Use these links to rapidly review the documentAES RED OAK, L.L.C. TABLE OF CONTENTS

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

|ý | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the quarterly period endedMarch 31, 2002
|- | -----------------------------------------------------------------------------------------------------------------------------------
|o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934                                           
|  | For the transition period from  to                                                                                                 

Commission
file number: 333-40478

AES RED OAK, L.L.C.(Exact name of registrant as specified in its charter)

Delaware(State or other jurisdiction of
incorporation or organization)

54-1889658(I.R.S. Employer
Identification Number)


1001 North 19th Street, Arlington, Virginia 22209,
c/o The AES Corporation
(703) 522-1315(Registrant's address of principal executive offices,)
(zip code and telephone number, including area code)

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 ý    No o

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AES RED OAK, L.L.C.        TABLE OF CONTENTS



|           |         |                                                                                                                                                                        |                                                                                       | Page No.
|---------- | ------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------- | --------
|PART I.    |         | FINANCIAL INFORMATION                                                                                                                                                  |                                                                                       |         
|           | Item 1. |                                                                                                                                                                        | Condensed Consolidated Financial Statements (unaudited)                               |         
|           |         | Condensed Consolidated Statements of Operations, three months ended March 31, 2002 and 2001, and period from March 15, 2000 (inception) through March 31, 2002         |                                                                                       | 3       
|           |         | Condensed Consolidated Balance Sheets, March 31, 2002 and December 31, 2001                                                                                            |                                                                                       | 4       
|           |         | Condensed Consolidated Statement of Changes in Member's Equity (Deficit), period from March 15, 2000 (inception) through March 31, 2002                                |                                                                                       | 5       
|           |         | Condensed Consolidated Statements of Cash Flows, for the three months ended March 31, 2002 and 2001, and period from March 15, 2000 (inception) through March 31, 2002 |                                                                                       | 6       
|           |         | Notes to the Condensed Consolidated Financial Statements                                                                                                               |                                                                                       | 7       
|           | Item 2. |                                                                                                                                                                        | Management's Discussion and Analysis of Financial Condition and Results of Operations |         
|           | Item 3. |                                                                                                                                                                        | Quantitative and Qualitative Disclosures About Market Risk                            |         
|PART II.   |         | OTHER INFORMATION                                                                                                                                                      |                                                                                       |         
|           | Item 6. |                                                                                                                                                                        | Exhibits and Reports on Form 8-K                                                      |         
|SIGNATURES |         | 21                                                                                                                                                                    

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PART I. FINANCIAL INFORMATION

Item 1.    Condensed Consolidated Financial Statements (Unaudited)

AES RED OAK, L.L.C.  (A Development Stage Enterprise)        Condensed Consolidated Statements of Operations,  three months ended March 31, 2002 and 2001, and  period from March 15, 2000
(inception) through March 31, 2002(dollars in thousands)

|                     |                              | Three Months
Ended
March 31, 2002 |     | Three Months
Ended
March 31, 2001 |   | March 15, 2000
(inception) through
March 31, 2002 |     
|-------------------- | ---------------------------- | --------------------------------- | --- | --------------------------------- | - | ------------------------------------------------- | ----
|OPERATING EXPENSES   |                              |                                   |     |                                   |   |                                                   |     
|                     | General administrative costs |                                   | $   | (22                               | ) | $                                                 | (9  
|                     |                              |                                   |     |                                   |   |                                                   |     
|                     | Operating Loss               |                                   | $   | (22                               | ) | $                                                 | (9  
|                     |                              |                                   |     |                                   |   |                                                   |     
|OTHER INCOME/EXPENSE |                              |                                   |     |                                   |   |                                                   |     
|                     | Interest income              |                                   |     | 25                                |   |                                                   | 260 
|                     | Interest expense             |                                   |     | (81                               | ) |                                                   | (352
|                     |                              |                                   |     |                                   |   |                                                   |     
|NET LOSS             |                              | $                                 | (78 | )                                 | $ | (101                                              | )   
|                     |                              |                                   |     |                                   |   |                                                   |     

See
notes to condensed consolidated financial statements.

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AES RED OAK, L.L.C.  (A Development Stage Enterprise)        Condensed Consolidated Balance Sheets,  March 31, 2002 and December 31, 2001(dollars in
thousands)

|                                                                                              |                                 | March 31, 2002                                  |         | December 31, 2001 |        
|--------------------------------------------------------------------------------------------- | ------------------------------- | ----------------------------------------------- | ------- | ----------------- | -------
|ASSETS:                                                                                       |                                 |                                                 |         |                   |        
|Current Assets:                                                                               |                                 |                                                 |         |                   |        
|Cash                                                                                          |                                 | $                                               | 20      |                   | $      
|Restricted investments-at cost, which approximates market value                               |                                 |                                                 | 5,938   |                   |        
|Receivable from affiliate                                                                     |                                 |                                                 | 118     |                   |        
|                                                                                              |                                 |                                                 |         |                   |        
|                                                                                              | Total current assets            |                                                 |         | 6,076             |        
|Land                                                                                          |                                 |                                                 | 4,240   |                   |        
|Construction in progress                                                                      |                                 |                                                 | 402,629 |                   |        
|Deferred financing costs  net of accumulated amortization of $1,666 and $1,462, respectively |                                 |                                                 | 17,039  |                   |        
|                                                                                              |                                 |                                                 |         |                   |        
|                                                                                              | Total assets                    |                                                 | $       | 429,984           |        
|                                                                                              |                                 |                                                 |         |                   |        
|LIABILITIES AND MEMBER'S DEFICIT:                                                             |                                 |                                                 |         |                   |        
|Current Liabilities:                                                                          |                                 |                                                 |         |                   |        
|Accounts payable                                                                              |                                 | $                                               | 998     |                   | $      
|Accrued liabilities                                                                           |                                 |                                                 | 235     |                   |        
|Accrued interest                                                                              |                                 |                                                 | 2,821   |                   |        
|Retainage payable                                                                             |                                 |                                                 | 1,025   |                   |        
|Payable to affiliate                                                                          |                                 |                                                 | 250     |                   |        
|Bonds payable-current portion                                                                 |                                 |                                                 | 2,886   |                   |        
|                                                                                              |                                 |                                                 |         |                   |        
|                                                                                              | Total current liabilities       |                                                 |         | 8,215             |        
|Bonds payable                                                                                 |                                 |                                                 | 381,114 |                   |        
|                                                                                              |                                 |                                                 |         |                   |        
|                                                                                              | Total liabilities               |                                                 | $       | 389,329           |        
|                                                                                              |                                 |                                                 |         |                   |        
|Commitments (Notes 5 and 6)                                                                   |                                 |                                                 |         |                   |        
|Member's equity (deficit):                                                                    |                                 |                                                 |         |                   |        
|Common stock, $1 par value-10 shares authorized, none issued or outstanding                   |                                 |                                                 |        |                   |        
|Contributed capital                                                                           |                                 |                                                 | 43,686  |                   |        
|Deficit accumulated during the development stage                                              |                                 |                                                 | (3,031  | )                 |        
|                                                                                              |                                 |                                                 |         |                   |        
|                                                                                              | Total member's equity (deficit) |                                                 |         | 40,655            |        
|                                                                                              |                                 |                                                 |         |                   |        
|                                                                                              |                                 | Total liabilities and member's equity (deficit) |         | $                 | 429,984
|                                                                                              |                                 |                                                 |         |                   |        

See
notes to condensed consolidated financial statements.

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AES RED OAK, L.L.C.  (A Development Stage Enterprise)        Consolidated Statements of Changes in Member's Equity (Deficit),  period form March 15, 2000 (inception) through March 31, 2002(dollars in thousands)

|                                    |  | Common Stock |  |   |   |  |   |        | 
|----------------------------------- |  | ------------ |  | - | - |  | - | ------ | 
|
|
|BALANCE, MARCH 15, 2000 (inception) |  |             |  | $ |  |  | $ |       | 
|Net Loss                            |  |             |  |   |  |  |   |       | 
|                                    |  |              |  |   |   |  |   |        | 
|BALANCE, DECEMBER 31, 2000          |  |             |  | $ |  |  | $ |       | 
|Contributed Capital                 |  |             |  |   |  |  |   | 986    | 
|Net Loss                            |  |             |  |   |  |  |   |       | 
|                                    |  |              |  |   |   |  |   |        | 
|BALANCE, DECEMBER 31, 2001          |  |             |  | $ |  |  | $ | 986    | 
|Capital Contributions               |  |             |  |   |  |  |   | 42,700 | 
|Net Loss                            |  |             |  |   |  |  |   |       | 
|                                    |  |              |  |   |   |  |   |        | 
|BALANCE, MARCH 31, 2002             |  |             |  | $ |  |  | $ | 43,686 | 
|                                    |  |              |  |   |   |  |   |        | 

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AES RED OAK, L.L.C.  (A Development Stage Enterprise)        Consolidated Statements of Cash Flows, for the three months ended March 31, 2002 and 2001  and the period from March 15, 2000
(inception) through March 31, 2002.(dollars in thousands)

|                                                                   |                           | Three Months
Ended March 31,
2002 |         | Three Months
Ended
March 31,
2001 |   | March 15, 2000
(inception)
through
March 31, 2002 |       
|------------------------------------------------------------------ | ------------------------- | --------------------------------- | ------- | --------------------------------- | - | ------------------------------------------------- | ------
|OPERATING ACTIVITIES:                                              |                           |                                   |         |                                   |   |                                                   |       
|Net loss                                                           |                           | $                                 | (78     | )                                 | $ | (101                                              | )     
|Amortization of deferred financing costs                           |                           |                                   | 204     |                                   |   | 204                                               |       
|Change in:                                                         |                           |                                   |         |                                   |   |                                                   |       
|                                                                   | Receivable                |                                   |         |                                  |   |                                                   | (47   
|                                                                   | Receivable from affiliate |                                   |         | 1,748                             |   |                                                   |      
|                                                                   | Accounts payable          |                                   |         | 116                               |   |                                                   | 829   
|                                                                   | Accrued liabilities       |                                   |         | 173                               |   |                                                   | (5    
|                                                                   | Accrued interest          |                                   |         |                                  |   |                                                   |      
|                                                                   | Payable to affiliates     |                                   |         | (1,573                            | ) |                                                   | (1,009
|                                                                   |                           |                                   |         |                                   |   |                                                   |       
|Net cash provided by (used in) operating activities                |                           |                                   | 590     |                                   |   | (129                                              | )     
|                                                                   |                           |                                   |         |                                   |   |                                                   |       
|INVESTING ACTIVITIES:                                              |                           |                                   |         |                                   |   |                                                   |       
|Payments for construction in progress                              |                           |                                   | (15,061 | )                                 |   | (11,928                                           | )     
|Retainage payable                                                  |                           |                                   | (28,453 | )                                 |   |                                                  |       
|Payments for land                                                  |                           |                                   |        |                                   |   |                                                  |       
|Change in investments held by trustee                              |                           |                                   | 196     |                                   |   | 11,132                                            |       
|                                                                   |                           |                                   |         |                                   |   |                                                   |       
|Net cash used in investing activities                              |                           |                                   | (43,318 | )                                 |   | (796                                              | )     
|                                                                   |                           |                                   |         |                                   |   |                                                   |       
|FINANCING ACTIVITIES:                                              |                           |                                   |         |                                   |   |                                                   |       
|Proceeds from project debt issuance                                |                           |                                   |        |                                   |   |                                                  |       
|Contributed capital                                                |                           |                                   | 42,700  |                                   |   | 986                                               |       
|Payments for deferred financing costs                              |                           |                                   |        |                                   |   |                                                  |       
|                                                                   |                           |                                   |         |                                   |   |                                                   |       
|Net cash provided by financing activities                          |                           |                                   | 42,700  |                                   |   | 986                                               |       
|                                                                   |                           |                                   |         |                                   |   |                                                   |       
|NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS               |                           |                                   | (28     | )                                 |   | 61                                                |       
|CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                     |                           |                                   | 48      |                                   |   | 15                                                |       
|                                                                   |                           |                                   |         |                                   |   |                                                   |       
|CASH AND CASH EQUIVALENTS, END OF PERIOD                           |                           | $                                 | 20      |                                   | $ | 76                                                |       
|                                                                   |                           |                                   |         |                                   |   |                                                   |       
|SUPPLEMENTAL DISCLOSURE OF OTHER ACTIVITIES:                       |                           |                                   |         |                                   |   |                                                   |       
|Interest paid (net of amount capitalized)                          |                           | $                                 | 81      |                                   | $ | 352                                               |       
|SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITIES:                    |                           |                                   |         |                                   |   |                                                   |       
|Transfer of prepaid construction costs to construction in progress |                           | $                                 |        |                                   | $ | 52,796                                            |       

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AES RED OAK, L.L.C.  (A Development Stage Enterprise)        Notes to Condensed Consolidated Financial Statements, three months ended March 31, 2002  and 2001, and the period from March 15,
2000 (inception) through March 31, 2002

1.    ORGANIZATION

AES Red Oak, L.L.C. (the Company) was formed on September 13, 1998, in the State of Delaware, to develop, construct, own and operate an
830-megawatt (MW) gas-fired, combined cycle electric generating facility (the Facility) in Sayreville, New Jersey. The Company was considered dormant until March 15,
2000, at which time it consummated a project financing and certain related agreements. On March 15, 2000, the Company issued $384 million in senior secured bonds for the purpose of
providing financing for the construction of the Facility and to fund, through the construction period, interest payments to the bondholders. In late September 2000, the Company consummated an
exchange offer whereby the holders of the senior secured bonds exchanged their privately placed senior secured bonds for registered senior secured bonds.

The
Facility, currently under construction, will consist of three Westinghouse 501 FD combustion turbines, three unfired heat recovery steam generators, and one multicylinder steam
turbine. The Facility will produce and sell electricity, as well as provide fuel conversion and ancillary services, solely to Williams Energy Marketing and Trading Company (Williams) under a
20-year fuel conversion services, capacity and ancillary services purchase agreement expected to commence on or about June 30, 2002, approximately 4.5 months after the
Facility's guaranteed completion date under the EPC Contract of February 14, 2002, as defined below (see note 6).

The
Company is in the development stage and is not expected to generate any operating revenues until the Facility achieves commercial operations. As with any new business venture of this
size and nature, operation of the Facility could be affected by many factors. Management of the Company believes that the assets of the Company are realizable.

The
Company is a wholly owned subsidiary of AES Red Oak, Inc. (Red Oak), which is a wholly-owned subsidiary of The AES Corporation (AES). Red Oak has no assets other than its
ownership interests in the Company and AES Sayreville, L.L.C. Red Oak has no operations and is not expected to have any operations. Red Oak's only income will be from distributions it receives from
the Company and AES Sayreville, L.L.C., once the Company achieves commercial operations. Pursuant to an equity subscription agreement (see note 4), Red Oak has agreed to contribute up to
approximately $55.7 million to the Company to fund construction after the bond proceeds have been fully utilized. The equity that Red Oak is to provide to the Company will be provided to Red
Oak by AES, which owns all of the equity interest in Red Oak. AES files quarterly and annual audited reports with the Securities and Exchange Commission under the Securities Exchange Act of 1934,
which are publicly available, but which do not constitute a part of, and are not incorporated into, this Form 10-Q. Red Oak's equity contribution obligations are required to be
supported by either an insurance bond or letter of credit. Currently those obligations are supported by an insurance bond issued to the Collateral Agent.

The
Company owns all of the equity interests in AES Red Oak Urban Renewal Corporation (URC), which was organized as an urban renewal corporation under New Jersey Law. As an urban renewal
corporation under New Jersey law, portions of the Facility can be designated as redevelopment areas in order to provide real estate tax and development benefits to the Facility. URC has no operations
outside of its activities in connection with the Facility.

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2.    BASIS OF PRESENTATION

In the Company's opinion, all adjustments necessary for a fair presentation of the unaudited results of operations for the three months ended March 31,
2002 and 2001, and the period from March 15, 2000 (inception) through March 31, 2002 are included. All such adjustments are accruals of a normal and recurring nature. The results of
operations for the three months ended March 31, 2002 and 2001, and the period from March 15, 2000 (inception) through March 31, 2002, are not necessarily indicative of the results
of operations to be expected for the full year or future periods.

These
condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial
information, with the instructions to the Form 10-Q, and with Regulation S-X. Accordingly, they do not include all of the information and footnotes required by
accounting principles generally accepted in the Unites States of America for complete financial statements and should be read in conjunction with the audited financial statements for the fiscal year
ended December 31, 2001 and notes thereto included in the Company's Form 10-K for the fiscal year ended December 31, 2001.

3.    RECLASSIFICATIONS

Certain reclassifications have been made to the 2001 financial statements to conform with 2002 presentation.

4.    EQUITY SUBSCRIPTION AGREEMENT

The Company, along with Red Oak, has entered into an equity subscription agreement, pursuant to which Red Oak has agreed to contribute up to approximately
$55.7 million to the Company to fund project costs. This amount is secured by an insurance bond issued to the Collateral Agent. As of May 1, 2002, AES Red Oak, Inc. has
contributed approximately $47.3 million in the form of equity funding to help finance project costs.

5.    POWER PURCHASE AGREEMENT

The Company and Williams have entered into a power purchase agreement (PPA) for the sale of all capacity produced by the Facility, as well as ancillary services
and fuel conversion services. The term of the PPA is 20 years, commencing on the commercial operation date, which is defined in the PPA as the day the initial start up testing procedures have
been successfully completed and notified to Williams by the Company. The payment obligations of Williams to the Company under the PPA are guaranteed by The Williams Companies, Inc. The payment
obligations of The Williams Companies, Inc. under that guarantee are capped at an amount equal to 125% of the sum of the principal amount of the senior secured bonds plus the maximum debt
service reserve account required balance. The Company has provided Williams a letter of credit (PPA Letter of Credit) in the amount of $30 million to support specific payment obligations should
the Facility not achieve commercial operation by the date required under the PPA. Upon achievement of commercial operation, the stated amount of the PPA Letter of Credit will be reduced to
$10 million. The repayment obligations with respect to any drawings under the PPA Letter of Credit are a senior debt obligation of the Company. The original anticipated commercial operation
date under the PPA was December 31, 2001, but such date was extended, at no cost, until June 30, 2002, as described below. The Company currently anticipates that commercial operation of
the Facility will commence on or about June 30, 2002, approximately 4.5 months after the guaranteed completion date of February 14, 2002 under the construction agreement (see
note 6).

Under
the PPA, the Company had the right to extend the required commercial operation date from December 31, 2001 to June 30, 2002 (1) by providing an opinion from a
third-party engineer that the commercial operation date will occur no later than June 30, 2002 (the "Free Extension Option"), or (2) by giving Williams written notice of such extension
no later than November 30, 2001, and paying

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to Williams $2.5 million by no later than January 31, 2002. On November 14, 2001, the Company exercised its Free Extension Option. On December 12, 2001, Williams formally
accepted the required
opinion of the third-party engineer. As a result, the required commercial operation date under the power purchase agreement was extended to June 30, 2002. In the event that the Company cannot
meet the June 30, 2002 commercial operation date, it has the right under the power purchase agreement, upon written notification to Williams no later than May 21, 2002 (which represents
an agreed upon extension from the original April 30, 2002 notification deadline), to again extend the commercial operation date until June 30, 2003 by paying Williams an amount equal to
the lesser of any actual damages Williams suffers or incurs after June 30, 2002 as a result of Williams reliance upon the delivery by such date or $3.0 million (the "Second Paid
Extension Option"). The Company must also pay specified amounts ranging from $11,000 per day to $50,000 per day of the extension. During the period of the Second Paid Extension Option, if any, the
Company expects to continue to collect liquidated damages until April 10, 2003 from Raytheon Company (Raytheon) under the construction agreement in the amount of $108,000 per day. To date, the
Company has invoiced Raytheon $2.7 million for liquidated damages under the construction agreement, and has received $2.16 million of such invoiced amounts.

In
the event that the project is not commercially operational by June 30, 2002, and the Company does not have sufficient funds to exercise its Second Paid Extension Option, or the
Facility does not achieve commercial operation by the commercial operation date as extended, Williams has the right to terminate the PPA. If Williams terminates the PPA and the Company cannot find a
long-term replacement power purchaser on favorable or reasonable terms, the Company will be required to sell its capacity and energy under shorter-term contracts or into the
PJM spot market. In such event, the Company may not have financial resources sufficient to meet its financial and contractual obligations, including the timely payment of principal and interest on the
senior secured bonds.

Fuel Conversion and Other ServicesWilliams has the obligation to deliver, on an exclusive basis, all quantities of natural
gas and fuel oil required by the Facility to generate electricity or ancillary services, to start-up or shut-down the plant, and to operate the Facility during any period other
than a start-up, shut-down, or required dispatch by Williams for any reason.

Concentration of Credit RiskWilliams Energy is currently the Company's sole customer for purchases of capacity, ancillary
services, and energy, and its sole source for fuel. Williams Energy's payments under the PPA are expected to provide all of our operating revenues during the term of the PPA. It is uncertain whether
the Company would be able to find another purchaser or fuel source on similar terms for its facility if Williams Energy were not performing under the PPA. Any material failure by Williams Energy to
make capacity and fuel conversion payments or to supply fuel under the PPA would have a severe impact on the Company's operations. The payment obligations of Williams Energy under the PPA are
guaranteed by the Williams Companies, Inc. The payment obligations of the Williams Companies, Inc. are capped at an amount equal to 125% of the sum of the principal amount of our senior
secured bonds, plus the maximum debt service reserve account balance.

If
at any time Moody's Investors Services or Standard & Poor's rates the long term senior unsecured debt of The Williams Companies, Inc. lower than investment grade and the
rating agency does not reestablish within 60 days an investment grade rating for the debt, then Williams Energy is to provide alternative credit support reasonably acceptable to the Company
within 90 days of the day on which the debt was rated lower than investment grade. According to published sources, as of May 8, 2002, the long-term senior unsecured debt of
the Williams Companies, Inc. was rated as follows: "Baa2" by
Moody's and "BBB" by Standard and Poor's, both of which ratings are investment grade. While both ratings agencies have recently affirmed this investment grade rating, on February 1, 2002,
Standard & Poor's placed the senior unsecured debt credit ratings of the Williams Companies, Inc. on credit watch with negative implications, and on May 8, 2002, Moody's placed
under review for possible

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downgrade the ratings of The Williams Companies, Inc. and its affiliates. Moody's had given the ratings of Williams Companies, Inc. a negative outlook on February 27, 2002.

6.    COMMITMENTS AND CONTINGENCIES

Construction AgreementThe Company has entered into an Agreement for Engineering, Procurement and
Construction services, dated as of October 15, 1999, between the Company and Washington Group International (WGI) (as the successor contractor), as amended for the design, engineering,
procurement, site preparation and clearing, civil works, construction, start-up, training and testing and to provide all materials and equipment (excluding operational spare parts),
machinery, tools, construction fuels, chemicals and utilities, labor, transportation, administration and other services and items (collectively and separately, the services) of the Facility. Under a
guaranty in the Company's favor, effective as of October 15, 1999, all of the WGI's obligations under the construction agreement are irrevocably and unconditionally guaranteed by the Raytheon
Company (Raytheon).

On
June 20, 2001, as a result of WGI's bankruptcy filing, the Company made a demand on Raytheon to perform its obligations under the Raytheon guarantee.

On
November 9, 2001, WGI received an order from the Bankruptcy Court approving WGI's (1) rejection of the construction agreement and (2) execution of the Project
Completion Agreement (PCA), as described below. On November 16, 2001, WGI and Raytheon executed the PCA. The PCA superceded the Interim Agreement for Advance Payments, between the Company, WGI
and Raytheon, which had been in place since June 20, 2001. The Interim Agreement did not change the construction agreement price, the construction progress milestone dates, the guaranteed
completion dates, or the project schedule.

Under
the PCA, WGI will (i) assign to the Company, as the project owner, certain of the major equipment, subcontracts and vendor contracts relating to the project,
(ii) assign to Raytheon the remaining subcontracts and vendor contracts relating to the project, (iii) agree to complete construction of the facility on a cost reimbursable basis but
otherwise in accordance with the terms of the construction agreement, with all funding to come from Raytheon, and (iv) perform obligations under the subcontracts and vendor contracts as the
subagent of Raytheon. Raytheon, as guarantor under the construction agreement, will, as necessary, fund all of WGI's costs and expenses related to WGI's completion of the project. Both parties will
have limited termination rights under the PCA.

On
November 21, 2001, the Company and Raytheon entered into the Owner/Guarantor Supplemental Agreement ("OGSA") pursuant to which (i) Raytheon and the Company will
acknowledge that, notwithstanding the rejection of the construction agreement by WGI, Raytheon will cause the project to be completed in accordance with the terms of the construction agreement
pursuant to Raytheon's performance guaranty obligations, and the construction agreement will have continuing applicability insofar as it defines (x) the obligations owed to the Company by
Raytheon under its guaranty and (y) the obligations of the Company to Raytheon arising from the performance of those obligations, (ii) Raytheon (or their designees) will be designated as
the Company's agent for purposes of administering the subcontracts and vendor contracts assigned by WGI to the Company, (iii) all future payments from the Company will be paid in accordance
with the terms of the construction agreement directly to Raytheon, and (iv) Raytheon will indemnify the Company with respect to any claims arising out of the subcontracts and vendor contracts
assumed by the Company. Although there can be no assurances, based upon (i) the Company's current assessment of progress at the construction site, (ii) the performance guaranty from
Raytheon, (iii) the mutual obligations of WGI and Raytheon under the PCA, and (iv) assuming (x) that WGI and Raytheon fulfill their respective obligations under the PCA, and
(y) that Raytheon continues to fulfill its obligations under its performance guarantee and the OGSA, the Company currently believes that it has sufficient funds available to complete
construction of the facility, and expects the facility to become commercially operational on or about

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June 30, 2002, which is approximately 4.5 months after the February 14, 2002 guaranteed completion date under the construction agreement. See "Cautionary Note Regarding
Forward-Looking Statements." Notwithstanding the Company's current belief, if the parties to the PCA fail to perform their obligations, or if Raytheon does not fulfill its obligations under its
performance guarantee or the OGSA, the Company may experience significant construction delays and/or may not have sufficient funds to complete the facility.

In
the event the commercial operation date of the Facility is significantly delayed, the PPA may be terminated by Williams and the Company may not have financial resources sufficient to
meet its financial and contractual obligations, including the timely payment of principal and interest on the senior secured bonds. Other than with respect to developments that may have a material
impact on the Company or its business operations, the Company is under no obligation nor does it intend to continuously provide updates of WGI's bankruptcy proceedings. However, copies of all
pleadings filed with the Bankruptcy Court are available from the office of the clerk of the Bankruptcy Court.

Interconnection Agreement (GPU)The Company has entered into an interconnection agreement with Jersey Central Power &
Light Company d/b/a GPU Energy (GPU) to transmit the electricity generated by the Facility to the transmission grid so that it may be sold as prescribed under the PPA. The agreement is in effect for
the life of the Facility, yet may be terminated by mutual consent of both GPU and the Company under certain circumstances as detailed in the agreement. Costs associated with the agreement are based on
electricity transmitted via GPU at a variable price and the PJM (Pennsylvania/New Jersey/Maryland) Tariff as charged by GPU, which is comprised of both service cost and asset recovery cost, as
determined by GPU and approved by the Federal Energy Regulatory Committee. On June 22, 2001, FERC approved the Company's MarketBased Tariff petition. The Company has been importing
electricity from the transmission system to support commissioning of the facility since July 2001 and the interconnection facilities are ready to export power to the transmission system.
Project completion and final invoicing are expected to be received from Jersey Central Power by May 31, 2002.

Interconnection Installation Agreement (GPU)The Company entered into an interconnection agreement with GPU on
April 27, 1999 to design, furnish install and own certain facilities required to interconnect the Company with the transmission system. Under the terms of this agreement GPU will provide all
labor, supervision, materials and equipment necessary to perform the interconnection installation. The cost of these interconnection facilities is estimated to be $5.3 million. As of
March 31, 2002 and December 31, 2001, the Company had paid approximately $4.0 million to GPU for these facilities.

Water Supply PipelineThe Borough is in the final stages of design and approval of the Lagoon Water Pipeline, Lagoon Pumping
Station and Sayreville Interconnection Number 2. The Company is responsible for selection of a contractor and for payment of all costs. The pipeline construction has been completed. The construction
contract for the Pumping Station was awarded and is completed. Startup and Commissioning of this system started May 1, 2002. The cost of the pipeline and pumping station are estimated to be
approximately $678,000 and $2.0 million, respectively. The Company owes $36,000 for the pipeline project and, as of May 5, 2002, has paid approximately $1.3 million towards the
Pumphouse Project.

Gas InterconnectionWilliams is responsible for the construction of all natural gas interconnection facilities necessary for
the delivery of natural gas up to the Company's natural gas delivery point. This includes metering equipment, valves and piping. Upon the expiration of the PPA or termination of the PPA, the Company
has the right to purchase the natural gas interconnection facilities from Williams. As of August 10, 2001, the interconnection facilities have been constructed by Public Service
Electric & Gas for Williams and are available for gas delivery to the Facility.

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Other Construction CostsThe Company has also made road modifications at a cost of approximately $537,000, has constructed an
administration building for an estimated $2.4 million, and has installed a fuel gas heater for an estimated $1.3 million. The Company has paid $1.11 million towards the fuel gas
heater project and $2.17 million towards the administration building. The majority of the remaining capital expenditures are expected to be paid by the end of May 2002.

7.    DERIVATIVE INSTRUMENTS

On January 1, 2001, the Company adopted SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, which, as amended, established
new accounting and reporting standards for derivative instruments and hedging activities. SFAS No. 133 requires that an entity recognize all derivatives (including derivatives embedded in other
contracts) as either assets or liabilities on the balance sheet and measure those instruments at fair value. Changes in the derivative's fair value are to be recognized currently in earnings unless
specific hedge accounting criteria are met. Hedge accounting allows a derivative's gains or losses in fair value to offset related results of a hedged item in the
statement of operations and requires that a company formally document, designate, and assess the effectiveness of transactions that receive hedge accounting.

SFAS
No. 133 allows hedge accounting for fair value and cash flow hedges. SFAS No. 133 provides that the gain or loss on a derivative instrument designated and qualifying
as a fair value hedge, as well as the offsetting gain or loss on the hedged item attributable to the hedged risk, be recognized currently in earnings in the same accounting period. SFAS No. 133
provides that the effective portion of the gain or loss on a derivative instrument designated and qualifying as a cash flow hedge be reported as a component of other comprehensive income in
stockholder's equity and be reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. The remaining loss on the derivative, if any, must be
recognized currently in earnings. There was no significant impact on the company's financial statements at January 1, 2001, December 31, 2001, or at March 31, 2002, as a result of
the implementation of this standard.

8.    PROJECT COST

The total cost of the construction of our facility is estimated to be approximately $446.4 million, up from an original cost of $439.8 million,
which has and will continue to be financed by the proceeds from our sale of the senior secured bonds ($384 million), equity contributions ($55.7 million), and expected cash flow from
liquidated damages ($9.2 million, assuming a June 30, 2002 commercial operation date). The increase in cost has been caused by the cancellation of the discount in the price of the
construction agreement after the draw back of the prepayment amount (see note 2) and due to an increase in the interest cost capitalized during the construction period.

If
the Company does not receive any anticipated liquidated damages from Raytheon or any anticipated cash flows from the sale of electricity during the testing phase of our facility, the
Company could experience a severe impact on its current and future financial condition, results of operations, liquidity, and accordingly, its ability to make principal and interest payments on the
bonds. Additionally, a significant delay in the Company's ability to reach commercial operations could result in, among other things, (i) a serious cash flow shortage to fund further
construction and (ii) the termination of the power purchase agreement by Williams.

Although
there can be no assurances, based upon (i) the Company's current assessment of progress at the construction site, (ii) the performance guaranty from Raytheon,
(iii) the mutual obligations of WGI and Raytheon under the PCA, and (iv) assuming (x) that WGI and Raytheon fulfill their respective obligations under the PCA, and (y) that
Raytheon continues to fulfill its obligations under its performance guarantee and the OGSA, the Company currently believes that it has sufficient funds available to complete construction of the
Facility, and expects the Facility to become commercially operational by approximately June 30, 2002.

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Item 2.    Management's Discussion and Analysis of Financial Condition and Results of Operations

Cautionary Note Regarding Forward-Looking Statements

Some of the statements in this Form 10-Q, as well as statements made by us in periodic press releases and other public communications,
constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Certain, but not necessarily all, of such forward-looking statements can be
identified by the use of forward-looking terminology, such as "believes," "estimates," "plans," "projects," "expects," "may," "will," "should," "approximately," or "anticipates" or the negative
thereof or other variations thereof or comparable terminology, or by discussion of strategies, each of which involves risks and uncertainties. We have based these forward-looking statements on our
current expectations and projections about future events based upon our knowledge of facts as of the date of this Form 10-Q and our assumptions about future events.

All
statements, other than of historical facts included herein, including those regarding market trends, our financial position, business strategy, projected plans and objectives of
management for future operations and the anticipated commercial operation date of the facility, are forward-looking statements. Such forward-looking statements involve known and unknown risks,
uncertainties and other factors outside of our control that may cause our actual results or performance to be materially different from any future results, performance or achievements expressed or
implied by the forward-looking statements. These risks, uncertainties and other factors include, among others, the following:



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We
have no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

General

We were formed on September 13, 1998 to develop, construct, own, operate and maintain our facility. We are in the development stage and have no operating
revenues. We were dormant until March 15, 2000, the date of the sale of our senior secured bonds. We obtained $384.0 million of project financing from the sale of the senior secured
bonds. The total cost of the construction of our facility is estimated to be approximately $446.4 million, which has and will continue to be financed by the proceeds from our sale of the senior
secured bonds, equity contributions, and expected cash flow from liquidated damages, as described below. In late September 2000, we consummated an exchange offer whereby the holders of our
senior secured bonds exchanged their privately placed senior secured bonds for registered senior secured bonds.

Our
facility is still under construction and is expected to be completed and operational by approximately June 30, 2002. We cannot assure that these expectations will be met. See
"Cautionary Note Regarding Forward-Looking Statements."

Equity Contributions

Under an equity subscription agreement, AES Red Oak, Inc. is obligated to contribute up to approximately $55.7 million to us to fund project costs.
AES Red Oak Inc.'s obligation to make the contributions is, and will be, supported by an acceptable letter of credit or an acceptable bond. As of May 1, 2002, AES Red Oak, Inc.
has contributed approximately $47.3 million in the form of equity funding to help finance project costs

Results of Operations

As of March 31, 2002 and December 31, 2001, Construction in Progress, which includes capitalized facility construction costs, was
$402.6 million and $387.6 million, respectively. For the three months ended March 31, 2002, the three months ended March 31, 2001, and the period from March 15, 2000
(inception) through March 31, 2002, capitalized facility construction costs were $15.0 million, $64.7 million, and $402.6 million, respectively. As discussed in greater
detail below, Construction in Progress also includes the capitalization of construction related interest cost incurred on the portion of the bond proceeds expended during the construction period.
These capitalized costs are included as assets on the Balance Sheets.

For
the three months ended March 31, 2002 and March 31, 2001, and the period March 15, 2000 (inception) through March 31, 2002, general and administrative
costs of $22,000, $9,000, and $291,000, respectively, were incurred. These costs did not directly relate to construction and are included as expenses in the Statement of Operations.

The
portion of the proceeds from the sale of the senior secured bonds that were held in the construction account pending their application on construction, were invested by the trustee.
For the three months ended March 31, 2002 and March 31, 2001, and the period March 15, 2000 (inception) through March 31, 2002, the interest income earned on these invested
funds was approximately $25,000, $260,000 and $3.5 million, respectively, and is included in the Statements of Operations.

As
noted above, construction related interest costs incurred on the portion of the bond proceeds expended during the construction period is capitalized to Construction in Progress. For
the three months ended March 31, 2002 and March 31, 2001, and the period March 15, 2000 (inception) through March 31, 2002, capitalized construction related interest costs
were approximately $8.4 million,

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$8.1 million and $62.8 million, respectively, and are included within Construction In Progress on the Balance Sheets. For the three months ended March 31, 2002 and
March 31, 2001, and the period March 15, 2000 (inception) through March 31, 2002, interest costs incurred on the bond proceeds not spent on construction of our facility was
approximately $81,000, $352,000 and $6.3 million, respectively, and are included as interest expense in the Statements of Operations.

For
the three months ended March 31, 2002 and March 31, 2001, and the period March 15, 2000 (inception) through March 31, 2002, non-capitalizable
costs less net interest expense resulted in a net loss of approximately $78,000, $101,000, and $3.0 million, respectively. At March 31, 2002 and December 31, 2001, these net
losses resulted in a deficiency of earnings to fixed charges of approximately $8.5 million and $32.3 million, respectively. The results of operations may not be comparable with the
results of operations during future periods, especially when our facility commences commercial operations.

Liquidity and Capital Resources

We believe that (i) the net proceeds from the sale of the senior secured bonds, (ii) the equity contribution from AES Red Oak, Inc,
(iii) expected liquidated damages from Raytheon in the amount of $108,000 per day, and (iv) cash flows, if any, from the expected sale of electricity during the testing phase of our
facility will be sufficient to (1) fund the engineering, procurement, construction, testing and commissioning of our facility until it is placed in commercial operation, (2) pay certain
fees and expenses in connection with the financing and development of our project and (3) pay project costs, including interest on the senior secured bonds. After our facility is placed in
commercial operation, we will depend on revenues under the power purchase agreement, and after the power purchase agreement expires, we will depend revenues generated from market sales of electricity.
The balance of the construction account and the amount remaining available under the equity contribution agreement are approximately $5.9 million and $13.0 million, respectively, at
March 31, 2002. Additionally, we expect to receive approximately $9.2 million in liquidated damages from Raytheon (assuming a June 30, 2002 commercial operations date). To date,
we have invoiced Raytheon $2.7 million for liquidated damages under the construction agreement, and have received $2.16 million of such invoiced amounts.

If
necessary, we also have access to liquidity under several letters of credit and other agreements. Under the construction agreement, the contractor is entitled to post a letter of
credit in the amount of the then current retainage in lieu of cash. On March 4, 2002, Raytheon provided us with a letter of credit in the amount of $29.5 million, which amount
represented the outstanding amount of retainage under the construction agreement on the date the letter of credit was posted. We may draw on this letter of credit in the event that Raytheon fails to
pay us any amount owed to us under the construction agreement, including a failure to pay liquidated damages, as described above. Furthermore, we have provided the collateral agent with a debt service
reserve letter of credit in an initial stated amount of $22.0 million. The collateral agent may draw on the debt service reserve letter of credit commencing on the earlier of the guaranteed
provisional acceptance date under the construction agreement or the commercial operation date of the facility. We also have a working capital agreement that, prior to the earlier of the commercial
operation date or the guaranteed provisional acceptance date, we can borrow up to $1 million for the purchase or transportation of gas for use at the project. After the provisional acceptance
date and the commercial operation date the available amount under the working capital agreement can be increased to a maximum aggregate principal amount of $2.5 million that can be used for
operating and maintenance costs. From time to time we may request an increased commitment under the working capital agreement that the lenders may, at their sole discretion and by unanimous consent,
grant to us.

During
the quarter ended March 31, 2002, we paid approximately $1.8 million in project costs. As of March 31, 2002, we have committed to five major additional capital
expenditures. At March 31, 2002, the unpaid portion of these five expenditures totals approximately $2.5 million. These

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expenditures are for a water pipeline for approximately $36,000, a water pumping station for an approximately estimated $700,000, an administration office building for approximately $230,000, a fuel
gas heater for approximately $200,000 and the construction of the Jersey Central Power interconnection facilities for approximately $1.3 million. The construction of the Jersey Central Power
interconnection
facilities are essentially complete, except for equipment testing. We expect to pay the remaining balance of these commitments during the second quarter of 2002.

We
have provided Williams Energy a letter of credit under the power purchase agreement in the amount of $30 million to support specific payment obligations should the facility not
achieve commercial operation by the date required under the power purchase agreement. Upon achievement of commercial operation, the stated amount of that letter of credit will be reduced to
$10 million. The repayment obligations with respect to any drawings under this letter of credit are a senior debt obligation of ours.

After
we achieve commercial operations, we expect to receive variable operations and maintenance payments, total fixed payments, energy exercise fee payments, each as defined in the
power purchase agreement, and other payments for the delivery of fuel conversion, capacity and ancillary services under the power purchase agreement. These payments will be our only source of
operating revenues and will be used to fund our generation expenses and other operations and maintenance expenses, as well as providing senior debt service coverage ratios greater than 1.2 to 1, as
required during the term of the power purchase agreement.

Risks that May Impact Our Liquidity

In addition to the factors listed under the caption "Cautionary Note Regarding Forward-Looking Statements," if we do not receive anticipated liquidated damages
from Raytheon or anticipated cash flows from the sale of electricity during the testing phase of our facility, we could experience a material adverse impact on our current and future financial
condition, results of operations, liquidity, and accordingly, our ability to make principal and interest payments on the bonds. Additionally, a significant delay in our ability to reach commercial
operations could result in, among other things, (i) a serious cash flow shortage to fund further construction and (ii) the termination of the power purchase agreement by Williams Energy
which could also materially and adversely impact our current and future financial condition, results of operations, liquidity, and accordingly, our ability to make principal and interest payments on
the bonds.

Although
there can be no assurances, based upon (i) our current assessment of progress at the construction site, (ii) the performance guaranty from Raytheon,
(iii) the mutual obligations of WGI and Raytheon under the PCA, and (iv) assuming (x) that WGI and Raytheon fulfill their respective obligations under the PCA, and (y) that
Raytheon continues to fulfill its obligations under its performance guarantee and the OGSA, we currently believe that we have sufficient funds available to complete construction of the facility, and
expect the facility to become commercially operational by approximately June 30, 2002, which is approximately 4.5 months after the February 14, 2002 guaranteed completion date
under the construction agreement. Notwithstanding our current belief, if the parties to the PCA fail to perform their obligations, or if Raytheon does not fulfill its obligations under its performance
guarantee or the OGSA, we may experience significant construction delays and/or may not have sufficient funds to complete the facility.

In
the event that the project is not commercially operational by June 30, 2002, and we do not have sufficient funds to exercise our Second Paid Extension Option, or the facility
does not achieve commercial operation by the commercial operation date as extended, Williams Energy has the right to terminate the power purchase agreement. If Williams Energy terminates the power
purchase agreement and we cannot find a long-term replacement power purchaser on favorable or reasonable terms, we will be required to sell our capacity and energy under
shorter-term contracts or into the Pennsylvania-New

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Jersey-Maryland ("PJM") spot market. In such event, we may not have financial resources sufficient to meet our financial and contractual obligations, including the timely payment of principal and
interest on the senior secured bonds.

Concentration of Credit Risk

Williams Energy currently is our sole customer for purchases of capacity, ancillary services, and energy, and our sole source for fuel. Williams Energy's payments
under the power purchase agreement are expected to provide all of our operating revenues during the term of the power purchase agreement. It is uncertain whether we would be able to find another
purchaser or fuel source on similar terms for our facility if Williams Energy were not performing under the power purchase agreement. Any material failure by Williams Energy to make capacity and fuel
conversion payments or to supply fuel under the power purchase agreement would have a severe impact on our operations. The payment obligations of Williams Energy under the power purchase agreement are
guaranteed by the Williams Companies, Inc. The payment obligations of the Williams Companies, Inc. are capped at an amount equal to 125% of the sum of the principal amount of our senior
secured bonds, plus the maximum debt service reserve account balance.

If
at any time Moody's or Standard & Poor's rates the long term senior unsecured debt of The Williams Companies, Inc. lower than investment grade and the rating agency does
not reestablish within 60 days an investment grade rating for the debt, then Williams Energy is to provide alternative credit support reasonably acceptable to us within 90 days of the
day on which the debt was rated lower than investment grade. According to published sources, as of March 8, 2002, the long-term senior unsecured debt of the Williams
Companies, Inc. was rated as follows: "Baa2" by Moody's and "BBB" by Standard and Poor's, both of which ratings are investment grade. While both ratings agencies have recently affirmed this
investment grade rating, on February 1, 2002, Standard & Poor's placed the senior unsecured debt credit ratings of the Williams Companies, Inc. on credit watch with negative
implications, and on May 8, 2002, Moody's placed under review for possible downgrade the ratings of The Williams Companies, Inc. and its affiliates. Moody's had given the ratings of
Williams Companies, Inc. a negative outlook on February 27, 2002.

Business Strategy and Outlook

Our overall business strategy is to market and sell all of our net capacity, fuel conversion and ancillary services to Williams Energy during the
20-year term of the power purchase agreement. After expiration
of the power purchase agreement, we anticipate selling our facility's capacity, ancillary services and energy under a power purchase agreement or into the PJM power pool market. We intend to cause our
facility to be managed, operated and maintained in compliance with the project contracts and all applicable legal requirements.

Critical Accounting Policies

GeneralWe prepare our financial statements in accordance with accounting principles generally
accepted in the United States of America. As such, we are required to make certain estimates, judgments and assumptions that we believes are reasonable based upon the information available. These
estimates and assumptions affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the periods presented.
The significant accounting policies which we believe are most critical to understanding and evaluating our reported financial results include the following: Construction in Progress and
Long-Lived Assets.

Construction in ProgressCosts incurred in developing the facility, including progress payments, engineering costs, management
and development fees, interest, and other costs related to construction are capitalized. Once our facility becomes operational, all amounts will be reclassified into property,

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plant and equipment, and will be depreciated over the estimated useful lives of the respective asset. Facility improvements will be capitalized and repairs and maintenance costs will be expensed as
incurred.

Long-Lived AssetsWe will evaluate the impairment of our long-lived assets based on the projection of
undiscounted cash flows whenever events or changes in circumstances indicate that the carrying amounts of such assets may not be recoverable. Estimates of future cash flows will be used to test the
recoverability of specific long-lived assets are based on expected cash flows from the use and eventual disposition of the asset. A significant reduction in actual cash flows and estimated
cash flows may have a material adverse impact on our operating results and financial condition.

Item 3.    Quantitative and Qualitative Disclosures about Market Risk

The market risks we face are not materially different from those market risks described in our annual report on Form 10-K for the fiscal year
ended December 31, 2001.

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PART II. OTHER INFORMATION

Item 6.    Exhibits and Reports on Form 8-K

a)    Exhibits

None.

b)    Reports on Form 8-K.

The Company did not file any reports on Form 8-K during the quarter ended March 31, 2002.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.

|                   |  | AES RED OAK, L.L.C.
|------------------ |  | -------------------
|Date: May 14, 2002 |  | By:                
|Date: May 14, 2002 |  | By:                

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