENT are stated at cost (including capitalized interest
costs)  less   accumulated   depreciation.   Depreciation  is  computed  on  the
straight-line method based on the 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; significant renewals and improvements are
capitalized. Liquidated damages relative to the Casecnan Project are recorded as
reduction  to the  cost  of the  capital  projects.  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.

INTEREST  ON  LONG-TERM  debt was  capitalized  as part of the  cost of  capital
projects during the construction period.  During the Cooperation Period interest
on long-term debt is charged to operations.

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 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 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.

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.

REVENUES from sale of electricity and delivery of water are recognized as income
during the period in which  actual  capacity is generated  and  delivered to the
customer. The water delivery fee is a fixed monthly amount, to be received in US
Dollars at the end of each month,  based on 801.9  million cubic meters of water
flow past the water  delivery  point per year,  pro-rated to 66.8 million  cubic
meters  per month.  The unit  price for water is set at $0.029  per cubic  meter
(subject to adjustment  as set forth in the Project  Agreement) as of January 1,
1994 and escalated at seven and one-half percent (7.5%) per annum,  pro-rated on
a monthly basis, through the end of the fifth year of the Cooperation Period and
then  kept  flat at that  level for the last  fifteen  years of the  Cooperation
Period.  The unit price for water is to be  adjusted  by  $.00043  for each $1.0
million  of  certain  taxes and fees paid by the  Company  as  specified  in the
Project  Agreement.  The unit price

                                      -27-
<PAGE>

of water as of December 31, 2002 is $0.1017.  Actual deliveries of water greater
than or less than 66.8 million  cubic meters in any month will not result in any
adjustment  of the water  delivery  fee.  The  guaranteed  energy fee is a fixed
monthly amount, to be received in US Dollars at the end of each month,  based on
energy deliveries of 228.0 million  kilowatt-hour  (kWh) per year,  pro-rated to
19.0 million kWh per month.  Actual  deliveries of energy less than 19.0 million
kWh per month will not result in any reduction of the guaranteed  energy fee but
will  result in an  adjustment  to the  excess  energy  fee.  The unit price for
guaranteed  energy is  $0.1596  per kWh.  The  excess  energy  fee is a variable
amount,  to be received in US Dollars at the end of each month,  for  electrical
energy  delivered in excess of 19.0 million kWh. No excess  energy  delivery fee
will be due until all cumulative electrical energy shortfalls in previous months
have been made up. At December  31,  2002,  there was no  cumulative  electrical
energy shortfall. The unit price of excess energy is $0.1509 per kWh.

Interest and other income are recognized when earned.

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.

USE OF ESTIMATES.  The  preparation of financial  statements in conformity  with
generally  accepted  accounting  principles  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.

RECLASSIFICATION.  Certain  accounts in the 2001 and 2000  financial  statements
were reclassified to conform to the 2002 financial statement presentation.  Such
reclassification  did not impact  previously  reported  net  income or  retained
earnings (deficit).

NOTE 3 - TRADE RECEIVABLE, NET
------------------------------

Trade  receivable,  net  pertains  to the  receivable  due  from  NIA for  water
delivered to NIA and the  electricity  generated and delivered by the Company to
the Philippine  National Power  Corporation on behalf of NIA. Trade  receivable,
net at December 31 consists of the following (in thousands):


----------------------------------------------------
                                     2002      2001
----------------------------------------------------
Water delivery fee                 $52,854    $4,474
Guaranteed energy delivery fee       6,709     2,059
Excess energy delivery fee           4,018     2,000
----------------------------------------------------
                                    63,581     8,533
Allowance for doubtful accounts     12,066       521
----------------------------------------------------
                                   $51,515    $8,012
====================================================


NIA has  paid all  amounts  due for  energy  delivery  fees  under  the  Project
Agreement as of December 31, 2002,  and all amounts  invoiced for water delivery
fees under the  Project  Agreement  except the tax  compensation  portion of the
water delivery fees, none of which has been paid.

Under  the  terms  of the  Project  Agreement,  NIA has  the  option  of  timely
reimbursing CE Casecnan  directly for certain taxes CE Casecnan has paid. If NIA
does not so reimburse CE  Casecnan,  the taxes paid by CE Casecnan  result in an
increase in the Water  Delivery  Fee.  The payment of certain  other taxes by CE
Casecnan  results  automatically in an increase in the Water Delivery Fee. As of
December 31, 2002,  CE Casecnan has paid  approximately  $56.7 million in taxes,
which as a result of the foregoing provisions had resulted in an increase in the
Water  Delivery Fee. NIA has failed to pay the portion of

                                      -28-
<PAGE>

the Water  Delivery Fee each month,  which relates to the payment of these taxes
by CE Casecnan. As a result of this non-payment, on August 19, 2002, CE Casecnan
filed a Request for Arbitration  against NIA, seeking payment of such portion of
the Water Delivery Fee and enforcement of the relevant  provision of the Project
Agreement going forward.  The  arbitration  will be conducted in accordance with
the rules of the International Chamber of Commerce.  NIA is expected to file its
answer late in the first quarter or early in the second quarter, 2003. The three
member  arbitration  panel has been  confirmed by the  International  Chamber of
Commerce  and an  initial  organizational  hearing is  scheduled  for the second
quarter, 2003.

Included in total  revenues of $138.3 million and $8.2 million for 2002 and 2001
respectively,   are  $34.5  million  and  $1.8  million  respectively,   of  tax
compensation for water delivery fees under the Project Agreement. As of December
31, 2002 and 2001,  the  cumulative  unpaid  portion of such fees totaled  $36.3
million and $1.8 million, respectively. As mentioned above, NIA has not yet paid
any of this  portion of the fees.  The  allowance  for  doubtful  accounts as of
December 31, 2002 and 2001  represents  the  Company's  current  estimate of the
uncollectible  portion of the amounts due from NIA. Any change in the  Company's
assessment of the potential outcome of such dispute could  significantly  impact
such allowance and the results of operations.

NOTE 4 - PROPERTY PLANT AND EQUIPMENT, NET
------------------------------------------

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

------------------------------------------------------------------------
                                                    2002          2001
------------------------------------------------------------------------
Hydroelectric power plant                         $476,786      $467,485
Office and building structures                         244             -
Transportation and other equipment                     501            44
------------------------------------------------------------------------
                                                   477,531       467,529
Less - accumulated depreciation                     24,460         1,249
------------------------------------------------------------------------
                                                   453,071       466,280
Construction in progress                               436           175
------------------------------------------------------------------------
                                                  $453,507      $466,455
------------------------------------------------------------------------


NOTE 5 - LONG-TERM DEBT
-----------------------

On November 27, 1995, the Company issued $371.5 million worth 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, 2002,  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.
Semi-annual  interest payments on Series A Notes and Series B Bonds commenced on
May 15, 1996.

The repayment schedule is as follows (in thousands):

-------------------------------------------------------------
              Series A notes     Series B bonds        Total
-------------------------------------------------------------
2003             $33,750            $ 7,718           $41,468
2004              42,500              6,860            49,360
2005              48,750              6,002            54,752
2006                --               36,015            36,015
2007                --               37,730            37,730
2008                --               37,730            37,730
2009                --               13,720            13,720
2010                --               17,150            17,150
-------------------------------------------------------------
                $125,000           $162,925          $287,925
=============================================================

                                      -29-
<PAGE>

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.  On and after the seventh anniversary of
the  Closing  (as  defined  in the  Trust  Indenture)  of the  Casecnan  Project
financing, 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 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;  material change in the Turnkey Construction Contract;  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  with Chemical  Trust
Company  of  California  ("Chemical  Trust")  and  Kiewit  Diversified  Group (a
predecessor  stockholder)  whereby  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 US$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 balance sheets.

NOTE 6 - INCOME TAXES
---------------------

Tax expense in 2002 of $6.1 million  consists 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,  2002 and  2001(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,  and the allowance
for doubtful accounts.  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.

NOTE 7 - 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 $33.3 million and $34.5 million at December 31, 2002
and 2001,  respectively.  Costs  incurred  by the Company in  transactions  with
related parties amounted to $1.3 million, $0.5 million and $7.0 million in 2002,
2001 and 2000, respectively.

                                      -30-
<PAGE>

As of December  31,  2002,  the Company has issued  $51.3  million of  unsecured
subordinated  notes  payable  (2001 - $40.8  million)  to CE  Casecnan  Ltd.,  a
stockholder,  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 $1.9  million and $0.2  million in 2002 and
2001, respectively.  Any overdue payment of principal or interest payable on the
notes shall  increase the annual  interest by two (2%) percent.  At December 31,
2002,  the  effective  interest  rate on the notes  was  3.4%.  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.

NOTE 8 - ACCOUNTS PAYABLE AND ACCRUED EXPENSES
----------------------------------------------

Accounts  payable and accrued  expenses at December 31 consist of the  following
(in thousands):

================================================================================
                                                       2002        2001
--------------------------------------------------------------------------------
Accounts payable and accrued expense                 $ 3,463      $1,223
Accrued contractor's fees                              1,902       1,783
Accrued liquidated damages                             5,420       1,620
--------------------------------------------------------------------------------
                                                     $10,785      $4,626
================================================================================

NOTE 9 - COMMITMENTS AND CONTINGENCIES
--------------------------------------

Replacement contract
--------------------

The  Casecnan  Project was  initially  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. On
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  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 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  International
Chamber of Commerce.

Hearings  have  been held in  connection  with this  arbitration  in July  2001,
September  2001,  January 2002,  March 2002,  November 2002 and January 2003. As
part of those hearings,  on June 25, 2001, the arbitration  tribunal temporarily

                                      -31-
<PAGE>

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, 2002,  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.  On November 7,
2002, the  International  Chamber of Commerce 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 the end of December 31, 2002. All of the Contractor's  other
claims with respect to force majeure and geologic conditions were denied.

Further hearings on the Contractor's  repudiation and quantum meruit claims, the
alleged  unenforceability  of the delay  liquidated  damages  clause and certain
other matters had been  scheduled for March 24 through March 28, 2003,  but were
postponed  as a result of the  commencement  of  military  action  in Iraq.  The
arbitral  tribunal has requested  the parties to indicate the earliest  possible
date on which they are available and will then reschedule the hearings.

If the Contractor were to prevail on its claim that the delay liquidated damages
clause is unenforceable, the Company 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, the Company 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.

Casecnan NIA Arbitration
------------------------

Under  the  terms  of the  Project  Agreement,  NIA has  the  option  of  timely
reimbursing CE Casecnan  directly for certain taxes CE Casecnan has paid. If NIA
does not so reimburse CE  Casecnan,  the taxes paid by CE Casecnan  result in an
increase in the Water  Delivery  Fee.  The payment of certain  other taxes by CE
Casecnan  results  automatically in an increase in the Water Delivery Fee. As of
December 31, 2002,  CE Casecnan has paid  approximately  $56.7 million in taxes,
which as a result of the foregoing provisions had resulted in an increase in the
Water  Delivery Fee. NIA has failed to pay the portion of the Water Delivery Fee
each month,  which  relates to the payment of these taxes by CE  Casecnan.  As a
result of this non-payment,  on August 19, 2002, CE Casecnan filed a Request for
Arbitration  against NIA,  seeking payment of such portion of the Water Delivery
Fee and  enforcement of the relevant  provision of the Project  Agreement  going
forward.  The arbitration  will be conducted in accordance with the rules of the
International  Chamber of  Commerce.  NIA is expected to file its answer late in
the first  quarter  or early in the  second  quarter,  2003.  The  three  member
arbitration  panel has been confirmed by the  International  Chamber of Commerce
and an initial organizational hearing is scheduled for the second quarter, 2003.

Project transmission line
-------------------------

Under the Project Agreement, if NIA is able to accept delivery of water into the
Pantabangan  Reservoir and NPC has completed the Project's related  transmission
line,  the Company was liable to pay NIA $5,500 per day for each day of delay in
completion of the Casecnan  Project beyond July 27, 2000,  increasing to $13,500
per day for each day of  delay in  completion  beyond  November  27,  2000.  The
Project transmission line was completed on August 13, 2001 and NIA has completed
the installation and testing of the Project's metering  equipment.  Accordingly,
the Company has accrued $1.6 million for  liquidated  damages as of December 31,
2002, payable to NIA for 120 days of delay and this is shown as part of accounts
payable and accrued expenses in the balance sheets.

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,  through its 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.  On July 8, 2002, LPG filed a complaint in the Superior Court of the
State of California,  City and County of San Francisco  against,  inter

                                      -32-
<PAGE>

alia, 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.  The impact,  if any, of this litigation on the Company
cannot be determined at this time.

In February  2003, San Lorenzo Ruiz Builders and  Developers  Group,  Inc. ("San
Lorenzo"),  an original  shareholder  substantially  all of whose  shares in the
Company  MidAmerican  purchased in 1998,  threatened to initiate legal action in
the  Philippines in connection  with certain aspects of its option to repurchase
such shares on or prior to  commercial  operation  of the  Project.  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 any such action.

Concentration of risk
---------------------

NIA's payments of obligations  under the Project Agreement will be substantially
denominated  in United States  Dollars and are expected to be 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  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.

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.

In connection with an interagency  review of approximately 40 independent  power
project  contracts in the Philippines,  the Casecnan Project (together with four
other  projects) has reportedly  been  identified as raising legal and financial
questions and, with those projects,  has been prioritized for renegotiation.  No
written report has yet been issued with respect to the interagency  review,  and
the timing and nature of steps,  if any that the Philippine  Government may take
in this regard are not known. Accordingly,  it is not known what, if any, impact
the  government's  review will have on the  operations  of the Company.  Company
representatives,  together with certain current and former government officials,
also have been  requested to appear,  and have  appeared  during 2002,  before a
Philippine Senate committee which has raised questions and made allegations with
respect to the  Casecnan  Project's  tariff  structure  and  implementation.  No
further Senate  hearings are scheduled at this time although  hearings  before a
Philippine House committee are scheduled for the first quarter of 2003.

BIR Audit
---------

The  Bureau  of  Internal  Revenue  ("BIR"),   consistent  with  the  Philippine
government's public statements to increase tax revenues,  has commenced auditing
the Company for all taxes,  including income taxes, for the years 2001, 2000 and
1999.  In  addition,  the BIR has issued  letters of  authority to audit the tax
years 1998,  1997 and 1996.  The only basis on which tax years prior to 1999 can
be audited is if the BIR successfully  argues in a Philippine  administrative or
court proceeding that the tax returns for those years are false or fraudulent in
some respect.  The Company  believes that any  allegations  that such tax years'
filings are false or fraudulent are without merit and accordingly that any audit
of such tax years is improper  and without  proper  legal  basis,  although  the
outcome  of  any  audit  by the  Philippine  tax  authorities  in  light  of the
government's  public  statements to increase tax revenues is  uncertain.  If the
Company is  ultimately  held liable the amounts  assessed may be  material.  The
Company further  believes that it currently is in compliance with applicable tax
laws and regulations with respect to all of its tax returns and filings.

                                      -33-
<PAGE>

NOTE 10 - FAIR VALUE OF FINANCIAL INSTRUMENTS
---------------------------------------------

Financial  Accounting  Standards  Board (FASB)  Statement 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, trade receivable, accounts payable and accrued expenses
-------------------------------------------------------------

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

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

The carrying  amount reported in the balance sheets  approximates  fair value in
the absence of quoted market prices.

Long-term debts
---------------

The fair value of the  Company's  long-term  debts is estimated  based on quoted
market  prices of similar  types of  arrangements.  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.  At December 31,  2001,  the Company had
fixed-rate  long-term  debt of $323.1  million in principal  amount and having a
fair value of $294.4 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 $12.8 million if interest rates were to increase by 10% from their
levels at December  31,  2002.  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.


ITEM 9:  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
         AND FINANCIAL DISCLOSURES
None

                                      -34-
<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:

NAME                          AGE     POSITION

David L. Sokol                46      Director and Chairman
Gregory E. Abel               40      Vice Chairman
David A. Baldwin              38      Director and President
James D. Stallmeyer           45      Vice President
Patrick J. Goodman            36      Director, Senior Vice President and Chief
                                        Financial Officer
Douglas L. Anderson           45      Director, Senior Vice President, General
                                        Counsel and Assistant Secretary
Brian K. Hankel               40      Vice President and Treasurer
Jose Sandejas                 66      Director and Corporate Secretary
Paul J. Leighton              49      Assistant Corporate Secretary
Jose Jaime Cruz               32      Director and Assistant Corporate Secretary
Marivic Punzalan-Espiritu     35      Director
Scott LaPrairie               45      Director
Linda Castillo                43      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 of the  minority
investors 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 and  President 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,  and  President  for the
Company,  Mr.  Baldwin  is  President  and  General  Manager,   Philippines  for
MidAmerican.  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 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.  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.

                                      -35-
<PAGE>

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.

PAUL J. LEIGHTON.  In addition to serving as Assistant Corporate Secretary,  Mr.
Leighton is also Vice President,  Corporate Law,  Assistant  General Counsel and
Assistant  Secretary  of  MidAmerican.  Mr.  Leighton  has  served as  Corporate
Secretary for  MidAmerican  and its  predecessor  companies since 1988 and as an
attorney since 1978.

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 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.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

DESCRIPTION OF CAPITAL STOCK

As of December 31, 2002, 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, 2002 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.

                                      -36-

<PAGE>

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.
<TABLE>
<CAPTION>
                                                                   Number Of        % Of Common
Name and Address of Owner                                          Shares Owned*    Stock Owned
-------------------------                                          -------------    -----------
<S>                                                                  <C>            <C>
1.  CE Casecnan, Ltd. (1)                                            652,005        85% (2)(3)
    a Bermuda corporation
    c/o Conyers Dill & Pearman
    Clarendon House
    P.O. Box 666 Hamilton, Bermuda HM CX

2.  LaPrairie Group Contractors (International), Ltd. ("LPG")        115,074        15% (4)
    a Barbados corporation
    c/o P.O.  Box 690C
    Bridgetown, Barbados
</TABLE>

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

(1)  MidAmerican indirectly owns CE Casecnan,  Ltd., a Bermuda corporation which
     is the registered owner of the shares.

(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
     Energy Holdings Company ("MidAmerican"),  through its wholly owned indirect
     subsidiary  CE Casecnan  Ltd,  has advised the minority  stockholders  that
     MidAmerican's  ownership  interest in the Company will increase to 100%. On
     July 8, 2002,  LPG filed a complaint in the Superior  Court of the State of
     California,  City and  County of San  Francisco  against,  inter  alia,  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.  Number of shares  owned  subject to upward
     adjustment  based on the  absence  of the  timely  exercise  of the  option
     specified in note (4) below.

(3)  Includes  115,000 shares  beneficial  ownership of which was purchased from
     San Lorenzo Ruiz Builders and Developers Group Inc. in 1998, with an option
     in favor of San Lorenzo to repurchase those shares at project completion.

(4)  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
     Energy Holdings Company ("MidAmerican"),  through its wholly owned indirect
     subsidiary  CE Casecnan  Ltd,  has advised the minority  stockholders  that
     MidAmerican's  ownership  interest in the Company has increased to 100%. On
     July 8, 2002,  LPG filed a complaint in the Superior  Court of the State of
     California,  City and  County of San  Francisco  against,  inter  alia,  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.

                                      -37-

<PAGE>

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Not Applicable.

ITEM 14.  CONTROLS AND PROCEDURES

     (a)  Evaluation  of  disclosure  controls  and  procedures:  Based  on  our
evaluation  as of a date within 90 days of the filing date of this Annual Report
on Form 10-K, our principal  executive  officer and principal  financial officer
have concluded that our disclosure  controls and procedures (as defined in Rules
13a-14(c) and 15d-14(c) under the Securities  Exchange Act of 1934 (the Exchange
Act)) are effective to ensure that information required to be disclosed by us in
reports that we file or submit  under the  Exchange Act is recorded,  processed,
summarized  and reported  within the time periods  specified in  Securities  and
Exchange  Commission  rules and forms. It should be noted that the design of any
system  of  controls  is  based  in part  upon  certain  assumptions  about  the
likelihood of future events,  and there can be no assurance that any design will
succeed in achieving  its stated goals under all  potential  future  conditions,
regardless of how remote.

     (b) Changes in internal controls.  There were no significant changes in our
internal  controls or in other  factors  that could  significantly  affect these
controls  subsequent to the date of their evaluation.  There were no significant
deficiencies  or material  weaknesses,  and  therefore  there were no corrective
actions taken.

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

The Company  filed a Current  Report on Form 8-K on November  14, 2002 to report
under Item 9 that the  Quarterly  Report on Form 10-Q for the  quarterly  period
ended  September 30, 2002,  filed on November 14, 2002, by CE Casecnan Water and
Energy Company, Inc. was accompanied by certification by the President, David A.
Baldwin and Chief Financial Officer, Patrick J. Goodman, pursuant to Section 906
of the  Sarbanes-Oxley  Act  of  2002  and to  file a  copy  of  each  of  those
certifications as an exhibit.

                                      -38-

<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 March 28, 2003.

                   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:
<TABLE>
<CAPTION>
<S>                                <C>                                          <C>

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

/s/ David L. Sokol*                Director and Chairman of the Board           March 28, 2003
-------------------
David L. Sokol

/s/ David A. Baldwin*              Director and President                       March 28, 2003
---------------------
David A. Baldwin                   (Principal Executive Officer)

/s/ Patrick J. Goodman*            Director, Senior Vice President              March 28, 2003
-----------------------              and Chief Financial Officer
Patrick J. Goodman                 (Principal Financial Officer)

/s/ Douglas L. Anderson            Director, Senor Vice President, General      March 28, 2003
-----------------------              Counsel and Assistant Secretary
Douglas L. Anderson

/s/ Linda B. Castillo*             Director                                     March 28, 2003
----------------------
Linda B. Castillo



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

                                      -39-
<PAGE>


                     SECTION 302 CERTIFICATION FOR FORM 10-K


                                 CERTIFICATIONS
                                 --------------


I, David A. Baldwin, certify that:


1. I have  reviewed  this annual  report on Form 10-K of CE  Casecnan  Water and
Energy Company, Inc.;


2.  Based on my  knowledge,  this  annual  report  does not  contain  any untrue
statement of a material fact or omit to state a material fact  necessary to make
the statements made, in light of the  circumstances  under which such statements
were made,  not  misleading  with  respect to the period  covered by this annual
report;


3.  Based  on my  knowledge,  the  financial  statements,  and  other  financial
information  included  in this annual  report,  fairly  present in all  material
respects the financial  condition,  results of operations  and cash flows of the
registrant as of, and for, the periods presented in this annual report;


4.  The  registrant's  other  certifying  officers  and  I are  responsible  for
establishing and maintaining  disclosure  controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:


a) designed  such  disclosure  controls and  procedures  to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others  within those  entities,  particularly  during the
period in which this annual report is being prepared;


b) evaluated  the  effectiveness  of the  registrant's  disclosure  controls and
procedures  as of a date  within 90 days prior to the filing date of this annual
report (the "Evaluation Date"); and


c) presented in this annual report our conclusions  about the  effectiveness  of
the  disclosure  controls  and  procedures  based  on our  evaluation  as of the
Evaluation Date;


5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation,  to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):


a) all significant  deficiencies in the design or operation of internal controls
which  could  adversely  affect the  registrant's  ability  to record,  process,
summarize and report  financial data and have  identified  for the  registrant's
auditors any material weaknesses in internal controls; and


b) any  fraud,  whether  or not  material,  that  involves  management  or other
employees who have a significant role in the registrant's internal controls; and


6. The  registrant's  other  certifying  officers  and I have  indicated in this
annual report whether or not there were significant changes in internal controls
or in other factors that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.


Date:  March 28, 2003

                                /s/ David A. Baldwin
                                -------------------------
                                    David A. Baldwin
                                    President
                                (chief executive officer)

                                      -40-

<PAGE>


I, Patrick J. Goodman, certify that:


1. I have  reviewed  this annual  report on Form 10-K of CE  Casecnan  Water and
Energy Company, Inc.;


2.  Based on my  knowledge,  this  annual  report  does not  contain  any untrue
statement of a material fact or omit to state a material fact  necessary to make
the statements made, in light of the  circumstances  under which such statements
were made,  not  misleading  with  respect to the period  covered by this annual
report;


3.  Based  on my  knowledge,  the  financial  statements,  and  other  financial
information  included  in this annual  report,  fairly  present in all  material
respects the financial  condition,  results of operations  and cash flows of the
registrant as of, and for, the periods presented in this annual report;


4.  The  registrant's  other  certifying  officers  and  I are  responsible  for
establishing and maintaining  disclosure  controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:


a) designed  such  disclosure  controls and  procedures  to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others  within those  entities,  particularly  during the
period in which this annual report is being prepared;


b) evaluated  the  effectiveness  of the  registrant's  disclosure  controls and
procedures  as of a date  within 90 days prior to the filing date of this annual
report (the "Evaluation Date"); and


c) presented in this annual report our conclusions  about the  effectiveness  of
the  disclosure  controls  and  procedures  based  on our  evaluation  as of the
Evaluation Date;


5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation,  to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):


a) all significant  deficiencies in the design or operation of internal controls
which  could  adversely  affect the  registrant's  ability  to record,  process,
summarize and report  financial data and have  identified  for the  registrant's
auditors any material weaknesses in internal controls; and


b) any  fraud,  whether  or not  material,  that  involves  management  or other
employees who have a significant role in the registrant's internal controls; and


6. The  registrant's  other  certifying  officers  and I have  indicated in this
annual report whether or not there were significant changes in internal controls
or in other factors that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.


Date:  March 28,  2003


                           /s/ Patrick J. Goodman
                           -------------------------
                               Patrick J. Goodman
                           Senior Vice President and
                           Chief Financial Officer


                                      -41-

<PAGE>

                                INDEX TO EXHIBITS


Exhibit No.    Description of Exhibit
-----------    ----------------------

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).


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).

                                      -42-
<PAGE>

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).

24             Power of Attorney

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

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

                                      -43-