OMNIBUS ACKNOWLEDGMENT AND AGREEMENT

	This OMNIBUS ACKNOWLEDGMENT AND AGREEMENT, dated as of 
February 1, 1997 (this "Agreement") is made by and between COSO 
FUNDING CORP., a Delaware corporation, for itself and as agent 
for the Trustee ("Coso Funding"), COSO FINANCE PARTNERS, a 
California general partnership ("CFP"), COSO ENERGY DEVELOPERS, a 
California general partnership ("CED"), and COSO POWER 
DEVELOPERS, a California general partnership ("CPD"), CALENERGY 
COMPANY, INC., a Delaware corporation ("CECI"), CHINA LAKE 
OPERATING COMPANY, a Delaware corporation ("CLOC"), COSO FINANCE 
PARTNERS II, a California general partnership ("CFPII"), COSO 
LAND COMPANY, a joint venture ("CLC"), COSO HOTSPRINGS 
INTERMOUNTAIN POWER, INC., a Delaware corporation ("CHIP"), CHINA 
LAKE JOINT VENTURE, a California general partnership ("CLJV"), 
COSO TECHNOLOGY CORPORATION, a Delaware corporation, ESCA LIMITED 
PARTNERSHIP, a California limited partnership ("ESCA"), ESI 
ENERGY, INC., a Florida corporation ("ESI"), CAITHNESS COSO 
HOLDINGS, L.P., a California limited partnership ("CCH"), 
CAITHNESS NAVY II GROUP, L.P., a New Jersey limited partnership 
("CNII" and, FIRST BANK NATIONAL ASSOCIATION, a national banking 
organization duly existing under the laws of the United States of 
America, as Lender (together with Coso Funding, CFP, CED, CECI, 
CPD, CLOC, CFPII, CLC, CHIP, CLJV, CTC, ESCA, ESI, CCH and CNII, 
the "Acknowledging Parties") in favor of FIRST BANK NATIONAL 
ASSOCIATION, a national banking organization duly existing under 
the laws of the United States of America, as trustee ("Trustee") 
under the Trust Indenture, dated as of December 16, 1992 (the 
"Original Indenture"), by and between Coso Funding and the 
Trustee, as amended, modified or supplemented pursuant to the 
First Supplemental Indenture, dated as of the date hereof.  The 
Original Indenture, as amended, modified or supplemented 
including pursuant to the First Supplemental Indenture, is 
hereafter referred to as the "Indenture".  Capitalized terms used 
and not otherwise defined herein shall have the meanings set 
forth in Exhibit A of the Indenture. 

W I T N E S S E T H 

	WHEREAS, Coso Funding is a corporation established for the 
purpose of issuing notes (the "Notes"), as principal and as agent 
for the Partnerships, pursuant to the Indenture; and

	WHEREAS, on December 16, 1992, Coso Funding issued and sold 
the Initial Notes in the aggregate principal amount of 
$560,245,000; and 

	WHEREAS, the proceeds of the Initial Notes were used (i) to 
finance the purchase by Coso Funding of outstanding secured 
indebtedness of each of CFP, CED and CPD, (ii) to finance capital 
expenditures relating to each of such Partnership's Projects, 
(iii) to fund certain reserves under the Indenture and (iv) to 
pay Transaction Costs; and 

	WHEREAS, the principal and interest payments on the Initial 
Notes will be serviced by repayment of loans made by Coso Funding 
to the Partnerships, pursuant to separate Amended and Restated 
Credit Agreements, each dated as of December 16, 1992 (the 
"Original Credit Agreements"), with each of CFP, CED and CPD and 
guaranteed by the Partnerships; and 

	WHEREAS, Coso Funding has simultaneously with the execution 
and delivery of this Agreement entered into (i) the First 
Supplemental Indenture and (ii) agreements with each of the 
Partnerships amending such Partnership's respective Original 
Credit Agreement, to permit the use of a Debt Service Reserve 
Letter of Credit to satisfy the obligation to maintain moneys in 
the Debt Service Reserve Fund; and 

	WHEREAS, Section 10.03 of the Original Indenture permits 
Coso Funding and the Trustee to amend the Security Documents and 
Partnership Documents in the manner contemplated by this 
Agreement upon notice to and the written approval or consent of 
the owners of not less than 66-2/3% in aggregate principal amount 
of the Notes then Outstanding, which consent has been obtained, 
and upon the consent and agreement of the Trustee.

	WHEREAS, the parties wish to enter into this Agreement in 
order to amend the Support Loan Agreements and to acknowledge 
that the obligations of the Acknowledging Parties under the 
Security Documents and Agency Agreements include the obligations 
of the Acknowledging Parties as amended, modified or supplemented 
by this Agreement, the amendments as of the date hereof to the 
Credit Agreements and the First Supplemental Indenture. 

	NOW, THEREFORE, for and in consideration of the premises and 
the covenants herein contained, it is mutually covenanted and 
agreed, for the benefit of the parties hereto and the equal and 
proportionate benefit of all Holders of the Notes, as follows: 

AGREEMENT

	Section 1.	Security Documents.  Each Acknowledging Party 
hereby acknowledges and agrees for the benefit of the Trustee 
acting for and on behalf of the Noteholders that the obligations 
secured by each Security Document to which such Acknowledging 
Party is a party shall and are hereby expressly made to include 
(to the extent they do not now so include) all obligations of 
such Acknowledging Party (and of any other Acknowledging Party 
whose obligations are secured by the terms of such Security 
Document), if any, under (a) each of the Credit Agreements, as 
amended as of the date hereof and (b) any other Financing 
Document entered into in connection with the First Supplemental 
Indenture to which such Acknowledging Party is a party. 

	Section 2.	References to Indenture and Credit 
Agreements.  From and after the date of this Agreement, all 
references in the Security Documents and the Agency Agreements to 
the Indenture or any Credit Agreement (including for the purpose 
of defining capitalized terms) shall, unless the context 
otherwise requires, mean the Original Indenture as amended, 
modified or supplemented by the First Supplemental Indenture, or 
such Credit Agreement, as amended, modified and supplemented as 
of the date hereof.

	Section 3.	Amendments to Support Loan Agreements.  Each 
of the Support Loan Agreements is hereby amended as follows: 

		(i)	in Paragraph 1(f) thereof, by inserting the phrase 
", except as provided in Section 4.06(f)(vii) of the 
Indenture," in the third line of such Paragraph immediately 
after the words ":it shall".

		(ii)	in Paragraph 1(i) thereof, by deleting the word 
"second" in the third line of such Paragraph and replacing 
such word with the word "junior".

	Section  4.	Amendments to Subordinated Deeds of Trust.  
Section 4.10 of each of the Subordinated Deeds of Trust, 
Assignment of Rents, Security Agreement and Fixture Filings (as 
defined in clause (i) of the definition of Subordinated Security 
Documents of each of the Support Loan Agreements) is hereby 
amended by inserting the following sentence at the end of such 
Section: 

	In addition, from and after the release of the Indenture and 
the Credit Agreements as contemplated by Section 11.01(a) of the 
Indenture, this Deed of Trust shall be subordinate in all 
respects to any security interest granted to the collateral agent 
for the Debt Service LOC Provider in connection with any Debt 
Service Reserve LOC Loans or other obligations of Debtor under 
the Debt Service LOC Reimbursement Agreement. 

	Section 5.	Acknowledgment of Assignment.  Each of the 
Acknowledging Parties hereby acknowledges and agrees for the 
benefit of the Trustee acting for and on behalf of the 
Noteholders that (i) Coso Funding has assigned to the Trustee, 
inter alia, (A) the Credit Agreement and the Security Documents 
and all rights attendant thereto and (B) all of Coso Funding's 
rights, title and interest in, to and under the Credit Agreements 
and the Security Documents; (ii) such assignments are hereby 
expressly made to include (to the extent they do not now so 
include) such Credit Agreements, Security Documents, all rights 
attendant thereto and all of Coso Funding's right, title and 
interest therein, in each case as amended, modified or 
supplemented as of the date hereof; and (iii) all references in 
the Acknowledgment of Assignment and Power of Attorney, dated as 
of December 16, 1992, by and among Coso Funding, CFP, CED, CPD 
and the Trustee, to the Indenture, the Credit Agreements and the 
Security Documents (including for the purpose of defining 
capitalized terms) shall mean, unless the context otherwise 
requires, the Original Indenture as amended, modified or 
supplemented by the First Supplemental Indenture, the Credit 
Agreements, as amended, modified and supplemented as of the date 
hereof, or the Security Documents, as amended, modified and 
supplemented hereby, as the case may be. 

	Section 6.	Effect of Agreement.  From and after the date 
hereof, all references in the Security Documents and the Agency 
Agreements to any Security Documents or Agency Agreements shall 
mean the applicable Security Documents or Agency Agreements as 
amended, modified or supplemented hereby.  Except as specifically 
amended, modified or supplemented above, the Initial Security 
Documents and Agency Agreements shall remain in full force and 
effect and are hereby ratified and confirmed.  The execution, 
delivery and effectiveness of this Agreement shall not, except as 
expressly provided herein, operate as a waiver of any right, 
power or remedy of the Trustee or any of the Noteholders and 
shall not constitute a waiver of any provisions of the Security 
Documents or Agency Agreements. 

	Section 7.	Headings for Convenience Only.  The 
descriptive headings in this Agreement are inserted for 
convenience only and shall not control or affect the meaning or 
construction of any of the provisions hereof. 

	Section 8.	Counterparts.  This Agreement may be executed 
in any number of counterparts, each of which when so executed and 
delivered shall be an original; but such counterparts shall 
together constitute but one and the same instrument. 

	Section 9.	Applicable Law.  THIS AGREEMENT SHALL BE 
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE 
STATE OF CALIFORNIA. 
	IN WITNESS WHEREOF, the parties hereto have caused this 
Agreement to be duly executed and delivered by the respective 
officers thereunto duly authorized as of the date first written 
above.