Financial Summary

Over  the  last  three years ended December 31,  1996,  CalEnergy
Company, Inc. (the "Company") has experienced significant growth.
The  market capitalization of the Company has risen at a compound
annual  rate of 48% from approximately $656 million  in  1993  to
approximately $2,140 million in 1996, the revenues of the Company
have  risen  at  a compound annual rate of 57% from approximately
$149  million in 1993 to approximately $576 million in  1996  and
net  income  available  to common stockholders  has  risen  at  a
compound  annual rate of 29% from approximately  $43  million  in
1993  to  approximately  $92 million in 1996.   This  significant
growth   has  been  achieved  through:   (i)  acquisitions   that
complement and diversify the Company's existing business, broaden
the   geographic  locations  of  its  assets  and   enhance   its
competitive  capabilities; (ii) enhancement of the financial  and
technical  performance  of existing and  acquired  projects;  and
(iii) development and construction of new plants.

On  December  24, 1996, CE Electric UK plc, which  is  70%  owned
indirectly  by  the  Company and 30% owned  indirectly  by  Peter
Kiewit  Sons', Inc. ("PKS"), acquired majority ownership  of  the
outstanding  ordinary  share capital  of  Northern  Electric  plc
("Northern")  pursuant  to  a tender  offer.   The  total  amount
expected to be paid for all of Northern's ordinary and preference
shares is approximately $1.3 billion.

In  the  last two years, the Company has consummated three  other
significant  acquisitions,  in addition  to  the  acquisition  of
Northern.   In  January  1995, the Company acquired  Magma  Power
Company  ("Magma"),  a publicly-traded United States  independent
power  producer  with  228  megawatts  ("MW")  of  aggregate  net
operating   capacity  and  154  MW  of  aggregate  net  ownership
capacity, for approximately $958 million.  The Magma acquisition,
combined with the Company's previously existing assets, made  the
Company the largest independent geothermal power producer in  the
world  today (based on the Company's estimate of aggregate MW  of
electric    generating   capacity   in   operation   and    under
construction).  In April 1996, the Company completed the  buy-out
for   approximately  $70  million  of  its  partner's   interests
("Partnership  Interest") in four electric generating  plants  in
Southern  California, resulting in sole ownership of the Imperial
Valley  Project.   In  August 1996, the Company  acquired  Falcon
Seaboard  Resources, Inc. ("Falcon Seaboard")  for  approximately
$226  million, thereby acquiring significant ownership in 520  MW
of  natural  gas-fired electric production facilities located  in
New  York,  Texas and Pennsylvania and a related gas transmission
pipeline.

Through   its  subsidiaries  and  joint  ventures,  the   Company
presently operates 19 projects with an aggregate net capacity  of
1,326 MW, in which it has a net ownership interest of 1,107 MW of
electric  generating capacity.  This includes  an  aggregate  net
ownership interest of 916 MW in facilities located in the  United
States (which facilities have an aggregate net capacity of  1,135
MW,  of  which 570 MW are fueled with natural gas and 565 MW  are
geothermal-fired).   The remaining 191 MW  are  supplied  by  two
geothermal power production facilities owned and operated by  the
Company  in  the  Philippines.  These numbers do not  reflect  47
small scale combined heat and power facilities and a diesel fired
power  production  facility in England that an indirect  Northern
subsidiary  operates.  Finally, the Company owns,  but  does  not
operate,  202  net  MW  from the 1,875  MW  Teesside  Project  in
England.

With  respect to power generation projects that are financed  and
under  construction, the Company has an aggregate  net  ownership
interest  of  270  MW  of  electric generating  capacity  in  two
geothermal  power projects and one hydroelectric project  in  the
Philippines, which collectively have an aggregate net capacity of
459  MW.  The Company is also currently constructing a 55 net  MW
geothermal  project  in Indonesia, in which the  Company  has  an
aggregate  net ownership interest of 26 MW of electric generating
capacity,  as the first phase of the Company's planned Indonesian
geothermal  project development of approximately 1,000  MW  under
contract.  The Company has commenced construction of a 50 MW  gas
fired  power  project  in England in which the  Company  has  net
ownership  interest of 18 MW.  The Company expects that  it  will
operate all of these projects.

The  Company is also currently developing six additional projects
with   executed  or  awarded  power  sales  contracts   in    the
Philippines,  Indonesia and the United States.   The  Company  is
expected to have an approximate net ownership interest of 573  MW
in  these development projects (which represent an aggregate  net
capacity  of 1,260 MW of additional potential electric generating
capacity).   Substantial  contingencies  exist  with  respect  to
development projects, including, without limitation, the need  to
obtain  financing,  permits  and licenses  and  the  satisfactory
completion  of construction.  The Company expects  that  it  will
operate all of these projects.

The  Company's  operations  have historically  been  seasonal  in
nature,  with a disproportionate percentage of income  earned  in
the  third  quarter.  As a result of the acquisition of Northern,
the  Company's historical results could differ significantly from
the Company's actual results in the future.

SELECTED Financial Data
Dollars in Thousands Except Per Share Amounts
<TABLE>
<CAPTION>
                                                     Year Ended December 31,
                                           1996      1995      1994      1993     1992
<S>                                      <C>       <C>       <C>       <C>       <C>
Sales of electricity and steam           $518,934  $335,630  $154,562  $132,059  $117,342
Total revenue                             576,195   398,723   185,854   149,253   127,529
Expenses                                  440,482   301,672   130,018    87,995    76,797
Income before provision for income taxes  135,713    97,05    155,836    61,258    50,732
Income before change in accounting
  principle and extraordinary item         93,892    66,420    38,834    43,074    38,810
Cumulative effect of change in
  accounting principle                        ---       ---       ---     4,100       ---
Minority interest                           1,431     3,005       ---       ---       ---
Extraordinary item                            ---       ---    (2,007)      ---    (4,991)
Net income before preferred dividends      92,461    63,415    36,827    47,174    33,819
Preferred dividends                           ---     1,080     5,010     4,630     4,275
Income per share before change in accounting
  principle and extraordinary item           1.60      1.25       .95      1.00       .92
Cumulative effect of change in accounting
  principle per share                         ---       ---       ---       .11       ---
Extraordinary item per share                  ---       ---      (.06)      ---      (.13)
Net income per share - primary               1.60      1.25       .89      1.11       .79
Total assets                            5,712,907 2,654,038 1,131,145   715,984   580,550
Total liabilities                       4,263,803 2,084,474   867,703   425,393   336,272
Company-obligated mandatorily
  redeemable convertible preferred
  securities of subsidiary trust
  holding solely convertible debentures   103,930       ---       ---       ---       ---
Preferred securities of subsidiary        136,065       ---       ---       ---       ---
Minority interest                         299,252       ---       ---       ---       ---
Redeemable preferred stock                    ---       ---    63,600    58,800    54,350
Stockholders' equity                      880,790   543,532   179,991   211,503   168,764

</TABLE>

1 Reflects acquisitions of Northern, Falcon Seaboard and the
Partnership Interest owned for part of the year.   See Note 3 to
the financial statements.
2 Reflects acquisition of Magma owned for part of the year. See
Note 3 to the financial statements.
MANAGEMENT'S Discussion and Analysis of Financial Condition
and Results of Operations
Dollars and Shares in Thousands Except Per Share Data

The  following is management's discussion and analysis of certain
significant  factors which have affected the Company's  financial
condition  and results of operations during the periods  included
in the accompanying statements of operations.  As a result of the
acquisition of Northern Electric plc ("Northern"), the  Company's
historical results could differ significantly from the  Company's
actual results in the future.

Acquisitions

On  December 24, 1996, CE Electric UK plc ("CE Electric"),  which
is  70%  owned indirectly by the Company and 30% owned indirectly
by  Peter Kiewit Sons', Inc. ("PKS"), acquired majority ownership
of the outstanding ordinary share capital of Northern pursuant to
a tender offer (the "Tender Offer"). Through January 31, 1997, CE
Electric  had  purchased  more than 90%  of  Northern's  ordinary
shares.   Under  United  Kingdom statutory  powers  available  to
compulsorily acquire shares not purchased in the Tender Offer, CE
Electric  expects  to acquire the remaining  Northern  shares  by
April 30, 1997.

Northern's  revenue  and  profit before  tax  were  approximately
$1,412,200  and $236,100 respectively, for its fiscal year  ended
March 31, 1996.

In   April   1996,   the  Company  completed  the   buy-out   for
approximately  $70,000  of its partner's interests  ("Partnership
Interest")  in  four  electric  generating  plants  in   Southern
California,  resulting in sole ownership of the  Imperial  Valley
Project.   In  August 1996, the Company acquired Falcon  Seaboard
Resources,  Inc. ("Falcon Seaboard") for approximately  $226,000,
thereby acquiring significant ownership in 520 MW of natural gas-
fired  electric production facilities located in New York,  Texas
and Pennsylvania and a related gas transmission pipeline.

Power Generation Projects

For  purposes  of  consistency in financial  presentation,  plant
capacity   factors  for  Navy  I,  Navy  II,   and   BLM   plants
(collectively  the  "Coso Project"), are based  upon  a  capacity
amount  of  80 net MW for each plant. Plant capacity factors  for
Vulcan,  Hoch  (Del Ranch), Elmore, Leathers plants (collectively
the "Partnership Project"), are based on nominal capacity amounts
of  34, 38, 38, and 38 net MW respectively, and for Salton Sea I,
Salton   Sea  II,  Salton  Sea  III  and  Salton  Sea  IV  plants
(collectively  the "Salton Sea Project"), are  based  on  nominal
capacity  amounts  of 10, 20, 49.8 and 39.6 net MW,  respectively
(the   Partnership  Project  and  the  Salton  Sea  Project   are
collectively referred to as the "Imperial Valley Project"). Plant
capacity  factors for Saranac, Power Resources, NorCon  and  Yuma
plants  (collectively  the "Gas Plants") are  based  on  capacity
amounts of 240, 200, 80 and 50 net MW, respectively.  Each  plant
possesses  an  operating margin which allows  for  production  in
excess  of the amount listed above. Utilization of this operating
margin is based upon a variety of factors and can be expected  to
vary throughout the year under normal operating conditions.

See  Note 4 to the financial statements for a discussion  of  the
Company's significant operating contracts.

Results  of Operations Three Years Ended December 31, 1996,  1995
and 1994

Sales of electricity and steam increased to $518,934 in the  year
ended  December 31, 1996 from $335,630 in the year ended December
31,  1995,  a 54.6% increase. This improvement was primarily  due
to  the acquisitions of the Partnership Interest, Falcon Seaboard
and  Northern, the deemed completion of the Upper Mahiao  Project
and  Unit  I  of  the  Malitbog Project in the  Philippines,  the
completion of Salton Sea IV Project and an increase in  the  Coso
Project's electricity revenues.

The  increase  in  sales of electricity  and  steam  in  1995  to
$335,630  from $154,562 in 1994 was primarily due to the addition
of production from the Imperial Valley Project as a result of the
acquisition of Magma in the first quarter of 1995, an increase in
the  Coso  Project's  electricity revenues  and  an  increase  in
revenue  received from the Yuma Project which commenced operation
in May 1994.

The  following  operating data represents the aggregate  capacity
and electricity production of the Coso Project:

                                              1996       1995        1994


Overall capacity factor                      110.2%     110.3%      106.5%
kWh produced (in thousands)                2,323,000   2,318,400   2,238,600
Capacity NMW (average)                         240        240         240


The Coso Project capacity factor was 111.0% in the fourth quarter
of  1996  compared to 111.5%, 109.5% and 108.7%  for  the  third,
second and first quarters of 1996, respectively. A steam transfer
agreement  was signed and the interties were constructed  in  the
third  quarter  of  1995,  providing  for  increased  production,
primarily at the BLM  Project.

The  following  operating data represents the aggregate  capacity
and electricity production of the Partnership Project:

                                          1996       1995        1994


Overall capacity factor                  104.8%     105.9%      103.8%
kWh produced (in thousands)            1,361,800  1,373,310   1,346,000
Capacity NMW (average)                     148        148         148


The  Partnership Project capacity factor was 105.7% in the fourth
quarter  of  1996 compared to 106.4%, 109.2%, and 97.6%  for  the
third,  second,  and first quarters of 1996,  respectively.   The
decreased  production in 1996 is a result of scheduled  overhauls
at  Leathers and Elmore.  The increased production in 1995  is  a
result of minimizing unscheduled downtime at the plants.

The  following  operating data represents the aggregate  capacity
and electricity production of the Salton Sea Project:

                                             1996       1995        1994


Overall capacity factor                     90.4%      86.5%       90.8%
kWh produced (in thousands)               817,400    604,300     634,890
Capacity NMW (average)                     103.0       79.8        79.8


The  overall Salton Sea Project capacity factor was 92.4% in  the
fourth quarter of 1996 compared to 97.9%, 78.6% and 89.6% for the
third,  second  and  first  quarters of 1996,  respectively.  The
Salton  Sea  Project capacity factor has increased in  1996  from
1995  due to the commencement of operations at the Salton Sea  IV
Project.   The decrease in 1995 from 1994 is due to the scheduled
Salton Sea III Project overhaul in the second quarter of 1995 and
the  conversion  of  that unit to the pH Mod  technology  in  the
fourth quarter of 1995.

The  following  operating data represents the aggregate  capacity
and electricity production of the Gas Plants:


                               1996              1995              1994

Overall capacity factor        84.2%             88.8%            80.6%
kWh produced (in thousands)  4,216,800        4,433,900        3,144,700
Installed capacity NMW          570             570              445.5

The  capacity  factor of the Gas Plants reflects  the  effect  of
certain  contractual curtailments.  The capacity factors adjusted
for these contractual curtailments are 93.2%, 96.8% and 90.6% for
1996, 1995 and 1994, respectively.

Electric  sale  price  per kWh for the Coso Project,  Partnership
Project  and  Salton Sea Project varies seasonally in  accordance
with  the rate schedule included in the SO4 agreements and  power
purchase  agreements.  The Coso Project's, Partnership  Project's
and  Salton Sea Project's average electricity prices per  kWh  in
1996, 1995 and 1994 were comprised of (in cents):

Coso Project            Energy Capacity & Bonus     Total

Average fiscal 1996      12.61         1.82         14.43
Average fiscal 1995      11.81         1.82         13.63
Average fiscal 1994      10.91         1.90         12.81


Partnership Project     Energy Capacity & Bonus     Total


Average fiscal 1996      10.02         2.12         12.14
Average fiscal 1995      11.14         2.10         13.24
Average fiscal 1994      10.29         2.16         12.45

Salton Sea Project      Energy Capacity & Bonus     Total


Average fiscal 1996       8.84         2.29         11.13
Average fiscal 1995       9.50         2.33         11.83
Average fiscal 1994      10.07         1.67         11.74


Income  on  equity  investments reflects the Company's  share  of
equity income primarily from the Saranac Project and Northern.

Royalty income decreased in 1996 to $6,846 from $19,482 in  1995,
a  64.9%  decrease. This decrease is a result of the  Company  no
longer  recognizing royalty income received from the  Partnership
Project  as  the  Partnership Project is now owned  100%  by  the
Company due to the Partnership Interest acquisition.  The Company
continues to receive royalty income from other projects not owned
by the Company.  Royalty income in 1995 of $19,482 is a result of
the  acquisition  of  Magma  which received  royalties  from  the
Partnership  Project, and from other projects not  owned  by  the
Company.

Interest and other income marginally increased in 1996 to $44,281
from $43,611 in 1995, a 1.5% increase. This increase is primarily
a  result of  operator fees received from the Saranac Project and
NorCon  Project partially offset by the fact the  Company  is  no
longer  recognizing management services income received from  the
Partnership Project as the Partnership Project is now owned  100%
by  the  Company  due  to  the Partnership Interest  acquisition.
Interest  and  other  income increased in 1995  to  $43,611  from
$31,292  in  1994.  The  increase primarily  reflects  management
services income received from the Partnership Project.

Overall,  the  Company's expenses increased in 1996  due  to  the
acquisitions  of  Northern, Falcon Seaboard and  the  Partnership
Interest,  the  commencement of operations of the Salton  Sea  IV
Project  and  the deemed completion of the Upper  Mahiao  Project
and Unit I of the Malitbog Project.

Plant  operations increased to $108,962 in 1996 from  $79,294  in
1995,  an  increase of 37.4%. The increase is  a  result  of  the
Falcon  Seaboard  and the Partnership Interest acquisitions,  and
the  commencement  of operations of the Salton  Sea  IV  Project.
Operating  expense increased to $79,294 in 1995 from  $33,015  in
1994,  an  increase of 140.2% as a result of the  cost  of  plant
operations  at the Imperial Valley Project and the full  year  of
operations at the Yuma Project.

The  cost of sales of $31,840 are a result of the acquisition  of
Northern  and  represent costs of electricity  sales  during  the
period  of  the Company's controlling interest from December  24,
1996 through December 31, 1996.

General  and  administration costs decreased to $21,451  in  1996
from  $23,376   in 1995, a decrease of 8.2%. This decrease  is  a
result  of  the Company's continued efforts to reduce  costs  and
reflects the elimination of redundant functions subsequent to the
acquisition of Magma. General and administration costs  increased
to  $23,376 in 1995 compared to $13,012 in 1994, a 79.6% increase
primarily attributable to the Magma acquisition.

Royalty  costs  marginally decreased  to  $23,693  in  1996  from
$24,308 in 1995, a 2.5% decrease.  This decrease is primarily due
to  decreased  royalty costs at the Desert Peak  Project  due  to
revenue  reductions. Royalty cost increased to  $24,308  in  1995
from $9,888 in 1994, a 145.8% increase. The 1995 increase was due
to the addition of the Imperial Valley Project, increased revenue
from  the plants the Company owned in 1994 and scheduled  royalty
increases associated with such plants.

Depreciation and amortization increased in 1996 to $118,586  from
$72,249 in 1995, a 64.1% increase. This increase is primarily due
to  the  depreciation and amortization of the allocated  purchase
price and goodwill related to the Magma, Partnership Interest and
Falcon  Seaboard  acquisitions, the Philippine projects  and  the
commencement  of  operations  at  the  Salton  Sea  IV   Project.
Depreciation and amortization increased to $72,249 in  1995  from
$21,197  in  1994,  a 240.8% increase. The increase  was  due  to
depreciation and amortization of the allocated purchase price and
goodwill from the Magma acquisition.

Loss  on  equity investment in the Casecnan Project reflects  the
Company's  share  of  interest expense in excess  of  capitalized
interest  and interest income at the Casecnan  Project, which  is
currently in construction.

Interest expense, less amounts capitalized, increased in 1996  to
$126,038  from $102,083 in 1995, a 23.5% increase, and  increased
to  $102,083  in  1995 from $52,906 in 1994,  a  93.0%  increase.
Higher interest expense is primarily due to a larger portfolio of
facilities  and  their associated debt partially  offset  by  the
increase  in  capitalized interest on the Company's international
and domestic projects.

The  provision for income taxes increased to $41,821 in 1996 from
$30,631 in 1995, and increased to $30,631 in 1995 from $17,002 in
1994.  The effective tax rate was 30.8%, 31.6% and 30.5% in 1996,
1995, and 1994, respectively.

Income  before  the  provision  for  income  taxes  increased  to
$135,713 in 1996 from $97,051 in 1995, a 39.8% increase. Minority
interest  in  1996  reflects the Company's partial  ownership  in
Northern  for the period from December 24, 1996 through  December
31,  1996.   Minority  interest in 1995  reflects  the  Company's
partial  ownership in Magma for the period from January 10,  1995
to   February   24,  1995.   Net  income  available   to   common
shareholders  increased to $92,461 or $1.60 per common  share  in
1996  compared to $62,335 or $1.25 per common share in  1995  and
$31,817 or $.89 per common share in 1994. Net income for the year
ended  December 31, 1994 was reduced by $2,007 or $.06 per  share
due to an extraordinary item.

Liquidity and Capital Resources

Cash  and  short-term investments were $429,421 at  December  31,
1996  as  compared to $106,304 at December 31, 1995. In addition,
the  Company's  share  of  joint  venture  cash  and  investments
retained  in project control accounts was $48,083 and $77,590  at
December  31, 1996 and 1995, respectively. Distributions  out  of
the  project control accounts are made monthly to the Company for
operation  and maintenance and capital costs and semiannually  to
each  Coso  Project partner for profit sharing under a prescribed
calculation  subject  to mutual agreement  by  the  partners.  In
addition,  the  Company recorded separately  restricted  cash  of
$107,143   and   $149,227  at  December  31,   1996   and   1995,
respectively.   The  restricted  cash  balances   are   comprised
primarily of amounts deposited in restricted accounts from  which
the  Company  will  provide its equity contribution  requirements
relating  to  the  Mahanagdong  Project,  fund  certain   capital
improvements  at  the Imperial Valley Project and  the  Company's
proportionate  share  of the Coso Project,  the  Power  Resources
Project,  the Upper Mahiao Project and the Malitbog Project  cash
reserves for the debt service reserve funds.

Accounts  receivable normally represents two months of  revenues,
and  fluctuates with both production and distribution and  supply
of electricity.

The  balance  due from the joint ventures relates to  operations,
maintenance, and management fees for managing the Coso Project as
well  as  advances  and  deferred revenue  on  the  international
projects. This amount fluctuates based on the timing of  billings
and incurrence of costs.

The  Company  repurchased 472 common shares during 1996  for  the
aggregate  amount of $12,008. The Company repurchased 102  shares
of  common stock in 1995 at an aggregate amount of $1,590. As  of
December 31, 1996 the Company holds 299 shares of treasury  stock
at  a  cost  of $8,787 to provide shares for issuance  under  the
Company's employee stock option and share purchase plan and other
outstanding convertible securities. The repurchase plan  attempts
to  minimize the dilutive effect of the additional shares  issued
under these plans.

On  February  26,  1997 CalEnergy Capital  Trust  II,  a  special
purpose  Delaware business trust organized by the  Company   (the
"Trust II"), pursuant to the Amended and Restated Declaration  of
Trust   (the  "Declaration")  dated  as  of  February  26,  1997,
completed  a  private placement (with certain shelf  registration
rights) of 6 1/4%, $150,000 aggregate amount of Trust Convertible
Preferred  Securities  ("Trust  Securities").   In  addition,  an
option to purchase an additional 600 Trust Securities, or $30,000
aggregate  amount,  was  exercised by the initial  purchasers  to
cover  over-allotments in connection with  the  placement.   Each
Trust Security has a liquidation preference of fifty dollars  and
is  convertible  at  any time at the option of  the  holder  into
1.1655 shares of Company Common Stock (equivalent to a conversion
price  of  $42.90  per common share) subject  to  adjustments  in
certain circumstances.

On  December 24, 1996 CE Electric, which is 70% owned  indirectly
by the Company and 30% owned indirectly by PKS, acquired majority
ownership  of the outstanding ordinary share capital of  Northern
pursuant  to the Tender Offer commenced in the United Kingdom  by
CE  Electric on November 5, 1996.  Through January 31,  1997,  CE
Electric  had  purchased  more than 90%  of  Northern's  ordinary
shares.   Under  United  Kingdom statutory  powers  available  to
compulsorily acquire shares not purchased in the tender offer, CE
Electric  expects  to acquire the remaining  Northern  shares  by
April 30, 1997.

As  of  December  31,  1996, the Company had  contributed  to  CE
Electric  approximately $410,000 of the approximately  $1,300,000
required  to  acquire all of Northern's ordinary  and  preference
shares   in  connection  with  the  Tender  Offer  and  PKS   had
contributed  approximately  $176,000  to  CE  Electric  for  such
purpose.   The  Company obtained such funds from  cash  on  hand,
short-term  borrowings, and borrowings of approximately  $100,000
under a $100,000 Credit Agreement entered into with Credit Suisse
on  October  28,  1996 (the "CalEnergy Credit Facility").  As  of
February  27,  1997, the Company had repaid the entire  CalEnergy
Credit Facility through the use of proceeds of the $150,000 Trust
Securities offering.  The remaining funds necessary to consummate
the  Tender Offer will be provided from a 560,000 ($958,888) Term
Loan  and  Revolving Facility Agreement, dated as of October  28,
1996  (the "U.K. Credit Facility") with CE Electric.  The Company
has  not guaranteed, nor is it otherwise subject to recourse for,
amounts  borrowed under the U.K. Credit Facility.  As of  January
31,   1997,  CE  Electric  had  borrowed  approximately   321,000
($549,648)  under  the U.K. Credit Facility to pay  for  Northern
ordinary and preference shares purchased to date.

On  October  4,  1996  the Company closed  the  $120,000  project
financing  for  the  Dieng Unit I 55 net  MW  geothermal  project
located in Indonesia.  Dieng Unit I is already under construction
and  is currently expected to begin commercial operation by  late
1997.

On   September  20,  1996  the  Company  completed  a   sale   to
institutional investors of $225,000 aggregate principal amount of
its 9 1/2% Senior Notes due 2006.

Also  on  September  20, 1996 the Company converted  the  $64,850
convertible  debt  and  associated accrued  interest  into  3,620
common  shares  at a conversion price of $18.375 per  share.   In
September and October, the Company converted substantially all of
the  convertible subordinated debentures into 4,443 common shares
at a conversion price of $22.50 per share.

On  July  8,  1996  the  Company obtained a $100,000  three  year
revolving credit facility of which the Company had drawn  $95,000
as of December 31, 1996.  Subsequent to year end, the Company had
repaid the entire outstanding balance.  The facility is unsecured
and  is  available to fund general operating capital requirements
and finance future business opportunities.

On  June  20, 1996 the Salton Sea Funding Corporation,  a  wholly
owned   indirect   subsidiary  of  the  Company   (the   "Funding
Corporation"),  completed  a sale to institutional  investors  of
$135,000 aggregate amount of Senior Secured Notes and Bonds ("the
Notes  and  Bonds") which are nonrecourse to  the  Company.   The
Funding Corporation Notes and Bonds which mature in May 2000  and
May  2011 respectively, bear an interest rate of 7.02% and  8.30%
respectively.   The proceeds of the offering were used by Funding
Corporation  to  refinance  $96,584  of  existing  project  level
indebtedness at the Partnership Project, to fund a portion of the
Partnership   Interest  acquisition  and  for   certain   capital
improvements at the Imperial Valley Project.

On  April  12,  1996 CalEnergy Capital Trust, a  special  purpose
Delaware  business trust organized by the Company  (the "Trust"),
completed  a  private placement (with certain shelf  registration
rights)  of  $100,000  trust  preferred  convertible  securities,
referred   to  as  of  Company-obligated  mandatorily  redeemable
convertible  preferred  securities of  subsidiary  trust  holding
solely  convertible debentures ("TIDES"). In addition, an  option
to purchase an additional 78.6 TIDES, or $3,930, was exercised by
the  initial  purchasers to cover over-allotments  in  connection
with the placement.

In  1996,  the  Company signed an agreement with an international
mining  company which provides for the extraction of minerals  by
the mining company at the Imperial Valley Project and among other
things, for the Company, at its option, to deliver power for  the
mineral  extraction process.  The initial phase  of  the  project
would  require  at  least 15 MW.  A pilot plant has  successfully
produced  zinc at the Imperial Valley Project.  Due to a  failure
to  reach  agreement with the mining company  on  a  satisfactory
partnership  and  development agreement  for  construction  of  a
larger extraction plant, the Company has determined to pursue the
mineral extraction project on its own or with other partners.  If
successfully  developed,  the  mineral  extraction  process  will
provide  an  environmentally compatible  and  low  cost  minerals
recovery methodology.

In  November 1995 the Company closed the financing and  commenced
construction  of the Casecnan Project, a combined irrigation  and
150  net MW hydroelectric power generation project (the "Casecnan
Project") located in the central part of the island of  Luzon  in
the Republic of the Philippines.

CE   Casecnan  Water  and  Energy  Company,  Inc.,  a  Philippine
corporation  ("CE Casecnan") which is presently indirectly  owned
as  to  approximately  35%  of its  equity  by  the  Company  and
approximately  35%  by  PKS, is developing the  Casecnan  Project
under  the  terms of the Project Agreement ("Project  Agreement")
between  CE  Casecnan and the National Irrigation  Administration
("NIA").   Under the Project Agreement, CE Casecnan will develop,
finance and construct the Casecnan Project over an estimated four-
year  construction  period, and thereafter own  and  operate  the
Casecnan   Project  for  20  years  (the  "Casecnan   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 guaranteed fee  for
the  delivery of water and a guaranteed fee for the  delivery  of
electricity,  regardless of the amount of  water  or  electricity
actually  delivered.  In addition, NIA will pay  a  fee  for  all
electricity  delivered in excess of a threshold amount  up  to  a
specified amount.  NIA will sell the electric energy it purchases
to  the  National  Power Corporation of the Philippines  ("NPC"),
although  NIA's  obligations  to CE Casecnan  under  the  Project
Agreement  are  not dependent on the purchase of the  electricity
from  NIA by NPC.  All fees to be paid by NIA to CE Casecnan  are
payable in U.S. dollars.  The guaranteed fees for the delivery of
water and energy are expected to provide approximately 70% of  CE
Casecnan's revenues.

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 Philippines
political  action,  NIA  may be obligated  to  buy  the  Casecnan
Project  from CE Casecnan at a buy out price expected  to  be  in
excess  of  the aggregate principal amount of the outstanding  CE
Casecnan  debt  securities,  together  with  accrued  but  unpaid
interest.   At  the end of the Casecnan Cooperation  Period,  the
Casecnan  Project  will be transferred to  NIA  and  NPC  for  no
additional consideration on an "as is" basis.

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.

The  Casecnan Project is being constructed on a joint and several
basis  by  Hanbo Corporation and Hanbo Engineering & Construction
Co.  Ltd.  (formerly known as You One Engineering &  Construction
Co.,  Ltd., and herein referred to as "HECC"), both of which  are
South  Korean  corporations, pursuant  to  a  fixed-price,  date-
certain, turnkey construction contract (the "Turnkey Construction
Contract").   Hanbo Corporation and HECC (sometimes  collectively
referred  to  as  the  "Contractor") are under  common  ownership
control.   Hanbo  Corporation  is an  international  construction
company.   HECC, which recently emerged from a court-administered
receivership,  is a contractor with over 25 years  experience  in
tunnel  construction, using both the drill-and-blast  and  tunnel
boring machine ("TBM") methods.

The  Contractor's  obligations  under  the  Turnkey  Construction
Contract  are  guaranteed by Hanbo Iron  &  Steel  Company,  Ltd.
("Hanbo  Steel"),  a  large  South  Korean  steel  company.    In
addition,   the  Contractor's  obligations  under   the   Turnkey
Construction   Contract   are  secured   by   an   unconditional,
irrevocable standby letter of credit issued by Korea  First  Bank
("KFB") in the approximate amount of $118,000.  The total cost of
the   Casecnan   Project,  including  development,  construction,
testing  and startup, is estimated to be approximately  $495,000.
The  current capital structure consists of term loans of $371,500
and  $123,836 in equity contributions.  The Company's portion  of
the contributed equity is $61,918.

In  late  January  1997,  the  Company  was  advised  that  Hanbo
Corporation  and  Hanbo  Steel  had  each  filed  to  seek  court
receivership  protection in Korea.  At the present time,  all  of
the  construction work on the Casecnan Project is being performed
by   the   second  contractor  which  is  party  to  the  Turnkey
Construction  Contract, HECC.  Although HECC,  Hanbo  Corporation
and  Hanbo Steel are under common ownership control, HECC has not
filed  for receivership protection and is believed to be solvent.
However,  no assurances can be given that HECC will not file  for
receivership  due to the foregoing developments or that  it  will
remain  solvent  and able to perform fully its obligations  under
the Turnkey Construction Contract.

The  work  on the Casecnan Project, which commenced in  1995,  is
presently  continuing  on schedule and  within  the  budget.   CE
Casecnan  is  presently  reviewing its  rights,  obligations  and
potential   remedies  in  respect  of  the  recent   developments
regarding  the co-Contractor and the guarantor and  is  presently
unable   to  speculate  as  to  the  ultimate  effect   of   such
developments  on CE Casecnan.  However, CE Casecnan has  recently
received confirmation from HECC that it intends to fully  perform
its  obligations  under  the  Turnkey Construction  Contract  and
complete the Casecnan Project on schedule and within the  budget.
Additionally,  it  has  been  reported  that  the  South   Korean
government has informed the Philippine government that the  South
Korean government will take appropriate actions to support HECC's
completion of the Casecnan Project.

KFB  has  recently reconfirmed to CE Casecnan that it will  honor
its  obligations under the Casecnan Project letter of credit  and
also has stated its support for the successful completion of  the
Casecnan   Project.   However,  Moody's  Investors  Service   has
recently  issued a warning for a possible ratings  downgrade  for
KFB   because   of  the  possible  impact  of  the  Hanbo   Steel
receivership  on  the substantial loans KFB  previously  made  to
Hanbo   Steel.   In  a  related  development,  the  South  Korean
government  has  recently announced that it  would  provide  some
funding  to  assist Hanbo Steel's creditor banks (including  KFB)
and its subcontractors.

CE  Casecnan  financed  a portion of the costs  of  the  Casecnan
Project  through  the issuance of $125,000 of its  11.45%  Senior
Secured Series A Notes due 2005 and $171,500 of its 11.95% Senior
Secured  Series  B Notes due 2010 pursuant to an indenture  dated
November 27, 1995, as amended to date (the "Casecnan Indenture").
Although no default has occurred under the Casecnan Indenture  as
a  result of the announced receivership of Hanbo Corporation,  CE
Casecnan will continue to closely monitor the Hanbo group and KFB
developments   and  project  construction  status   and   develop
appropriate contingency plans.

If  HECC were to materially fail to perform its obligations under
the  Turnkey  Construction Contract and if KFB were  to  fail  to
honor  its obligations under the Casecnan letter of credit,  such
actions  could  have a material adverse effect  on  the  Casecnan
Project  and  CE  Casecnan.  However, based  on  the  information
presently available to it, CE Casecnan does not presently  expect
that either such event will occur.

In  August 1994, the Company closed the financing for the 165 net
MW   Mahanagdong   Project  located  in  the   Philippines   (the
"Mahanagdong  Project"). The total project cost for the  facility
is  approximately $320,000. The capital structure consists  of  a
term  loan  of  $240,000  and  approximately  $80,000  in  equity
contributions.   The  Overseas  Private  Investment   Corporation
("OPIC") and a consortium of international commercial lenders are
providing  the  construction debt financing  facility.  The  debt
provided  by the commercial lenders is insured against  political
risk  by  the  Export-Import Bank of the  United  States  ("Ex-Im
Bank").  Ten  year  term debt financing (which will  replace  the
construction debt) will be provided by Ex-Im Bank and by OPIC. As
of  December 31, 1996, the Company's proportionate share of draws
on  the  construction loan totaled $76,503 and equity investments
made  by  a  subsidiary of the Company totaled $35,586.  OPIC  is
providing political risk insurance on the equity. The Mahanagdong
Project  is  targeted for service in July 1997.   The Mahanagdong
Project  is  structured  as a ten year build-own-operate-transfer
project  ("BOOT"), in which the Company will be  responsible  for
implementing construction of the geothermal power plant  and,  as
owner, for providing operations and maintenance for the ten  year
BOOT  period.  After  a  ten  year cooperation  period,  and  the
recovery   by   the  Company  of  its  capital  investment   plus
incremental  return, the plant will be transferred to PNOC-Energy
Development  Corporation ("PNOC-EDC") at no cost. The Mahanagdong
Project  will be built, owned and operated by CE Luzon Geothermal
Power  Company, Inc., a Philippine corporation, that is  expected
to  be owned post-completion as follows: 45% by the Company,  45%
by  PKS, and up to 10% by another industrial company. The turnkey
contractor consortium consists of Kiewit Construction Group, Inc.
(with  an  80%  interest)  and CE Holt Company,  a  wholly  owned
subsidiary of the Company (with a 20% interest).

The electricity generated by the Mahanagdong Project will be sold
to  PNOC-EDC, on a "take or pay" basis, which is also responsible
for  supplying the facility with the geothermal steam. The  terms
of  the  Mahanagdong  Energy  Conversion  Agreement  ("ECA")  are
substantially similar to those of the Upper Mahiao ECA  described
in  Note  5  to  the  financial  statements.  All  of  PNOC-EDC's
obligations  under  the  Mahangdong Energy  Conversion  Agreement
("ECA")  are  supported  by  the Government  of  the  Philippines
through a performance undertaking. The capacity fees are expected
to  be approximately 97% of total revenues at the design capacity
levels and the energy fees are expected to be approximately 3% of
such total revenues.

In   1994,   the  Company  closed  the  financing  and  commenced
construction  of  the Malitbog Project, a 216 net  MW  geothermal
project,  to be constructed in two phases, 72 net MW in 1996  and
144 net MW in 1997, located on the island of Leyte (the "Malitbog
Project"). The Malitbog Project is being built, and will be owned
and  operated  by  Visayas Geothermal Power Company  ("VGPC"),  a
Philippine  general partnership that is wholly owned, indirectly,
by  the  Company.   Unit I of the Malitbog  Project  was  "deemed
complete"  by  PNOC-EDC  as  of  July  25,  1996,  meaning   that
construction  of the first 72 net MW unit was completed  on  time
but the required transmission line was not completed and provided
to  VGPC.  During deemed completion, PNOC-EDC is required to pay,
and  has  in fact been paying (with respect to Unit I  which  has
been  deemed completed), all capacity fees under the take or  pay
provisions  of  the Malitbog ECA.  VGPC is selling  100%  of  its
capacity  to PNOC-EDC, which will in turn sell the power  to  the
NPC.

The  Malitbog  Project has a total project cost of  approximately
$280,000,  including  interest during  construction  and  project
contingency costs. A consortium of international banks  and  OPIC
have  provided a total of $210,000 of construction and term  loan
facilities, the $135,000 international bank portion of  which  is
supported  by political risk insurance from OPIC. As of  December
31,  1996,  draws on the construction loan totaled  $137,881  and
equity  investments made by subsidiaries of the  Company  totaled
$70,000.  The  Company's  equity  participation  is  covered   by
political  risk  insurance from OPIC.  The  Malitbog  Project  is
structured  as  a BOOT, in which the Company will be  responsible
for  implementing construction of the geothermal power plant and,
as  owner, for providing operations and maintenance for  the  ten
year BOOT period.

Units II and III of the Malitbog Project are being constructed by
Sumitomo  Corporation  pursuant to a  fixed-price,  date-certain,
turnkey  supply and construction contract.  Commercial  operation
of  Units II and III are scheduled to commence prior to July  25,
1997.

The  Malitbog Project is located on land provided by PNOC-EDC  at
no  cost.  The electrical energy produced by the facility will be
sold  to PNOC-EDC on a take-or-pay basis.  Specifically, PNOC-EDC
is  obligated to make payments (the "Capacity Payments") to  VGPC
based  upon the available capacity of the Malitbog Project.   The
Capacity  Payments  equal approximately 100% of  total  revenues.
The  Capacity  Payments will be payable so long as  the  Malitbog
Project is available to produce electricity, even if the Malitbog
Project  is  not operating due to scheduled maintenance,  because
PNOC-EDC  fails  to  supply  steam to  the  Malitbog  Project  as
required  or  because  NPC  is unable (or  unwilling)  to  accept
delivery  of electricity from the Malitbog Project.  In addition,
PNOC-EDC must continue to make the Capacity Payments if there  is
a  force  majeure event (e.g., war, nationalization,  etc.)  that
affects the operation of the Malitbog Project and that is  within
the  reasonable  control of PNOC-EDC or  the  Government  of  the
Philippines  or  any agency or authority thereof.   The  Capacity
Payments   are  designed  to  cover,  under  expected   operating
conditions,  the  Malitbog  Project's operating  and  maintenance
expenses  and  VGPC's  debt service and to provide  a  return  on
investment  to the partners in VGPC.  A substantial  majority  of
the Capacity Payments are required to be made by PNOC-EDC in U.S.
dollars.  The portion of Capacity Payments payable by PNOC-EDC in
pesos is expected to vary over the term of the Malitbog ECA  from
10%  of  VGPC's  revenues  in the early  years  of  the  10  year
cooperation period to 23% of VGPC's revenues at the  end  of  the
cooperation period. Payments made in pesos will generally be made
to  a  peso-denominated account and will be  used  to  pay  peso-
denominated  operation and maintenance expenses with  respect  to
the Malitbog Project and Philippine withholding taxes, if any, on
the  Malitbog  Project's debt service.   The  Government  of  the
Philippines  has  entered into a performance  undertaking,  which
provides  that  all  of PNOC-EDC's obligations  pursuant  to  the
Malitbog ECA carry the full faith and credit of, and are affirmed
and guaranteed by, the Government of the Philippines.

The  Malitbog ECA cooperation period will expire ten years  after
the date of commencement of commercial operation of Unit III.  At
the  end  of  the  cooperation  period,  the  facility  will   be
transferred to PNOC-EDC at no cost, on an "as is" basis.

On  October  4,  1996  the Company closed  the  $120,000  project
financing  for  the  Dieng Unit I 55 net  MW  geothermal  project
located  in  Indonesia (the "Dieng Unit I  Project").   The  loan
carries  a variable interest rate (weighted average of  7.19%  at
December  31,  1996)  and has scheduled project  term  repayments
through  2002.   Dieng  Unit  I is  under  construction   and  is
currently  expected to begin commercial operation by  late  1997.
The  Dieng  Unit I Project has drawn $12,442 as of  December  31,
1996.

Magma sought new long-term final SO4 power purchase agreements in
the  Salton Sea area through the bidding process adopted  by  the
CPUC  under  its 1992 Biennial Resource Plan Update ("BRPU").  In
its  BRPU,  the  California Public Utilities Commission  ("CPUC")
cited  the  need  for an additional 9,600 MW of power  production
through  1999 among California's three investor-owned  utilities,
Southern California Edison Company ("Edison"), San Diego Gas  and
Electric ("SDG&E") and Pacific Gas and Electric Company. Of  this
amount,  275  MW  was set aside for bidding by independent  power
producers (such as Magma) utilizing renewable resources. Pursuant
to  an  order  of  the  CPUC dated June 22,  1994  (confirmed  on
December  21,  1994), Magma was awarded 163 net MW  for  sale  to
Edison  and  SDG&E, with in-service dates in 1997 and  1998.   On
February  23,  1995  the  Federal  Energy  Regulatory  Commission
("FERC")  issued  an order finding that the CPUC's  BRPU  program
violated  the Public Utilities Regulatory Policies Act  ("PURPA")
and  FERC's  implementing regulations and recommended  negotiated
settlements.    In   response,  the  CPUC  issued   an   Assigned
Commissioners  Ruling encouraging settlements between  the  final
winning bidders and the utilities.  The utilities are expected to
continue  to  challenge the BRPU and, in light of the  regulatory
uncertainty, there can be no assurance that power sales contracts
will be executed or that any such projects will be completed.  In
light  of  these developments, the Company agreed to  execute  an
agreement with Edison on March 16, 1995 providing that in certain
circumstances  it  would  withdraw  its  Edison   BRPU   bid   in
consideration  for  the payment of certain  sums.   In  December,
1996,  the  Company  entered  into  a  confidential  cash  buyout
agreement  with  SDG&E.  These agreements  are  subject  to  CPUC
approval.

The  Company is actively seeking to develop, construct,  own  and
operate  new  power  projects  utilizing  geothermal  and   other
technologies,   both   domestically  and   internationally,   the
completion of any of which is subject to substantial  risk.   The
Company  has  in  development  or  under  construction,  projects
representing  an aggregate generating capacity in excess  of  the
generating capacity of those currently in operation.  Development
can   require  the  Company  to  expend  significant   sums   for
preliminary   engineering,  permitting,  fuel  supply,   resource
exploration,   legal  and  other  expenses  in  preparation   for
competitive bids which the Company may not win or before  it  can
be   determined  whether  a  project  is  feasible,  economically
attractive  or capable of being financed.  Successful development
and   construction  is  contingent  upon,  among  other   things,
negotiation  on terms satisfactory to the Company of engineering,
construction,  fuel supply and power sales contracts  with  other
project  participants, receipt of required  governmental  permits
and consents and timely implementation of construction.  Further,
there   can   be  no  assurance  that  the  Company,   which   is
substantially  leveraged, will obtain access to  the  substantial
debt  and  equity  capital required to continue  to  develop  and
construct electric power projects or to refinance projects.   The
Company's  future growth is dependent, in large  part,  upon  the
demand   for   significant  amounts  of   additional   electrical
generating capacity and its ability to obtain contracts to supply
portions  of  this  capacity. There  can  be  no  assurance  that
development  efforts on any particular project, or the  Company's
efforts generally, will be successful.

The  Company  believes that the international  independent  power
market  holds  the majority of new opportunities for  financially
attractive  private power development in the next several  years.
The  financing, construction and development of projects  outside
the  United  States  entail significant political  and  financial
risks  (including,  without limitation, uncertainties  associated
with  first time privatization efforts in the countries involved,
currency   exchange  rate  fluctuations,  currency   repatriation
restrictions,   political   instability,   civil    unrest    and
expropriation)  and  other  structuring  issues  that  have   the
potential  to cause substantial delays or material impairment  of
value  to the project being developed, which the Company may  not
be  fully  capable  of insuring against. The uncertainty  of  the
legal  environment  in  certain foreign countries  in  which  the
Company  may  develop  or acquire projects  could  make  it  more
difficult  for the Company to enforce its rights under agreements
relating  to such projects. In addition, the laws and regulations
of certain countries may limit the ability of the Company to hold
a  majority interest in some of the projects that it may  develop
or  acquire. The Company's international projects may, in certain
cases,  be  terminated by a government.  Projects  in  operation,
construction  and  development  are  subject  to  a   number   of
uncertainities, more specifically described in the Company's Form
8-K  dated  February  25,  1997, filed with  the  Securities  and
Exchange Commission.

Inflation  has  not  had a substantial impact  on  the  Company's
operating revenues and costs; energy payments for electricity for
the  Coso Project, Partnership Project, Salton Sea II Project and
Salton  Sea III Project will continue to be based upon  scheduled
rates and are not adjusted for inflation through the initial  ten
year period of each power purchase agreement.


CONSOLIDATED BALANCE SHEETS
As of December 31, 1996 and 1995
Dollars and Shares in Thousands Except Per Share Amounts

ASSETS                                       1996       1995


Cash and cash equivalents             $   424,500  $  72,114
Joint venture cash and investments         48,083     77,590
Restricted cash                           107,143    149,227
Short-term investments                      4,921     34,190
Accounts receivable                       342,307     57,909
Due from joint ventures                    17,556     27,273
Properties, plants, contracts and
 equipment, net                         3,348,583  1,781,255
Excess of cost over fair value of
 net assets acquired, net                 790,920    302,288
Equity investments                        196,535     60,815
Deferred charges and other assets         432,359     91,377


Total assets                           $5,712,907 $2,654,038


LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Accounts payable                         $218,182  $   6,638
Other accrued liabilities                 674,842     87,892
Parent company debt                     1,146,685    842,205
Subsidiary and project debt             1,754,895    921,219
Deferred income taxes                     469,199    226,520


Total liabilities                       4,263,803  2,084,474


Deferred income                            29,067     26,032


Commitments and contingencies (Notes 3, 17, 18, 19 and 20)
Company - obligated mandatorily redeemable
  convertible preferred securities of
  subsidiary trust holding solely
  convertible debentures                  103,930        ---
Preferred securities of subsidiary        136,065        ---
Minority interest                         299,252        ---


Stockholders' equity:
Preferred stock - authorized 2,000
  shares, no par value                        ---        ---
Common stock - par value $.0675 per share,
 authorized 80,000 shares, issued 63,747
 and 50,680 shares, outstanding 63,448
 and 50,593 shares, respectively            4,303      3,421
Additional paid in capital                563,567    343,406
Retained earnings                         297,520    205,059
Cumulative effect of foreign currency
 translation adjustment                    29,658        ---
Treasury stock - 299 and 87 common
 shares at cost                            (8,787)    (1,348)
Unearned compensation - restricted stock   (5,471)    (7,006)


Total stockholders' equity                880,790     543,532


Total liabilities and stockholders'
 equity                                $5,712,907  $2,654,038

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


CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Years Ended December 31, 1996
Dollars and Shares in Thousands Except Per Share Amounts

                                      1996      1995     1994


Revenue:
Sales of electricity and steam     $518,934  $335,630 $154,562
Income on equity investments          6,134      ---       ---
Royalty income                        6,846   19,482       ---
Interest and other income            44,281   43,611    31,292


Total revenues                      576,195  398,723   185,854


Cost and expenses:
Operating expense                   108,962   79,294    33,015
Cost of sales                        31,840      ---       ---
General and administration           21,451   23,376    13,012
Royalty expense                      23,693   24,308     9,888
Depreciation and amortization       118,586   72,249    21,197
Loss on equity investment in Casecnan 5,221      362       ---
Interest expense                    165,900  134,637    62,837
Less interest capitalized           (39,862) (32,554)   (9,931)
Dividends on convertible preferred
 securities of subsidiary trust       4,691      ---       ---

Total expenses                      440,482  301,672   130,018

Income before provision for
 income taxes                       135,713   97,051    55,836
Provision for income taxes           41,821   30,631    17,002

Income before extraordinary item     93,892   66,420    38,834
Extraordinary item                      ---      ---    (2,007)

Income before minority interest
 and preferred dividends             93,892   66,420    36,827
Minority interest                     1,431    3,005       ---


Net income                           92,461   63,415    36,827
Preferred dividends                     ---    1,080     5,010

Net income available to common
 stockholders                       $92,461  $62,335   $31,817

Income per share before
 extraordinary item                 $  1.60  $  1.25   $   .95

Extraordinary item                      ---     ---       (.06)

Net income per share - primary        $1.60    $1.25     $ .89


Net income per share - fully diluted  $1.50    $1.18     $ .88


Average number of shares
 outstanding - primary               57,870   49,971    35,721


Fully diluted shares                 67,164   57,742    40,166


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


CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
For the Three Years Ended December 31, 1996
Dollars and Shares in Thousands

<TABLE>
<CAPTION>
                           Outstanding       Additional
Foreign
                             Common   Common   Paid-In
Retained  Currency  Treasury   Unearned
                             Shares   Stock    Capital
Earnings  Adjust.   Stock     Compensation  Total

<S>                           <C>     <C>     <C>       <C>
<C>       <C>       <C>           <C>
Balance December 31, 1993     35,446  $2,404  $100,965  $111,031
$    ---  $(2,897)  $   ---       $211,503
Exercise of stock options         46       3       379       ---
---      ---       ---            382
Purchase of treasury stock    (3,765)    ---       ---       ---
---  (65,119)      ---        (65,119)
Exercise of stock options
 from treasury stock              96     ---    (1,473)      ---
---    1,772       ---            299
Employee stock purchase plan
 issues from treasury stock       26     ---      (122)      ---
---      470       ---            348
Preferred stock dividends,
 Series C, including cash
 distribution of $121            ---    ---        ---    (4,921)
---      ---       ---         (4,921)
Tax benefit from stock plan      ---    ---        672       ---
---      ---       ---            672
Net income before preferred
 dividends                       ---    ---        ---    36,827
---      ---       ---         36,827

Balance December 31, 1994     31,849  2,407    100,421   142,937
---  (65,774)      ---        179,991
Equity offering               18,170  1,004    240,825       ---
---   56,801       ---        298,630
Exercise of stock options        102      7        303       ---
---      ---       ---            310
Restricted stock                 500    ---        848       ---
---    8,652    (9,500)           ---
Amortization of unearned
 compensation                    ---    ---        ---       ---
---      ---     2,494          2,494
Employee stock purchase
 plan issues                      41      3        559       ---
---      ---       ---            562
Exercise of stock options
 from treasury stock              33    ---       (416)      ---
---      563       ---            147
Purchase of treasury stock      (102)   ---        ---       ---
---   (1,590)      ---         (1,590)
Preferred stock dividends,
 Series C, including cash
 distribution of $43             ---    ---        ---    (1,293)
---      ---       ---         (1,293)
Tax benefit from stock plan      ---    ---        866       ---
---      ---       ---            866
Net income before preferred
 dividends                       ---    ---        ---    63,415
---      ---       ---         63,415


Balance December 31, 1995     50,593  3,421    343,406   205,059
---   (1,348)   (7,006)       543,532
Exercise of stock options and
 other equity transactions     4,971    335     57,190       ---
---        1       ---         57,526
Amortization of unearned
 compensation                    ---    ---        ---       ---
---      ---     1,535          1,535
Employee stock purchase plan
 issues                           60      2        547       ---
---      588       ---          1,137
Exercise of stock options
 from treasury stock             232    ---     (4,707)      ---
---    3,980       ---           (727)
Purchase of treasury stock      (472)   ---        ---       ---
---  (12,008)      ---        (12,008)
Conversion of debt             8,064    545    164,912       ---
---      ---       ---        165,457
Tax benefit from stock plan      ---    ---      2,219       ---
---      ---       ---          2,219
Foreign currency translation
 adjustment                      ---    ---        ---       ---
29,658      ---       ---         29,658
Net income                       ---    ---        ---    92,461
---      ---       ---         92,461

Balance December 31, 1996     63,448 $4,303   $563,567  $297,520
$29,658  $(8,787)  $(5,471)      $880,790

</TABLE>

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


CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Years Ended December 31, 1996
Dollars in Thousands
                                                      1996
1995      1994
Cash flows from operating activities:
Net income                                          $92,461  $
63,415  $ 36,827
Adjustments to reconcile net cash flow from operating activities:
  Depreciation and amortization                     109,447
65,244    21,197
  Amortization of excess of cost over fair
   value of net assets acquired                       9,139
7,005       ---
  Amortization of original issue discount            50,194
45,409    31,946
  Amortization of deferred financing costs            9,677
8,979     1,885
  Amortization of unearned compensation               1,535
2,494       ---
  Provision for deferred income taxes                12,252
13,983     8,258
  Loss (income) on equity investments                  (910)
362       ---
  Income applicable to minority interest              1,431
3,005       ---
  Changes in other items:
   Accounts receivable                              (13,936)
213    (6,614)
   Accounts payable and other accrued liabilities      (942)
5,922    19,364
   Deferred income                                    3,035
6,181      (437)
Net cash flows from operating activities            273,383
222,212   112,426
Cash flows from investing activities:
Purchase of Northern, Falcon Seaboard, Partnership
 Interest and Magma, net of cash acquired          (474,443)
(907,614)   (3,043)
Distributions from equity investments                 8,222
---       ---
Capital expenditures relating to operating
 projects                                           (24,821)
(27,120)  (38,078)
Philippine construction                            (167,160)
(289,655)  (69,997)
Indonesian and other development                    (81,068)
(8,973)   (2,445)
Salton Sea IV construction                          (63,772)
(62,430)      ---
Pacific Northwest, Nevada, and Utah
 exploration costs                                   (4,885)
(10,445)   (8,493)
Decrease (increase) in short-term investments        33,998
80,565   (50,000)
Decrease (increase) in restricted cash               63,175
(17,452)  (83,670)
Other                                                (2,591)
11,514     1,847
Investment in Casecnan                                  ---
(61,177)      ---
Net cash flows from investing activities
(713,345)(1,292,787)(253,879)
Cash flows from financing activities:
Proceeds from sale of common and treasury stock
 and exercise of stock options                       54,935
299,649    1,580
Proceeds from convertible preferred securities
 of subsidiary trust                                103,930
---      ---
Proceeds from issuance of parent company debt       324,136
200,000  400,000
Net proceeds from revolver                           95,000
---      ---
Proceeds from subsidiary and project debt           428,134
654,695   31,503
Repayments of subsidiary and project debt          (210,892)
(176,664) (13,800)
Deferred charges relating to debt financing         (36,010)
(34,733) (11,905)
Decrease (increase) in amounts due from
 joint ventures                                      10,756
(29,169)     316
Purchase of treasury stock                          (12,008)
(1,590) (65,119)
Proceeds from merger facility                           ---
500,000      ---
Recapitalization of merger facility                     ---
(500,000)     ---
Defeasance of 12% senior notes                          ---
---  (35,730)
Net cash flows from financing activities            757,981
912,188  306,845
Effect of exchange rate changes                       4,860
---      ---
Net increase (decrease) in cash and investments     322,879
(158,387) 165,392
Cash and cash equivalents at beginning of period    149,704
308,091  142,699
Cash and cash equivalents at end of period         $472,583
$149,704 $308,091
Supplemental Disclosures:
Interest paid (net of amounts capitalized)         $ 92,829   $
50,840 $ 12,624
Income taxes paid                                  $ 23,211   $
14,812 $  4,926

   See note 6 regarding conversion of debt to equity.

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


NOTES Consolidated Financial Statements
For the Three Years Ended December 31, 1996
Dollars and Shares in Thousands, Except Per Share Amounts

1. Business

CalEnergy  Company,  Inc.  (the "Company") is  a  United  States-
based
global   power  company  which  generates,  distributes  and
supplies
electricity  to utilities, government entities, retail  customers
and
other customers located throughout the world.  The Company was
founded
in  1971  and  through its subsidiaries is primarily  engaged  in
the
development,  ownership  and operation of environmentally
responsible
independent power production facilities worldwide utilizing
geothermal
resources, natural gas and hydroelectric or other energy sources,
such
as   oil  and  coal.   In  addition,  through  its  recently
acquired
subsidiary,  Northern, the Company is engaged in the distribution
and
supply of electricity to approximately 1.5 million customers
primarily
in  northeast  England  as  well  as  the  generation  and
supply  of
electricity   (together  with  other  related   business
activities)
throughout England and Wales.

The  Company  has  organized several partnerships and  joint
ventures
(herein  referred to as the "Coso Joint Ventures") in order to
develop
geothermal  energy at the China Lake Naval Air Weapons  Station,
Coso
Hot  Springs,  China  Lake,  California.  Collectively,  the
projects
undertaken  by these Coso Joint Ventures are referred to as  the
Coso
Project.   In  1992,  the Company entered into the  natural  gas-
fired
electrical  generation market through the purchase  of  a
development
opportunity  in Yuma, Arizona which commenced commercial
operation  in
May  1994.  In  1993,  the  Company started  developing  a
number  of
international   power  project  opportunities  where   private
power
generating programs have been initiated, including the
Philippines and
Indonesia.   In  1995,  the  Company  acquired  Magma  Power
Company
("Magma"). Magma's operating assets included four projects
referred to
as  the  Partnership Project in which Magma had a  50%  interest,
and
three  projects referred to as the Salton Sea Project of  which
Magma
owned  100%.  A fourth project included in the Salton Sea Project
was
constructed after the acquisition of Magma and commenced
operations in
June  1996.   In  addition, in April 1996, the  Company  acquired
the
remaining  50% interest in the Partnership Project.  In  August
1996,
the   Company  acquired  Falcon  Seaboard  Resources,  Inc.
("Falcon
Seaboard") which includes significant interests in three
operating gas-
fired cogeneration facilities and a related natural gas pipeline.
On
December  24, 1996, CE Electric UK plc ("CE Electric"), which  is
70%
owned  indirectly  by  the Company and 30% owned indirectly  by
Peter
Kiewit  Sons',  Inc.  ("PKS"),  acquired  majority  ownership  of
the
outstanding  ordinary share capital of Northern pursuant to  a
tender
offer ("Tender Offer").  The total amount expected to be paid for
all
of  Northern's  ordinary and preference shares is  approximately
$1.3
billion.

Northern  is  one  of the twelve regional electric companies
("RECs")
which  came  into  existence  as a result  of  the  restructuring
and
subsequent  privatization of the electricity industry  in  the
United
Kingdom  in  1990.  Northern is primarily engaged in the
distribution
and  supply of electricity.  Northern was granted a Public
Electricity
Supply  ("PES")  license under the Electricity Act to  distribute
and
supply  electricity in Northern's Authorized Area ("Authorized
Area").
Northern's   Authorized  Area  covers  approximately   14,400
square
kilometers  with a population of approximately 3.2 million people
and
includes  the  counties  of Northumberland,  Tyne  and  Wear,
Durham,
Cleveland  and  North  Yorkshire. Northern  distributes  and
supplies
electricity  outside its Authorized Area pursuant to second  tier
PES
licenses.   Northern  also  is involved in  non-regulated
activities,
including   the   generation  of  electricity,  electrical
appliance
retailing and gas exploration and production.

2. Summary of Significant Accounting Policies

The  consolidated  financial statements include the  accounts  of
the
Company, its wholly-owned subsidiaries, and its proportionate
share of
the  partnerships  and joint ventures in which  it  has  an
undivided
interest  in the assets and is proportionally liable for its
share  of
liabilities.  Other investments and corporate joint ventures
where the
Company  has  the  ability  to  exercise  significant  influence
are
accounted  for  under  the equity method of accounting.
Investments,
where the Company's ability to influence is limited, are
accounted for
under the cost method of accounting.  All significant inter-
enterprise
transactions  and  accounts  have been  eliminated.   The
results  of
operations of the Company include the Company's proportionate
share of
results  of  operations of entities acquired as of the  date  of
each
acquisition.

Investments and Restricted Cash

Investments other than restricted cash are primarily commercial
paper
and money market securities. The restricted cash balance includes
such
securities  and mortgage backed securities, and is mainly
composed  of
amounts  deposited in restricted accounts from which the Company
will
source  its equity contributions and debt service reserve
requirements
relating  to  the  projects.   These funds  are  restricted  by
their
respective  project debt agreements to be used only  for  the
related
project.

At  December 31, 1996, all of the Company's investments are
classified
as  held-to-maturity  and are accounted for at  their  amortized
cost
basis.  The carrying amount of the investments approximates  the
fair
value  based  on  quoted market prices as provided  by  the
financial
institution which holds the investments.

Well, Resource Development and Exploration Costs

The  Company  follows  the full cost method of  accounting  for
costs
incurred  in  connection  with  the  exploration  and
development  of
geothermal resources. All such costs, which include dry hole
costs and
the  cost  of  drilling and equipping production  wells  and
directly
attributable  administrative and interest costs, are  capitalized
and
amortized over their estimated useful lives when production
commences.
The estimated useful lives of production wells are ten to twenty
years
depending   on   the  characteristics  of  the  underlying
resource;
exploration costs and development costs, other than production
wells,
are  generally amortized over the weighted average remaining
term  of
the Company's power and steam purchase contracts.

Deferred Well and Rework Costs

Well rework costs are deferred and amortized over the estimated
period
between   reworks.   These   deferred  costs,   net   of
accumulated
amortization,  are $8,371 and $7,086 at  December 31, 1996  and
1995,
respectively, and are included in other assets.

Properties, Plants, Contracts, Equipment and Depreciation

The  cost  of  major additions and betterments are capitalized,
while
replacements, maintenance, and repairs that do not improve  or
extend
the lives of the respective assets are expensed.

Depreciation of the operating power plant costs, net of salvage
value,
is  computed  on  the straight-line method over the  estimated
useful
lives,  between  10 and 30 years. Depreciation of furniture,
fixtures
and  equipment which are recorded at cost, is computed on the
straight
line  method  over the estimated useful lives of the  related
assets,
which range from three to ten years.

The   Northern,  Falcon  Seaboard,  Partnership  Interest  and
Magma
acquisitions  by  the  Company have been  accounted  for  as
purchase
business   combinations.   All  identifiable   assets   acquired
and
liabilities  assumed were assigned a portion of the cost of
acquiring
the respective companies equal to their fair values at the date
of the
acquisition and include the following:

Property  and equipment of Northern is depreciated using a
systematic
method, which approximates the straight line method over the
estimated
useful lives of the related assets which range from 1-40 years.

Northern's  investment in Teesside Power Limited  is  being
amortized
over  the  remaining contract life of 11 years using a  straight
line
method.

Power sales agreements are amortized separately over (1) the
remaining
portion  of  the scheduled price periods of the power sales
agreements
and  (2)  for the Partnership Interest and Magma acquisitions
the  20
year  avoided  cost  periods of the power sales agreements  using
the
straight line method.

Mineral reserves are amortized on the units of production method.

Excess of Cost over Fair Value

Total  acquisition costs in excess of the fair values assigned to
the
net  assets  acquired  are amortized over a 40  year  period  for
the
Northern  and Magma acquisitions and a 25 year period for  the
Falcon
Seaboard acquisition, both using the straight line method.

Capitalization of Interest and Deferred Financing Costs

Prior  to  the commencement of operations, interest is
capitalized  on
the  costs  of the plants and geothermal resource development  to
the
extent  incurred. Capitalized interest and other deferred charges
are
amortized over the lives of the related assets.

Deferred  financing costs are amortized over the term of  the
related
financing using the implicit interest method.

Revenue Recognition

Revenues are recorded based upon service rendered and electricity
and
steam  delivered  to  the  end  of the month.  Royalties  earned
from
providing  geothermal  resources to power  plants  operated  by
other
geothermal power producers are recorded on an accrual basis.

Deferred Income Taxes

The  Company recognizes deferred tax assets and liabilities
based  on
the difference between the financial statement and tax bases of
assets
and  liabilities using estimated tax rates in effect for the
year  in
which the differences are expected to reverse.  The Company
intends to
repatriate earnings of foreign subsidiaries in the foreseeable
future.
As  a result, deferred income taxes are provided for retained
earnings
of  international subsidiaries and corporate joint ventures which
are
intended to be remitted.

Fair Values of Financial Instruments

The  following  methods and assumptions were used by  the
Company  in
estimating  fair values of financial instruments as discussed
herein.
Fair values have been estimated based on quoted market prices for
debt
issues listed on exchanges. Fair values of financial instruments
that
are  not  actively  traded  are  based on  market  prices  of
similar
instruments and/or valuation techniques using market assumptions.

The  Company assumes that the carrying amount of short-term
financial
instruments approximates their fair value. For these purposes,
short-
term  is  defined as any item that matures, reprices, or
represents  a
cash transaction between willing parties within six months or
less  of
the measurement date.

Net Income per Common Share

Primary and fully diluted earnings per common share are based  on
the
weighted  average  number  of  common and dilutive  common
equivalent
shares outstanding during the period computed using the treasury
stock
method.  Fully  diluted  earnings per common share  also  assumes
the
conversion at the beginning of the year of the convertible  debt
into
3,529  common shares at a conversion price of $18.375 per  share,
the
conversion   at   the  beginning  of  the  year  of  the
convertible
subordinated debentures into 4,444 common shares at a conversion
price
of   $22.50  per  share,  the  convertible  preferred  securities
of
subsidiary  into 3,477 common shares at a conversion price  of
$29.89
per  share  and the exercise of all dilutive stock options
outstanding
at  their  option  prices, with the option exercise proceeds
used  to
repurchase shares of common stock at the ending market price for
fully
diluted earnings per share. For primary earnings per share,
shares  of
common  stock are assumed to be repurchased at the average  price
for
the period.

Cash Equivalents

The  Company  considers all investment instruments purchased
with  an
original  maturity  of  three months or less to be  cash
equivalents.
Restricted cash is not considered a cash equivalent.

Impairment of Long-Lived Assets

On  January  1,  1996,  the  Company adopted  Statement  of
Financial
Accounting  Standards  No.  121  ("SFAS  121"),  "Accounting  for
the
Impairment  of  Long-Lived  Assets and for  Long-Lived  Assets
to  be
Disposed  Of"  which  requires  that  long-lived  assets  and
certain
identifiable intangibles be reviewed for impairment whenever
events or
changes in circumstances indicate that the carrying amount of an
asset
may  not  be  recoverable.  The adoption of SFAS 121 did  not
have  a
material effect on the Company's financial statements.

Reclassification

Certain  amounts in the fiscal 1995 and 1994 financial statements
and
supporting  footnote disclosures have been reclassified to
conform  to
the  fiscal  1996 presentation. Such reclassification did  not
impact
previously reported net income or retained earnings.




Use of Estimates

The  preparation of financial statements in conformity with
generally
accepted  accounting principles 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
revenues
and expenses during the reporting period. Actual results  could
differ
from those estimates.

3.   Acquisitions

Northern

On  December  24, 1996, CE Electric, which is 70% owned
indirectly  by
the  Company  and  30%  owned  indirectly by  PKS,  acquired
majority
ownership  of  the  outstanding ordinary  share  capital  of
Northern
pursuant  to the Tender Offer.   Through January 31, 1997, CE
Electric
had  purchased  more  than 90% of Northern's ordinary  shares.
Under
United  Kingdom statutory procedures available to compulsorily
acquire
shares  not  purchased  in the Tender Offer, CE  Electric
expects  to
acquire the remaining Northern ordinary shares by April 30, 1997.

As  of  December 31, 1996, the Company and PKS had contributed
to  CE
Electric  approximately  $410,000 and $176,000  respectively,  of
the
approximately  $1,300,000  required  to  acquire  all  of
Northern's
ordinary  and  preference shares in connection with the Tender
Offer.
The  Company  obtained  such  funds  from  cash  on  hand,  short-
term
borrowings,  and borrowings of approximately $100,000 under  a
Credit
Agreement  entered into with Credit Suisse on October  28,  1996
(the
"CalEnergy  Credit  Facility").   The  remaining  funds
necessary  to
consummate the Tender Offer will be provided from a 560,000
($958,888)
Term  Loan  and Revolving Facility Agreement, dated October  28,
1996
(the "U.K. Credit Facility").

The Northern acquisition has been accounted for as a purchase
business
combination.  All identifiable assets acquired and liabilities
assumed
were  assigned a portion of the cost of acquiring Northern,
equal  to
their  fair values at the date of the acquisition.  Minority
interest
is  recorded  at historical cost.   The total cost of the
acquisition
through December 31, 1996 was allocated as follows:

Cash                                     $     200,399
Properties, plants and equipment             1,101,860
Other assets                                   541,554
Northern project debt                         (447,119)
Accounts payable                              (213,710)
Accrued liabilities                           (606,525)
Minority interest                             (297,821)
Preferred securities                          (136,065)
Excess of cost over fair value of
 net assets acquired, net of
 deferred taxes of  $129,493                   267,648
                                            $  410,221

In  1993, Northern entered into a contract relating to the
purchase of
400  MW  of capacity from a 15.4% owned related party, Teesside
Power
Limited  ("Teesside"),  for a period of 15 years  beginning
April  1,
1993.   The  contract sets escalating purchase prices at
predetermined
levels.  Currently the escalating contract prices exceed those
paid by
the Company to the electricity pool (the "Pool") which is
operated  by
the  National Grid Group.  However, under current price cap
regulation
expected to expire March 31, 1998 the Company is able to recover
these
costs.   For  the  period  after  March  31,  1998,  the  Company
has
established  a  liability for the estimated loss as a result  of
this
contract.

Northern  utilizes contracts for differences ("CFDs") to mitigate
its
exposure to volatility in the prices of electricity purchased
through
the Pool.  Such contracts allow the Company to effectively
convert the
majority  of  its  anticipated Pool purchases  from  market  to
fixed
prices.   As  of  December 31, 1996, CFDs were in  place  to
hedge  a
portion  of electricity purchases of approximately 55,000 GWh
through
the year 2008.

The  Labour  Party has asserted that if they are elected at  the
next
General Election, which must be held no later than May 22, 1997,
they
will  seek  to introduce a "windfall" assessment to be levied  on
the
privatized  utilities including Northern.  The Company has
established
a  liability for such an assessment as part of its purchase
accounting
reserves.

The preferred  securities reflect the fair value  of  the
outstanding
    preferred stock of Northern.

Falcon Seaboard

On  August  7,  1996 the Company completed the acquisition  of
Falcon
Seaboard  for  a  cash price of $229,500 including acquisition
costs.
Through  the  acquisition, the Company indirectly acquired
significant
ownership   interests   in  three  operating  gas-fired
cogeneration
facilities  and  a  related  natural-gas pipeline.    The  plants
are
located  in  Texas,  Pennsylvania and New York and  total  520
MW  in
capacity.

The  Falcon Seaboard acquisition has been accounted for as a
purchase
business   combination.    All  identifiable   assets   acquired
and
liabilities  assumed were assigned a portion of the cost of
acquiring
Falcon  Seaboard,  equal  to their fair values  at  the  date  of
the
acquisition.  The  total  cost  of the acquisition  was
allocated  as
follows:

Cash                                       $   22,923
Operating facilities                          141,176
Power sales agreements                         23,282
Equity investments                            144,656
Other assets                                   27,229
Project loans                                (119,478)
Other liabilities                             (15,527)
Excess of cost over fair value of
 net assets acquired, net of
 deferred taxes of $93,279                      5,239
                                           $  229,500

Edison Mission Energy's Partnership Interest

On  April  17,  1996 the Company completed the acquisition  of
Edison
Mission  Energy's  Partnership Interests in four geothermal
operating
facilities  in  California  for  a  cash  purchase  price  of
$71,000
including  acquisition costs.   The four projects, Vulcan,  Hoch
(Del
Ranch),  Leathers  and Elmore, are located in the Imperial
Valley  of
California.  Prior to this transaction, the Company was a 50%
owner of
these facilities.

The  Partnership  Interest acquisition has been  accounted  for
as  a
purchase  business combination.  All identifiable assets acquired
and
liabilities  assumed were assigned a portion of the cost of
acquiring
the  Partnership Interest, equal to their fair values at the
date  of
the  acquisition.  The total cost of the acquisition was
allocated  as
follows:

Cash                                           $  12,956
Restricted cash                                   13,226
Power sales agreements                            78,036
Other assets                                      20,254
Project loans                                    (48,161)
Liabilities                                       (5,311)
                                                $ 71,000

Magma Power Company

On  January  10, 1995, the Company acquired approximately 51%  of
the
outstanding shares of common stock of Magma (the "Magma Common
Stock")
through  a  cash tender offer (the "Magma Tender Offer") and
completed
the   Magma  acquisition  on  February  24,  1995  by  acquiring
the
approximately 49% of the outstanding shares of Magma Common Stock
not
owned by the Company through a merger.

The  Magma  acquisition has been accounted for as a purchase
business
combination.  All identifiable assets acquired and liabilities
assumed
were assigned a portion of the cost of acquiring Magma, equal to
their
fair  values  at the date of the acquisition. The total  cost  of
the
acquisition was allocated as follows:

Cash                                              $   62,116
Operating facilities and project cash                291,365
Power sales agreements                               173,730
Mineral reserves                                     160,768
Construction in progress                              93,174
Process license and other                             39,304
Excess of cost over fair value of net assets
 acquired, net of deferred taxes of $168,914         137,455

                                                    $957,912

Unaudited pro forma combined revenue, net income and primary
earnings
per  share of the Company, Northern, Falcon  Seaboard, the
Partnership
Interest  and Magma for the twelve months ended December 31, 1996
and
1995,  as  if the acquisitions had occurred at the beginning  of
1995
after  giving effect to certain pro forma adjustments related  to
the
acquisition   were   $2,162,381,  $64,811  and  $1.12,   compared
to
$2,006,496, $53,887 and $1.02, respectively.

4.Properties, Plants, Contracts and Equipment

Properties, plants, contracts and equipment comprise the
following  at
December 31:

                                                   1996     1995


Operating project costs:
Power plants and distribution system           $2,361,089
$623,778
Wells and resource development                    391,929
329,414
Power sales agreements                            232,228
188,415
Licenses, equipment, wells and resource
    development in progress                        66,207
58,517

Total operating facilities                      3,051,453
1,200,124
Less accumulated depreciation and amortization   (271,216)
(164,184)

Net operating facilities                        2,780,237
1,035,940

Mineral reserves                                  207,424
212,929
Construction in progress:
  Malitbog                                        152,411
146,735
  Mahanagdong                                     123,567
76,560
  Other international development                  84,944
11,418
  Upper Mahiao                                        ---
188,904
  Salton Sea IV                                       ---
108,769

Total                                          $3,348,583
$1,781,255

Coso Project Operating Facilities

The   Coso   Project  operating  facilities  comprise  the
Company's
proportionate share of the assets of three of its Coso Joint
Ventures:
Coso Finance Partners ("Navy I Joint Venture"), Coso Energy
Developers
("BLM  Joint  Venture"),  and Coso Power Developers  ("Navy  II
Joint
Venture").   The Navy I power plant is located on land  owned  by
and
leased  from the U.S. Navy to December 2009, with a 10 year
extension
at  the  option of the Navy. Under terms of the Navy I Joint
Venture,
profits  and losses were allocated approximately 49% before
payout  of
Units 2 and 3 and approximately 46.4% thereafter to the Company.
As of
December  31, 1994, payout had been reached on Units 2 and  3  of
the
Navy I Joint Venture.  The BLM power plant is situated on lands
leased
from  the  U.S.  Bureau of Land Management under  a  geothermal
lease
agreement  that  extends  until October 31, 2035.  The  lease
may  be
extended to 2075 at the option of the BLM. Under the terms of the
BLM
Joint  Venture  agreement, the Company's share of profits  and
losses
before  and  after payout is approximately 45% and 48%,
respectively.
The BLM Joint Venture reached payout in June 1994.  Under terms
of the
Navy  II  Joint Venture, all profits, losses and capital
contributions
for Navy II are divided equally by the two partners.

Imperial Valley Project Operating Facilities

The  Company currently operates eight geothermal power plants  in
the
Imperial Valley in California. Four of these plants were
developed  by
Magma.  The  Partnership Project consists of  the  Vulcan,  Hoch
(Del
Ranch),  Elmore, and Leathers Partnerships. The remaining four
plants
which  comprise  the  Salton  Sea Project are  indirect  wholly
owned
subsidiaries of the Company, three of which were purchased by
Magma on
March  31,  1993 from Union Oil Company of California and  the
fourth
which  was  completed  by the Company in June 1996.  These
geothermal
power  plants consist of the Salton Sea I, Salton Sea II,  Salton
Sea
III  and the Salton Sea IV. The Partnership Project and the
Salton Sea
Project  are collectively referred to as the Imperial Valley
Project.
The  Imperial Valley Project commencement dates and nominal
capacities
are as follows:

Imperial Valley                  Commencement
Nominal
   Plants                            Date
Capacity

  Vulcan                           February 10, 1986          34
MW
  Hoch (Del Ranch)                 January 2, 1989            38
MW
  Elmore                           January 1, 1989            38
MW
  Leathers                         January 1, 1990            38
MW
  Salton Sea I                     July 1, 1987               10
MW
  Salton Sea II                    April 5, 1990              20
MW
  Salton Sea III                   February 13, 1989
49.8 MW
  Salton Sea IV                    May 24, 1996
39.6 MW

Significant Customers and Contracts

All  of  the Company's sales of electricity from the Coso Project
and
Imperial  Valley  Project, which comprise approximately  77%  of
1996
electricity and steam revenues, are to Edison and are under  long-
term
power purchase contracts.

The  Coso  Project  and the Partnership Project sell  all
electricity
generated  by  the respective plants pursuant to seven  long-term
SO4
Agreements  between  the  projects and Edison.  These  SO4
Agreements
provide  for  capacity payments, capacity bonus  payments  and
energy
payments. Edison makes fixed annual capacity payments to the
projects
and, to the extent that capacity factors exceed certain
benchmarks, is
required  to make capacity bonus payments. The price for capacity
and
capacity  bonus payments is fixed for the life of the SO4
Agreements.
Energy  is sold at increasing scheduled rates for the first ten
years
after  firm  operation  and  thereafter at Edison's  Avoided
Cost  of
Energy.

The  scheduled energy price periods of the Coso Project SO4
Agreements
extend  until  at least August 1997, March 1999 and January  2000
for
each  of  the  units  operated  by  the  Navy  I,  BLM  and  Navy
II
Partnerships, respectively. The Company's share of the annual
capacity
payments  is approximately $5,600 to $5,900 per annum for each
plant.
The  Company's  share  of bonus payments is approximately  $1,000
per
annum for each plant.

The  scheduled  energy  price periods of the Partnership  Project
SO4
Agreements extended until February 1996 for the Vulcan
Partnership and
extend until December 1998, December 1998, and December 1999 for
each
of   the   Hoch   (Del  Ranch),  Elmore  and  Leathers
Partnerships,
respectively.  The annual capacity payments are approximately
$24,500
and  the bonus payments are approximately $4,400 in aggregate for
the
four plants.

Excluding Vulcan, which is receiving Edison's Avoided Cost of
Energy,
the  Company's  SO4 Agreements provide for energy rates  ranging
from
12.6>  per kWh in 1996 to 15.6> per kWh in 1999.  The weighted
average
energy rate for all of the Company's SO4 Agreements was 11.7> per
kWh
in 1996.

Salton  Sea  I  sells  electricity to Edison  pursuant  to  a  30-
year
negotiated  power purchase agreement, as amended (the  "Salton
Sea  I
PPA"),  which  provides for capacity and energy payments.  The
energy
payment is calculated using a Base Price which is subject to
quarterly
adjustments  based  on a basket of indices. The time  period
weighted
average energy payment for Salton Sea I was 5.1> per kWh during
1996.
As  the  Salton Sea I PPA is not an SO4 Agreement, the energy
payments
do  not  revert  to  Edison's Avoided Cost of  Energy.   The
capacity
payment is approximately $1,100 per annum.

Salton  Sea II and Salton Sea III sell electricity to Edison
pursuant
to 30-year modified SO4 Agreements that provide for capacity
payments,
capacity  bonus payments and energy payments. The price  for
contract
capacity and contract capacity bonus payments is fixed for the
life of
the  modified  SO4 Agreements. The energy payments for the  first
ten
year period, which period expires in April 2000 and February 1999
are
levelized at a time period weighted average of 10.6> per kWh and
9.8>
per   kWh  for  Salton  Sea  II  and  Salton  Sea  III,
respectively.
Thereafter, the monthly energy payments will be Edison's Avoided
Cost
of  Energy. For Salton Sea II only, Edison is entitled to
receive,  at
no  cost,  5%  of  all energy delivered in excess of 80%  of
contract
capacity  through  September 30, 2004. The annual capacity  and
bonus
payments for Salton Sea II and Salton Sea III are approximately
$3,300
and $9,700, respectively.

The  Salton Sea IV Project sells electricity to Edison pursuant
to  a
modified  SO4 agreement which provides for contract capacity
payments
on  34  MW  of capacity at two different rates based on the
respective
contract capacities deemed attributable to the original Salton
Sea PPA
option (20 MW) and to the original Fish Lake PPA (14 MW). The
capacity
payment  price  for  the 20 MW portion adjusts  quarterly  based
upon
specified indices and the capacity payment price for the 14 MW
portion
is a fixed levelized rate.  The energy payment (for deliveries up
to a
rate  of  39.6  MW) is at a fixed price for 55.6% of the total
energy
delivered by Salton Sea IV and is based on an energy payment
schedule
for  44.4%  of  the  total energy delivered by  Salton  Sea  IV.
The
contract has a 30-year term but Edison is not required to
purchase the
20 MW of capacity and energy originally attributable to the
Salton Sea
I  PPA option after September 30, 2017, the original termination
date
of the Salton Sea I PPA.

For the year ended December 31, 1996, Edison's average Avoided
Cost of
Energy was 2.5 cents per kWh which is substantially below the
contract
energy  prices earned for the year ended December 31, 1996.
Estimates
of Edison's future Avoided Cost of Energy vary substantially from
year
to  year. The Company cannot predict the likely level of Avoided
Cost
of  Energy  prices  under  the SO4 Agreements  and  the  modified
SO4
Agreements  at  the expiration of the scheduled payment  periods.
The
revenues  generated  by  each  of the  projects  operating  under
SO4
Agreements  could  decline significantly after the expiration  of
the
respective scheduled payment periods.

The  Upper  Mahiao Project was deemed complete in June 1996 and
began
receiving  capacity  payments pursuant  to  the  Upper  Mahiao
Energy
Conversion  Agreement  ("ECA"), in  July  of  1996.   The
project  is
structured  as  a ten year BOOT, in which the Company's
subsidiary  CE
Cebu  Geothermal Power Company, Inc. ("CE Cebu"), the project
company,
is responsible for providing operations and maintenance during
the ten
year  BOOT  period.   The electricity generated by  the  Upper
Mahiao
geothermal  power plant is sold to PNOC-Energy Development
Corporation
("PNOC-EDC"),  which  is also responsible for supplying  the
facility
with the geothermal steam.  After the ten year cooperation
period, and
the recovery by the Company of its capital investment plus
incremental
return, the plant will be transferred to PNOC-EDC at no cost.

PNOC-EDC  is obligated to pay for electric capacity that is
nominated
each  year by CE Cebu, irrespective of whether PNOC-EDC is
willing  or
able to accept delivery of such capacity.  PNOC-EDC pays to CE
Cebu  a
fee (the "Capacity Fee") based on the plant capacity nominated to
PNOC-
EDC   in  any  year  (which,  at  the  plant's  design  capacity,
is
approximately 95% of total contract revenues) and a fee  (the
"Energy
Fee")   based  on  the  electricity  actually  delivered  to
PNOC-EDC
(approximately  5%  of  total contract revenues).   The  Capacity
Fee
serves  to recover the capital costs of the project, to recover
fixed
operating costs and to cover return on investment.  The Energy
Fee  is
designed to cover all variable operating and maintenance costs of
the
power  plant.  Payments under the Upper Mahiao ECA are
denominated  in
U.S. Dollars, or computed in U.S. dollars and paid in Philippine
pesos
at  the  then-current exchange rate, except for the Energy Fee,
which
will be used to pay Philippine peso-denominated expenses.
Significant
portions  of the Capacity Fee and Energy Fee are indexed to  U.S.
and
Philippine   inflation   rates,  respectively.    PNOC-EDC's
payment
requirements, and its other obligations under the Upper Mahiao
ECA are
supported  by the Government of the Philippines through a
performance
undertaking.

Unit I of the Malitbog Project was deemed complete in July 1996.
The
Malitbog  Project  is  being built, owned  and  operated  by
VGPC,  a
Philippine  general partnership that is wholly owned,
indirectly,  by
the  Company.   VGPC is selling 100% of its capacity on
substantially
the same basis as described above for the Upper Mahiao Project to
PNOC-
EDC,  which will in turn sell the power to the NPC. As with the
Upper
Mahiao project, the Malitbog project is structured as a ten year
BOOT,
in which the Company will be responsible for implementing
construction
of  the geothermal power plant and, as owner, for providing
operations
and  maintenance  for  the ten year BOOT period.   After  a  ten
year
cooperation  period, and the recovery by the Company  of  its
capital
investment  plus incremental return, the plant will be
transferred  to
PNOC-EDC at no cost.

The Saranac Project sells electricity to New York State Electric
& Gas
pursuant  to  a  15  year  negotiated power  purchase  agreement
(the
"Saranac  PPA"),  which  provides for capacity  and  energy
payments.
Capacity payments, which in 1996 total 2.1> per kWh, are received
for
electricity produced during "peak hours" as defined in the
Saranac PPA
and escalate at approximately 4.1% annually for the remaining
term  of
the  contract. Energy payments, which average 6.3> per  kWh  in
1996,
escalate at approximately 4.4% annually for the remaining term of
the
Saranac PPA.  The Saranac PPA expires in June of 2009.

The  Power  Resources  Project sells electricity  to  Texas
Utilities
Electric  Company  ("TUEC") pursuant to a  15  year  negotiated
power
purchase  agreement  (the "Power Resources PPA"), which  provides
for
capacity  and energy payments.  Capacity payments and energy
payments,
which  in  1996  are $2,930 per month and 2.86> per kWh,
respectively,
escalate  at  3.5%  annually  for the  remaining  term  of  the
Power
Resources PPA.  The Power Resources PPA expires in September
2003.

The   NorCon  Project  sells  electricity  to  Niagara  Mohawk
Power
Corporation  ("Niagara")  pursuant  to  a  25  year  negotiated
power
purchase  agreement  (the  "NorCon PPA")  which  provides  for
energy
payments  calculated  pursuant  to  an  adjusting  formula  based
on
Niagara's  ongoing  Tariff Avoided Cost and the  contractual
Long-Run
Avoided Cost.  The NorCon PPA term extends through December 2017.
The
Company  and Niagara are currently engaged in discussions
regarding  a
potential restructuring or buyout and termination of the NorCon
PPA.

The  Yuma Project sells electricity to SDG&E under an existing 30-
year
power  purchase contract.  The energy is sold at SDG&E's Avoided
Cost
of  Energy and the capacity is sold to SDG&E at a fixed price for
the
life  of  the  power  purchase contract.  The  contract  term
extends
through May 2024.

Royalty Expense

Royalty expense comprises the following for the years ended:

                                1996      1995      1994

Navy I, Unit 1              $  1,620   $ 1,622    $1,641
Navy I, Units 2 and 3          3,512     3,394     3,174
BLM                            2,538     3,036     2,842
Navy II                        5,742     5,571     1,963
Partnership Project            6,702     6,820       ---
Salton Sea Project             3,526     3,578       ---
Desert Peak                       53       287       268
   Total                     $23,693   $24,308    $9,888

The  amount  of royalties paid by Navy I to the U.S. Navy  to
develop
geothermal  energy for Navy I, Unit 1 on the lands owned by  the
Navy
comprises (i) a fee payable during the term of the contract
based  on
the  difference  between the amounts paid by the Navy  to  Edison
for
specified quantities of electricity and the price as determined
under
the  contract (which currently approximates 73% of that  paid  by
the
Navy  to Edison), and (ii) $25,000 payable in December 2009, of
which
the  Company's  share is $11,600. The $25,000 payment  is
secured  by
funds  placed on deposit monthly, which funds, plus accrued
interest,
will  aggregate $25,000. The monthly deposit is currently $50.
As  of
December 31, 1996, the balance of funds deposited approximated
$5,311,
which amount is included in restricted cash.

Units  2  and  3 of Navy I and the Navy II power plants  are  on
Navy
lands,  for which the Navy receives a royalty based on electric
sales
revenue at the initial rate of 4% escalating to 22% by the end of
the
contract  in December 2019. The BLM is paid a royalty of  10%  of
the
value  of steam produced by the geothermal resource supplying the
BLM
Plant.

The  Partnership Project pays royalties based on both energy
revenues
and  total  electricity revenues. Hoch (Del Ranch)  and  Leathers
pay
royalties  of  approximately 5% of energy revenues  and  1%  of
total
electricity  revenue.  Elmore pays royalties of  approximately
5%  of
energy revenues. Vulcan pays royalties of 4.167% of energy
revenues.

The  Salton Sea Project's weighted average royalty expense in
1996 was
approximately  5.2%.  The royalties are paid  to  numerous
recipients
based on varying percentages of electrical revenue or steam
production
multiplied by published indices.

Nevada and Utah Properties

Roosevelt  Hot Springs. The Company operates and owns an
approximately
70%  interest  in  a geothermal steam field which supplies
geothermal
steam  to a 23 net MW power plant owned by Utah Power & Light
Company
("UP&L") located on the Roosevelt Hot Springs property under a 30-
year
steam sales contract.

The  Company  obtained  approximately $20,317 cash  under  a  pre-
sale
agreement  with  UP&L  whereby UP&L paid  in  advance  for  the
steam
produced  by  the  steam field. The Company must make certain
penalty
payments  to UP&L if the steam produced does not meet certain
quantity
and quality requirements.

Desert  Peak.  The Company is the owner and operator of  a
geothermal
plant at Desert Peak, Nevada that is currently selling
electricity  to
Sierra Pacific Power Company ("Sierra") at Sierra's Avoided Cost.

Glass Mountain

Under  a  Bonneville  Power  Administration ("BPA")  geothermal
pilot
program,  the  Company  has been developing a  30  net  MW
geothermal
project  which was originally located in the Newberry Known
Geothermal
Resource  Area  in Deschutes County, Oregon.  Pursuant  to  two
power
sales  contracts  executed  in September 1994,  an  affiliate  of
the
Company  agreed  to sell 20 MW to BPA and 10 MW to  Eugene  Water
and
Electric  Board ("EWEB") from the Project.  In addition, BPA and
EWEB
together  have  an option to purchase up to an additional  100
MW  of
production from the project under certain circumstances.  These
power
sales contracts provide that under certain circumstances the
contracts
may be utilized at an alternative location.

Pursuant  to  its  resource  exploration  program,  the  Company
has
determined  that the geothermal resource at Newberry is not
sufficient
to support the contracts and accordingly has determined to
utilize the
contracts  at  its  leasehold position in Glass Mountain  (the
"Glass
Mountain Project") in Northern California, where it has two
successful
production  wells.  The Company and BPA have agreed  to  relocate
the
project  to Glass Mountain.  Under the relocation agreement  BPA
will
purchase 30 MW from the project.  The movement of the project to
this
alternative  location  and BPA's purchase obligation  are
subject  to
obtaining a final environmental impact statement relating to  the
new
site location.  Discussions with EWEB are continuing.

The   Glass  Mountain  Project  is  currently  expected  to
commence
commercial  operation in 2000.  Completion of this project is
subject
to a number of significant uncertainties and cannot be assured.

5. Equity Investments

The  Company has a present indirect ownership of approximately
35%  in
the   Casecnan  Project,  a  combined  irrigation  and  150   net
MW
hydroelectric power generation project located on the island of
Luzon
in the Philippines.

The  Company acquired an approximate 47% economic interest in
Saranac
Power  Partners,  L.P.  and a 20% economic interest  in  NorCon
Power
Partners, L.P. as part of the Falcon Seaboard acquisition.

Summary financial information for these equity investments
follows:

                                     Casecnan   Saranac  NorCon

As of and for the year ended December 31, 1996:

Assets                             $ 492,166  $ 325,174   $
125,956
Liabilities                          380,737    213,326
121,223
Net income (loss)                    (11,207)    40,005
(53)

As of December 31, 1995:
Assets                              501,160        N/A       N/A
Liabilities                         378,524        N/A       N/A

6.                       Parent Company Debt

 Parent company debt comprises the following at December 31:
                                             1996          1995
Senior discount notes                   $   527,535     $ 477,355
Senior notes                                224,150           ---
Limited recourse senior secured notes*      200,000       200,000
CalEnergy credit facility                   100,000           ---
Revolving credit facility                    95,000           ---
Convertible subordinated debentures             ---       100,000
Convertible debt                                ---        64,850
                                        $ 1,146,685     $ 842,205

*The amount of recourse obligation to the parent was $0 at
December 31, 1996.

Senior Discount Notes

In  March 1994, the Company issued $400,000 of 10 1/4% Senior
Discount
Notes  which  accrete to an aggregate principal amount of
$529,640  at
maturity in 2004.  The original issue discount (the difference
between
$400,000  and  $529,640)  will be amortized from  issue  date
through
January  15, 1997, during which time no cash interest will be
paid  on
the Senior Discount Notes.  Commencing July 15, 1997, cash
interest on
the  Senior Discount Notes will be payable semiannually on
January  15
and July 15 of each year.  The Senior Discount Notes are
redeemable at
any  time on or after January 15, 1999 initially at a redemption
price
of  105.125%  declining  to  100% on January  15,  2002  plus
accrued
interest  to  the date of redemption.  The Senior Discount  Notes
are
unsecured senior obligations of the Company.

The  Senior  Discount Notes prohibit payment of cash dividends
unless
certain  financial  ratios are met and unless  the  dividends  do
not
exceed  50%  of  the Company's accumulated adjusted  consolidated
net
income  as defined, subsequent to April 1, 1994, plus the
proceeds  of
any stock issuance.

Senior Notes

On  September  20,  1996  the  Company completed  a  private
sale  to
institutional investors of $225,000 aggregate principal  amount
of  9
1/2%  Senior  Notes due 2006.  Interest on the Senior  Notes
will  be
payable  semiannually on March 15 and September 15 of each year.
The
Senior Notes are redeemable at any time on or after September 15,
2001
initially  at  a  redemption price of 104.75%  declining  to
100%  on
September  15,  2004 plus accrued interest to the date of
redemption.
The Senior Notes are unsecured senior obligations of the Company.

Limited Recourse Senior Secured Notes

On  July  21,  1995  the Company issued $200,000  of  9  7/8%
Limited
Recourse Senior Secured Notes Due 2003 (the "Notes"). Interest on
the
Notes  is  payable on June 30 and December 30 of each year,
commencing
December  1995. The Notes are secured by an assignment and
pledge  of
100%  of the outstanding capital stock of Magma and are recourse
only
to such Magma capital stock, the Company's interest in a secured
Magma
note and general assets of the Company equal to the Restricted
Payment
Recourse  Amount, as defined in the Note Indenture ("Note
Indenture"),
which was $0 at December 31, 1996.

At  any  time or from time to time on or prior to June 30,  1998,
the
Company  may,  at  its option, use all or a portion of  the  net
cash
proceeds  of  a  Company  equity offering  (as  defined  in  the
Note
Indenture)  and shall at any time use all of the net cash
proceeds  of
any Magma equity offering (as defined in the Note Indenture) to
redeem
up  to  an  aggregate  of 35% of the principal  amount  of  the
Notes
originally  issued  at a redemption price equal  to  109.875%  of
the
principal amount thereof plus accrued interest to the redemption
date.
On  or after June 30, 2000, the Notes are redeemable at the
option  of
the  Company, in whole or in part, initially at a redemption
price  of
104.9375%  declining  to 100% on June 30, 2002  and  thereafter,
plus
accrued interest to the date of redemption.

CalEnergy Credit Facility

On  October  28, 1996 the Company obtained a $100,000 credit
facility
(the  "CalEnergy  Credit Facility") of which  the  Company  has
drawn
$100,000  as  of  December 31,1996.  Borrowings  under  the
CalEnergy
Credit  Facility are unsecured and mature on October 28, 1997,
subject
to prepayment by the Company at any time.  Subsequent to year
end, the
Company repaid the entire balance of the CalEnergy Credit
Facility.

Revolving Credit Facility

On  July  8, 1996 the Company obtained a $100,000 three year
revolving
credit  facility.  The facility is unsecured and is available to
fund
general  operating  capital requirements and finance  future
business
opportunities.  The Company had drawn $95,000 as of December 31,
1996.
Subsequent to year end, the Company repaid the entire balance.


Convertible Subordinated Debentures

In  June of 1993, the Company issued $100,000 principal amount
of  5%
convertible subordinated debentures ("debentures") due July 31,
2000.
Substantially all of the debentures were converted into  4,443
common
shares  in September and October 1996 at a conversion price of
$22.50
per share.

Convertible Debt

On  November  19,  1991,  the  Company sold  one  thousand
shares  of
convertible preferred stock, Series C, at $50,000 per share to
Kiewit
Energy  Company  Inc. ("Kiewit"), a subsidiary of PKS,  in  a
private
placement.  Each share of the Series C preferred stock was
convertible
at  any  time at $18.375 per common share into 2,721 shares of
common
stock  subject to customary adjustments.  The Series C preferred
stock
had  a  dividend  rate of 8.125%, commencing March  15,  1992
through
conversion  date  or  December 15, 2003.  The  dividends,  which
were
cumulative,  were  payable quarterly in convertible  preferred
stock,
Series  C,  through March 15, 1995 and in cash on subsequent
dividend
dates.

Pursuant  to  the  terms  of the Securities  Purchase  Agreement,
the
Company  exercised its rights to exchange the preferred stock,
Series
C,  on  March  15, 1995 for $64,850 principal amount 9.5%
convertible
subordinated  debenture  of  the Company  due  2003,  with   the
same
conversion  features of the preferred stock, Series C.   On
September
20,  1996,  the  Company converted the $64,850  convertible  debt
and
associated  accrued interest into 3,620 common shares at a
conversion
price of $18.375 per share.

The  annual  repayments  of  the parent company  debt  for  the
years
beginning January 1, 1997 are as follows:

                         Senior                 Limited
                        Discount    Senior      Recourse
                         Notes       Notes      Notes *

  1997 - 2001          $    ---    $    ---    $    ---
  Thereafter            529,640     225,000     200,000
                       $529,640    $225,000    $200,000

*The amount of recourse obligation to the parent was $0 at
December 31, 1996.

7.  Subsidiary and Project Debt:

Project  loans  held  by  subsidiaries and  projects  of  the
Company
comprise the following at December 31:
                                             1996       1995

Salton Sea Notes and Bonds              $   538,982$   452,088
Northern eurobonds                          439,192        ---
Coso Funding Corp. project loans            148,346    203,226
U.K. Credit Facility                        128,423        ---
Power Resources project debt                114,571        ---
Construction loans                          377,454    211,198
Other                                         7,927     54,707
                                       $  1,754,895 $  921,219

Pursuant to separate project financing agreements, substantially
all
the assets of the Company are pledged or encumbered to support or
otherwise provide the security for the project or subsidiary
debt.

Salton Sea Notes and Bonds

On  June  20, 1996 and July 25, 1995, the Company through  its
wholly
owned   subsidiary,   Salton   Sea   Funding   Corporation
("Funding
Corporation"), completed sales to institutional investors of
$135,000
and  $475,000, respectively, of Salton Sea Notes and Bonds (the
"Notes
and  Bonds").  The Salton Sea Notes and Bonds are nonrecourse  to
the
Company.  The  Funding  Corporation debt securities  were
offered  as
follows:
              Senior Secured Series       Due          Rate
Amount
July 25, 1995           A Notes       May 30, 2000     6.69%
$232,750
July 25, 1995           B Bonds       May 30, 2005     7.37%
133,000
July 25, 1995           C Bonds       May 30, 2010     7.84%
109,250
June 20, 1996           D Notes       May 30, 2000     7.02%
70,000
June 20, 1996           E Bonds       May 30, 2011     8.30%
65,000

The  Salton  Sea  Notes and Bonds are secured by  the  Company's
four
existing  Salton Sea plants as well as an assignment of the
right  to
receive  various  royalties payable to Magma in  connection  with
its
Imperial  Valley  properties and distributions  from  the
Partnership
Project.

Each of the Company's direct or indirect subsidiaries is
organized  as
a  legal  entity  separate and apart from the Company  and  its
other
subsidiaries.   It should not be assumed that any asset  of  any
such
subsidiary will be available to satisfy the obligations of the
Company
or  any  of  its  other  such subsidiaries;  provided,  however,
that
unrestricted cash or other assets which are available for
distribution
may, subject to applicable law and the terms of financing
arrangements
of  such  parties, be advanced, loaned, paid as dividends or
otherwise
distributed  or  contributed  to the Company  or  affiliates
thereof.
Substantially  all  of  the  assets of each  subsidiary  listed
below
(except   Vulcan/BN  Geothermal  Power  Company  and   certain
other
subsidiaries  involved  in  project financing  activities)  have
been
encumbered  to  secure  obligations owed  to  the  creditors  of
such
subsidiary:

Fish Lake Power Company
Salton Sea Brine Processing L.P.
Salton Sea Power Generation L.P.
Vulcan Power Company
CalEnergy Operating Company
Salton Sea Funding Corporation
Salton Sea Power Company
Salton Sea Royalty Company
Vulcan/BN Geothermal Power Company
Del Ranch, L.P.
Elmore, L.P.
Leathers, L.P.

Pursuant  to the Depository Agreement, Funding Corporation
established
a  debt service reserve fund in the form of a letter of credit in
the
amount of $70,430 from which scheduled interest and principal
payments
can be made.

Northern Eurobonds

The  Northern debt includes a 55,000 ($94,177) debenture due in
1999,
which  bears a fixed interest rate of 12.661%.  The debt also
includes
bearer bonds repayable in 100,000 ($171,230) amounts in 2005 and
2020,
bearing fixed interest rates of 8.625% and 8.875%, respectively.

The balance at December 31, 1996 consists of the following:

              Debenture due 1999                       $  99,924
              Bearer bonds due 2005                      171,130
              Bearer bonds due 2020                      168,138
                                                       $ 439,192
Coso Funding Corp. Project Loans

The  Coso  Funding Corp. project loans are from Coso Funding
Corp.,  a
single-purpose corporation formed to issue notes for its  own
account
and  act  as an agent on behalf of the Coso Project.  On December
16,
1992,  pursuant  to separate credit agreements executed  between
Coso
Funding  Corp.  and  each Coso Joint Venture, the proceeds  from
Coso
Funding  Corp.'s note offering were loaned to the Coso  Project.
The
proceeds of $560,245 were used by the Coso Project to (i)
purchase and
retire   project  finance  debt  comprised  of  the  term  loans
and
construction  loans in the amount of $424,500, (ii)  fund
contingency
funds  in the amount of $68,400, (iii) fund debt service reserve
funds
in  the  amount  of  $40,000,  and (iv)  finance  $27,345  of
capital
expenditures  and transaction costs.  The contingency  fund  and
debt
service reserve fund were required by the project loan
agreements.

The  contingency fund represented the approximate maximum
amount,  if
any,  which could theoretically have been payable by the Coso
Project
to  third  parties to discharge all liens of record and other
contract
claims  encumbering  the Coso Project's plants  at  the  time  of
the
project  loans.   The  contingency fund was established  in
order  to
obtain  investment-grade ratings to facilitate the offer and
sale  of
the  notes  by  Coso  Funding Corp., and such  establishment  did
not
reflect the Coso Project's view as to the merits or likely
disposition
of  such litigation or other contingencies.  On June 9, 1993, MPE
and
the  Mission Power Group, subsidiaries of Edison Corp., and  the
Coso
Project  reached  a  final  settlement of  all  of  their
outstanding
disputes  and claims relating to the construction of the Coso
Project.
As  a  result  of the various payments and releases involved  in
such
settlement, the Coso Project agreed to make a net payment of
$20,000
to MPE from the cash reserves of the Coso Project contingency
fund and
MPE agreed to release its mechanics' liens on the Coso Project.
After
making  the $20,000 payment, the remaining balance of the Coso
Project
contingency fund (approximately $49,300) was used to increase the
Coso
Project  debt reserve fund from approximately $43,000 to  its
maximum
fully-funded requirement of $67,900.  The remaining $24,400
balance of
contingency  fund  was  retained within the Coso  Project  for
future
capital  expenditures  and  for Coso Project  debt  service
payments.
Since  the  Coso  Project  debt service reserve  is  fully
funded  in
advance,  Coso Project cash flows otherwise intended to fund the
Coso
Project  debt service reserve fund, subject to satisfaction of
certain
covenants  and  conditions  contained  in  the  Coso  Joint
Ventures'
refinancing  documents,  may  be available  for  distribution  to
the
Company in its proportionate share.

The  Coso  Funding  Corp. project loans are collateralized  by,
among
other  things,  the  power plants, geothermal resource,  debt
service
reserve  funds,  contingency  funds,  pledge  of  contracts,  and
an
assignment  of all such Coso Project's revenues which will be
applied
against  the  payment  of  obligations of  each  Coso  Joint
Venture,
including  the project loans.  Each Coso Joint Venture's  assets
will
secure only its own project loan, and will not be cross-
collateralized
with   assets   pledged  under  other  Coso  Joint  Venture's
credit
agreements.  The project loans are nonrecourse to any partner  in
the
Coso  Joint Ventures and the Coso Funding Corp. shall solely
look  to
such  Coso  Joint  Venture's pledged assets for satisfaction  of
such
project  loans.   However, the loans are cross-collateralized  by
the
available  cash  flow  of each Coso Joint Venture.   Each  Coso
Joint
Venture after satisfying a series of its own obligations has
agreed to
advance support loans (to the extent of available cash flow and,
under
certain  conditions,  its debt service reserve  funds)  in  the
event
revenues  from the supporting Coso Joint Ventures are
insufficient  to
meet scheduled principal and interest on their separate project
loans.

The  Coso Funding Corp. project loans carry a fixed interest rate
with
weighted  average interest rates of 8.46% and 8.29%  at  December
31,
1996  and  1995,  respectively.  The loans have  scheduled
repayments
through December 2001.

U.K. Credit Facility

On  October  28,  1996 CE Holdings obtained a 560,000 ($958,888)
five
year  term  loan  and  revolving credit  facility  (the  "U.K.
Credit
Facility").   The  Company has not guaranteed,  nor  is  it
otherwise
subject  to  recourse  for, amounts borrowed  under  the  U.K.
Credit
Facility.  The agreement places restrictions on distributions
from  CE
Electric to any of its shareholders based on certain financial
ratios.
As of December 31, 1996, CE Holdings had drawn 75,000 ($128,423)
under
the agreement.

Power Resources Project Financing Debt

Power  Resources,  an  indirect wholly-owned subsidiary,  has
project
financing  debt consisting of a term loan payable to a
consortium  of
banks  with interest and principal due quarterly through October
2003.
The  debt  carries fixed interest rates of 10.385% and  10.625%.
The
loan is collateralized by all of the assets of Power Resources.

The  annual  repayments of the subsidiary and project debt,
excluding
construction  loans,  for  the years beginning  January  1,  1997
and
thereafter are as follows:

                   Salton Sea           Coso
                   Notes and           Funding  UK Credit   Power
                     Bonds   Northern    Corp.  Facility
Resources     Other
            1997  $  90,228  $   ---  $ 41,729  $    ---  $
11,228     $  873
            1998    106,938      ---    38,912       ---
12,805      1,678
            1999     57,836   99,924    31,717       ---
14,268      1,421
            2000     25,072      ---     4,080       ---
16,087      1,181
            2001     22,376      ---    31,908   128,423
18,119        959
Thereafter          236,532  339,268       ---       ---
42,064      1,815

                   $538,982 $439,192  $148,346  $128,423
$114,571     $7,927

Construction Loans

The Company's share of project construction loans comprise the
following at December 31:

                           1996        1995
Upper Mahiao             $150,628    $134,619
Malitbog                  137,881      36,863
Mahanagdong                76,503      39,716
Dieng Unit I               12,442         ---
                         $377,454    $211,198

The  construction loans are scheduled to be replaced by  term
project
financing   upon  completion  of  construction  and  commencement
of
commercial operations.


Upper Mahiao Construction Loan

Draws  on the construction loan for the Upper Mahiao geothermal
power
project  at  December  31,  1996 totaled $150,628.   A
consortium  of
international banks provided the construction financing with
interest
rates at LIBOR or "Prime" with interest payments due every
quarter and
at LIBOR maturity.  The weighted average interest rate at
December 31,
1996  and  1995  is approximately 8.01% and 8.31%, respectively.
The
Export-Import  Bank of the U.S. ("Ex-Im Bank") is providing
political
risk  insurance  to  commercial banks on the construction  loan.
The
construction loan is expected to be converted to a term loan
promptly
after  NPC  completes the full capacity transmission  line,
which  is
currently  expected in early 1997.  The largest portion  of  the
term
loan  for  the project will also be provided by Ex-Im Bank.  The
term
financing  for the Ex-Im Bank loan will be for a ten year  term
at  a
fixed interest rate of 5.95%.

Malitbog Construction Loan

Draws  on  the  construction  loan for the Malitbog  geothermal
power
project at December 31, 1996 totaled $137,881. Credit Suisse and
OPIC
have  provided the construction and term loan facilities.   The
eight
year  project term loan facilities will be at variable interest
rates
(weighted  average of 8.15% and 8.42% at December 31, 1996  and
1995,
respectively).   The international bank portion of the  debt
will  be
insured  by  the  Overseas  Private  Investment  Corporation
("OPIC")
against  political  risks  and the Company's  equity
contribution  to
Visayas Geothermal Power Company ("VGPC") is covered by political
risk
insurance from the Multilateral Investment Guarantee Agency and
OPIC.

Mahanagdong Construction Loan

The  Company's  share  of  draws  on the  construction  loan  for
the
Mahanagdong  geothermal  power project at December  31,  1996
totaled
$76,503.   The construction debt financing is provided by OPIC
and  a
consortium  of  international banks.  The construction  loan
interest
rates are at LIBOR or "Prime" with interest payments due
quarterly and
at LIBOR maturity.  The weighted average interest rate at
December 31,
1996 and 1995 is approximately 8.05% and 8.02% respectively.
Political
risk  insurance  from Ex-Im Bank has been obtained for the
commercial
lenders.   Ten  year  project  term debt  financing  of
approximately
$120,000  will be provided by Ex-Im Bank (which will replace the
bank
construction debt) and by OPIC.  The majority of the term
financing is
expected to be provided by the Ex-Im Bank at a fixed interest
rate  of
6.92%.

Dieng Construction Loan

On  October 4, 1996 the Company closed the $120,000 project
financing
for  the  Dieng  Unit  I  55  net  MW geothermal  project
located  in
Indonesia.   The  loan  carries  a variable  interest  rate
(weighted
average of 7.19% at December 31, 1996) and has scheduled project
term
repayments  through 2002.  Dieng Unit I is under construction
and  is
currently  expected to begin commercial operation by late  1997.
The
Company has drawn $12,442 as of December 31, 1996.

8. Income Taxes

Provision  for income taxes is comprised of the following at
December
31:
                                             1996       1995
1994

Currently payable:
State                                    $ 7,520     $ 5,510
$1,970
Federal                                   19,873      11,138
5,829
Foreign                                    2,176         ---
---
                                          29,569      16,648
7,799
Deferred:
State                                      1,619         921
1,017
Federal                                    9,209      13,062
7,241
Foreign                                    1,424         ---
---
                                          12,252      13,983
8,258
Total after benefit of
 extraordinary item                       41,821      30,631
16,057
Tax benefit attributable to
 extraordinary item                          ---         ---
945
Total before benefit of
 extraordinary item                      $41,821     $30,631
$17,002

A  reconciliation of the federal statutory tax rate to  the
effective
tax  rate  applicable  to  income before provision  for  income
taxes
follows:
                                    1996     1995      1994

Federal statutory rate             35.00%   35.00%    35.00%
Percentage depletion in excess
 of cost depletion                 (6.12)   (7.38)    (6.85)
Investment and energy tax credits  (8.34)   (1.80)    (3.04)
State taxes, net of federal
 tax effect                         4.38     4.09      4.48
Goodwill amortization               2.51     2.53       ---
Non-deductible expense               .84     1.10       ---
Lease investment                     ---    (2.18)      ---
Tax effect of foreign income        2.54      ---       ---
Other                                .01      .20       .86
                                   30.82%   31.56%    30.45%

Deferred tax liabilities (assets) are comprised of the following
at
December 31:
                                            1996           1995
Depreciation and amortization, net        $725,366       $349,079
Pensions                                    22,883            ---
Other                                        6,119          4,043

                                           754,368        353,122

Deferred contract costs                  (128,745)            ---
Deferred income                            (9,298)
(7,709)
Loss carryforwards                            ---
(3,050)
Energy and investment tax credits         (55,931)
(52,857)
Advance corporation tax                   (20,205)            ---
Alternative minimum tax credits           (50,819)
(52,480)
Jr. SO4 royalty receivable                 (5,865)
(5,865)
Accruals not currently deductible
 for tax purposes                         (13,372)            ---
Other                                        (934)
(4,641)

                                         (285,169)
(126,602)

Net deferred taxes                       $469,199        $226,520

The  Company  has unused investment and geothermal energy  tax
credit
carryforwards of approximately $55,931 expiring between 2002 and
2011.
The  Company also has approximately $50,819 of alternative
minimum tax
credit  and  11,800  ($20,205)  of  surplus  advance  corporation
tax
carryforwards which have no expiration date.

9.    Company-Obligated  Mandatorily Redeemable Convertible
Preferred
Securities of Subsidiary Trust Holding Solely Convertible
Debentures

On  April 12, 1996 CalEnergy Capital Trust, a special purpose
Delaware
business  trust organized by the Company  (the "Trust"),
pursuant  to
the  Amended  and  Restated Declaration of Trust  (the
"Declaration")
dated as of April 4, 1996, completed a private placement (with
certain
shelf  registration  rights)  of  $100,000  of  convertible
preferred
securities ("TIDES"). In addition, an option to purchase an
additional
78.6  TIDES,  or  $3,930, was exercised by the initial
purchasers  to
cover over-allotments.

The  Trust  has  issued  2,078.6 of 6 1/4% TIDES  with  a
liquidation
preference of fifty dollars each.  The Company owns all of the
common
securities  of  the  Trust.   The  TIDES  and  the  common
securities
represent undivided beneficial ownership interests in the Trust.
The
assets of the Trust consist solely of the Company's 6 1/4%
Convertible
Junior  Subordinated  Debentures due 2016 in an outstanding
aggregate
principal amount of $103,930 ("Junior Debentures") issued
pursuant  to
an  indenture  dated as of April 1, 1996.  The indenture
includes  an
agreement  by the Company to pay expenses and obligations
incurred  by
the Trust.  Each TIDES will be convertible at the option of the
holder
thereof  at  any  time  into 1.6728 shares of CalEnergy  Common
Stock
(equivalent to a conversion price of $29.89 per share of the
Company's
Common Stock), subject to customary anti-dilution adjustments.

Until  converted into the Company's Common Stock, the TIDES will
have
no voting rights with respect to the Company and, except under
certain
limited circumstances, will have no voting rights with respect to
the
Trust.  Distributions  on  the  TIDES  (and  Junior  Debentures)
are
cumulative,  accrue from the date of initial issuance and are
payable
quarterly in arrears, commencing June 15, 1996.  The Junior
Debentures
are subordinated in right of payment to all senior indebtedness
of the
Company  and  the Junior Debentures are subject to certain
covenants,
events  of  default and optional and mandatory redemption
provisions,
all as described in the Junior Debenture Indenture.

Pursuant  to a Preferred Securities Guarantee Agreement, dated
as  of
April  10, 1996 (the "Guarantee"), between the Company and a
preferred
guarantee  trustee, the Company has agreed irrevocably to pay  to
the
holders  of  the  TIDES,  to the extent that  the  Trustee  has
funds
available  to make such payments, quarterly distributions,
redemption
payments  and liquidation payments on the TIDES.  Considered
together,
the  undertakings  contained  in the Declaration,  Junior
Debentures,
Indenture  and Guarantee constitute a full and unconditional
guarantee
by the Company of the Trust's obligations under the TIDES.

10.Preferred Stock

On  December  1,  1988  the  Company distributed  a  dividend  of
one
preferred share purchase right ("right") for each outstanding
share of
common  stock. The rights are not exercisable until ten days
after  a
person  or  group  acquires or has the right  to  acquire,
beneficial
ownership of 20% or more of the Company's common stock or
announces  a
tender  or  exchange  offer for 30% or more of  the  Company's
common
stock. Each right entitles the holder to purchase one one-
hundredth of
a  share of Series A junior preferred stock for $52. The rights
may be
redeemed  by  the  Board of Directors up to ten days  after  an
event
triggering the distribution of certificates for the rights. The
rights
plan  was  amended in February 1991 so that the agreement with
Kiewit
would  not trigger the exercise of the rights. The rights will
expire,
unless  previously redeemed or exercised, on November  30,  1998.
The
rights  are automatically attached to, and trade with, each
share  of
common stock.

11.Stock Options and Restricted Stock

The Company has issued various stock options. As of December 31,
1996,
a total of 5,088 shares are reserved for stock options, of which
4,777
shares have been granted and remain outstanding at prices of
$3.00  to
$30.38 per share.

The  Company  has stock option plans under which shares were
reserved
for  grant  as incentive or non-qualified stock options, as
determined
by  the  Board of Directors. The plans allow options to be
granted  at
85%  of  their  fair  market value at the date  of  grant.
Generally,
options are issued at 100% of fair market value at the date of
grant.
Options  granted under the 1996 Plan become exercisable over a
period
of  three  to five years and expire if not exercised within ten
years
from  the date of grant or, in some instances a lesser term.
Prior  to
the 1996 Plan, the Company granted 256 options at fair market
value at
date  of  grant  which had terms of ten years and were
exercisable  at
date  of grant. In addition, the Company had issued approximately
138
options to consultants on terms similar to those issued under the
1996
Plan.  The  non-1996  plan options are primarily  options
granted  to
Kiewit (see Note 12).

The  Company  granted 500 shares of restricted common  stock
with  an
aggregate market value of $9,500 in exchange for the
relinquishment of
500  stock options which were canceled by the Company. The shares
have
all  rights  of  a  shareholder, subject to  certain
restrictions  on
transferability   and   risk  of  forfeiture.  Unearned
compensation
equivalent  to the market value of the shares at the date of
issuance
was  charged  to  Stockholders' equity. Such unearned
compensation  is
being  amortized  over  the vesting period of which  125  shares
were
immediately  vested  and the remaining 375 shares vest  straight
line
over  approximately  five years. Accordingly,  $1,535  and
$2,494  of
unearned  compensation  was  charged  to  general  and
administrative
expense in 1996 and 1995, respectively.

Transactions in Stock Options

<TABLE>
<CAPTION>
Options Outstanding
                          Shares Available
                          for Grant Under               Option
Price    Weighted Avg
                          1996 Option Plan     Shares     Per
Shares    Option Price   Total
<S>                        <C>               <C>       <C>
<C>        <C>
Balance December 31, 1993      439             8,514    $3.00 -
$19.00     $12.32     $104,931

Options granted               (954)            1,243    12.00 -
17.25       15.49       19,260
Options terminated              15               (15)    3.00 -
15.94       13.67         (205)
Options exercised              ---              (141)    3.00 -
15.94        5.03         (709)
Additional shares reserved
 under 1996 Option Plan        586               ---         ---
---          ---
Balance December 31, 1994       86             9,601     3.00 -
19.00       12.84      123,277

Options granted               (396)              396    15.81 -
19.00       18.15        7,188
Options terminated             571              (571)   14.88 -
19.00       18.69      (10,673)
Options exercised              ---              (135)    3.00 -
15.94        3.41         (460)
Balance December 31, 1995      261             9,291     3.00 -
19.00       12.84      119,332

Options granted             (1,157)           1,1572     5.06 -
30.38       28.17       32,590
Options terminated             468              (468)    3.00 -
19.00       17.96       (8,406)
Options exercised              ---            (5,203)    3.00 -
21.68       11.13      (57,931)
Additional shares reserved
 under 1996 Option Plan        739               ---          ---
---          ---
Balance December 31, 1996      311             4,777    $3.00 -
$30.38     $17.92      $85,585

Options exercisable at:
December 31, 1994                              7,897    $3.00 -
$19.00     $11.87      $93,705
December 31, 1995                              8,229    $3.00 -
$19.00     $12.26     $100,886
December 31, 1996                              3,071    $3.00 -
$30.38     $14.25      $43,770

</TABLE>

The following table summarizes information about stock options
outstanding
and exercisable as of December 31, 1996:

<TABLE>
<CAPTION>

                           Options Outstanding
Options Exercisable
                                             Weighted
Weighted Average                        Weighted
Range of                    Number           Average
Remaining           Number            Average
Exercise Prices          Outstanding      Exercise Price
Contractual Life     Exercisable     Exercise Price
<S>                        <C>              <C>
<C>                 <C>             <C>
$3.00   $11.99             1,251            $ 10.70             4
years             1,251           $ 10.70
12.00    20.99             2,369              16.72             7
years            1,786             16.50
21.00    30.38             1,157              28.16             9
years                34             29.25

                           4,777            $ 17.92             7
years             3,071           $ 14.25
</TABLE>

In October 1995 the Financial Accounting Standards Board issued
Statement
of Financial Accounting Standards No. 123 ("SFAS
123"), "Accounting for Stock-Based Compensation."  SFAS 123
defines a fair
value based method of accounting for stock-based employee
compensation
plans and encourages all entities to adopt that method of
accounting.
However, it also allows an entity to continue to measure
compensation cost
for those plans using the intrinsic value based method of
accounting.

The Company has decided to continue to apply the intrinsic value
based
method  of accounting for its stock-based employee compensation
plans.
If the fair value based method had been applied for 1996 and
1995, non-
cash  compensation expense and the effect on net income
available  to
common stockholders and earnings per share would have been
immaterial.
The fair value for stock options was estimated using the Black-
Scholes
option pricing model with assumptions for the risk-free interest
rate
of  6.00%,  expected volatility of 22%, expected life of
approximately
4.5 years, and no expected dividends.  The weighted average fair
value
of options granted during 1996 and 1995 was $8.62 per option and
$5.72
per option, respectively.

12.Common Stock Sales & Related Options

Simultaneous with the acquisition of the remaining equity
interest  of
Magma  on  February 24, 1995, the Company completed a public
offering
(the  "Offering")  of  18,170  shares of common  stock,  which
amount
included  a  direct sale by the Company to Kiewit of 1,500 shares
and
the  exercise of underwriter over-allotment options for 1,500
shares,
at  a  price  of  $17.00 per share. The Company received
proceeds  of
$300,388 from the Offering.

The  Company and Kiewit signed a Stock Purchase Agreement and
related
agreements,  dated as of February 18, 1991. Under  the  terms  of
the
agreements, Kiewit purchased 4,000 shares of common stock at
$7.25 per
share  and received options to buy 3,000 shares at a price of  $9
per
share exercisable over three years and an additional 3,000 shares
at a
price  of  $12  per  share  exercisable over five  years
(subject  to
customary adjustments).

In  May 1994, pursuant to a special antidilution provision of the
1991
Stock  Purchase Agreement between the Company and Kiewit, the
Company
increased Kiewit's existing option (granted in 1991) to purchase
3,000
shares  at  $12  per  share by an additional 289  shares  as  a
final
adjustment under such provisions.

In connection with this initial stock purchase, the Company and
Kiewit
also  entered  into certain other agreements pursuant to which
Kiewit
and  its  affiliates  agreed  not to acquire  more  than  34%  of
the
outstanding common stock (the "Standstill Percentage") for a five-
year
period  ending in February 1996 and Kiewit became entitled to
nominate
at least three of the Company's directors.

On  June  19, 1991, the board approved a number of amendments  to
the
Stock  Purchase Agreement and the related agreements. As part of
those
amendments, the Company extended the term of the $9 and $12
options to
seven  years;  modified certain of the other terms of  these
options;
granted  to Kiewit an option to acquire an additional 1,000
shares  of
the  common  stock  at  $11.625 per share for a  ten  year  term;
and
increased the Standstill Percentage from 34% to 49%.

On  November 19, 1991, the Board approved the issuance by the
Company
to  Kiewit  of  one  thousand shares of Series C preferred  stock
for
$50,000.  In connection with the sale of the Series C preferred
stock
to  Kiewit,  the  Standstill Agreement was amended  so  that  the
49%
Standstill  Percentage restriction would apply to voting stock
rather
than just common stock.

13.    Related Party Transactions

The  Company  charged and recognized a management fee and
interest  on
advances  to  its Coso Joint Ventures, which aggregated
approximately
$5,731,  $6,075 and $5,569 in the years ended December 31, 1996,
1995
and  1994,  respectively. The Company has a note receivable  from
the
Coso  Joint  Ventures included in deferred charges  and  other
assets
which bears a fixed interest rate of 12.5% and is payable on or
before
March 19, 2002.  The balance of the note is $11,578 and $14,254
as  of
December  31,  1996 and 1995, respectively.  This note is
subordinated
to the senior project loan on the project.

The Mahanagdong Project is being constructed by a consortium (the
"EPC
Consortium")  of Kiewit Construction Group, Inc. ("KCG")  and
the  CE
Holt  Company, a wholly owned subsidiary of the Company,
pursuant  to
fixed-price,  date-certain, turnkey supply and construction
contracts
(collectively,  the  "Mahanagdong EPC"). The obligations  of  the
EPC
Consortium  under the Mahanagdong EPC are supported by a
guaranty  of
KCG  at  an  aggregate  amount  equal  to  approximately  50%  of
the
Mahanagdong  EPC  price.  The Mahanagdong  EPC  provides  for
maximum
liability for liquidated damages of up to $100,500 and total
liability
of  up to $201,000. KCG, a wholly owned subsidiary of PKS, is the
lead
member  of  the  EPC Consortium, with an 80% interest.   KCG
performs
construction services for a wide range of public and private
customers
in  the U.S. and internationally. CE Holt Company provides design
and
engineering services for the EPC Consortium, and holds a 20%
interest.
The  Company  has provided a guaranty of CE Holt Company's
obligations
under the Mahanagdong EPC Contract.

The  Company has in an international joint venture agreement with
PKS,
a  stockholder of the Company, which the Company believes
enhances its
capabilities in foreign power markets. The joint venture
agreement  is
limited  to  international  power project development  activities
and
provides that, if both the Company and PKS agree to participate
in  a
project,  they will share all development costs equally.  The
Company
and  PKS each will provide 50% of the equity required for
financing  a
project  developed by the joint venture and the Company  will
receive
from  the  project a development fee (generally 1% of project
capital)
and  will  operate  and manage such project for a fee.  The
agreement
creates  a  joint development structure under which, on a
project  by
project  basis, the Company will be the development manager,
managing
partner and/or project operator, and equal equity participant
with PKS
and  a  preferred participant in the construction consortium  and
PKS
will  be  an  equal  equity  participant  and  the  preferred
turnkey
construction contractor. The joint venture agreement may be
terminated
by  either  party  on  15  days  written notice,  provided  that
such
termination cannot affect the pre-existing contractual
obligations  of
either party.

14.            Extraordinary Item

In  conjunction with the Company's Senior Discount Notes
offering  in
1994,  the  12%  Senior  Notes  were defeased.  This  resulted
in  an
extraordinary  item  in the amount of $2,007,  after  the  income
tax
effect of $945. The extraordinary item represents the amount
necessary
to  defease the interest payments and the unamortized portion  of
the
deferred financing costs on the 12% Senior Notes.

15.Fair Value of Financial Instruments

The  fair  value of a financial instrument is the amount at which
the
instrument could be exchanged in a current transaction between
willing
parties,  other  than  in  a  forced  sale  or  liquidation.
Although
management  uses  its best judgment in estimating the  fair
value  of
these  financial  instruments, there are inherent limitations  in
any
estimation  techniques. Therefore, the fair value estimates
presented
herein are not necessarily indicative of the amounts which the
Company
could realize in a current transaction.

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

Debt  instruments  -  The  fair value of all  debt  issues
listed  on
exchanges has been estimated based on the quoted market prices.

Interest  rate swap agreements - The fair value of interest rate
swap
agreements  is  estimated based on quotes from the  counter
party  to
these  instruments  and  represents the  estimated  amounts  that
the
Company would expect to receive or pay to terminate the
agreements. It
is  the  Company's  intention to hold the  swap  agreements  to
their
intended maturity.

Other  financial  instruments - All other financial instruments
of  a
material nature fall into the definition of short-term and fair
value
is estimated as the carrying amount.

The  carrying  amounts  in  the table below  are  included  under
the
indicated captions in Notes 6 and 7 except for the interest rate
swaps
which are discussed in Note 16.



                                         1996
1995
                                             Estimated
Estimated
                                  Carrying   Fair        Carrying
Fair
                                   Value     Value         Value
Value
Financial assets:
Interest rate swap receivable     $    100   $    222    $     61
$  561
Financial liabilities:
Senior discount notes              527,535    556,971     477,355
503,158
Senior notes                       224,150    229,866         ---
---
Limited recourse senior secured
 notes                             200,000    212,560     200,000
210,500
CalEnergy credit facility          100,000    100,000         ---
---
Revolving line of credit            95,000     95,000         ---
---
Convertible subordinated debentures    ---        ---     100,000
100,500
Salton Sea notes and bonds         538,982    531,807     452,088
459,629
Northern Electric eurobonds        439,192    445,830         ---
---
Construction loans                 377,454    377,454     211,198
211,198
Coso Funding Corp. project loans   148,346    153,650     203,226
214,917
Power Resources Inc. project
 financing debt                    114,571    114,571         ---
---
U.K. credit facility               128,423    128,423         ---
---
Other                                7,927      7,927      54,707
54,707
Interest rate swap payable             ---        ---         226
672

16.  Interest Rate Swap Agreements

In  January  1993,  the  Coso Joint Ventures entered  into  five
year
deposit  interest rate swap agreements. The subject deposits
represent
debt service reserves established in conjunction with refinancing
the
Coso  Joint  Ventures  loans through Coso Funding  Corp.  The
deposit
interest  rate swaps effectively convert interest earned on  the
debt
service  reserve  deposits from a variable rate to a  fixed
rate,  in
order to match the nature of the interest rate on the borrowings
used
to fund the debt service reserve deposits. The Company's
proportion of
the  deposit  amount  of  $27,239  included  in  restricted  cash
and
investments  accretes  annually to a maximum amount  of
approximately
$29,300  in  1997. Under the agreements, which mature on  January
11,
1998, the Coso Joint Ventures make semi-annual payments to the
counter
party  at  variable rates based on LIBOR, reset and  compounded
every
three months, and in return receive payments based on a fixed
rate  of
6.34%.  The effective LIBOR rate ranged from 5.5313% to 5.9375%
during
1996  and was 5.5313% at December 31, 1996. The counter party to
these
agreements is a large multi-national financial institution.

17.  Regulatory Matters

Northern   is  subject  to  price  cap  regulation.   The  Office
of
Electricity  Regulation ("OFFER") controls the revenues
generated  by
Northern in its distribution and supply businesses by applying a
price
control formula, P + RPI - X (where X is currently 3% for
distribution
and  2%  for  supply), where P is the price level at the
beginning  of
each  new  regulatory period, RPI is the change in  the  Retail
Price
Index and X is an adjustment factor determined by OFFER.

In  the  distribution business, the Distribution Price Control
Formula
("DPCF")  is  usually  set  for a five-year period,  subject  to
more
frequent  adjustments as determined necessary by the Director
General
of   Electricity  Supply  (the  "Regulator").   At  each  review,
the
Regulator  can require a one-time price reduction.  An initial
review
by  the Regulator of allowable income in the distribution
business led
to  a  reduction of the price level by 17% for Northern starting
April
1,  1995,  followed by efficiency factors of X=2% for each year
until
March 2000.  On July 6, 1995, the Regulator announced the result
of  a
further  distribution price review which was precipitated  by
certain
market events in the UK electric utility industry.  For Northern,
such
announcement  meant  a  further real reduction  of  11%  in
allowable
distribution income for the twelve months from April 1, 1996,
followed
by  an  efficiency  factor X=3% for each year until  March  31,
2000,
before an allowed increase for inflation.

In  the  supply  business,  which  is progressively  being
opened  to
competition,  price  regulation  still  applies  to  the  market
for
customers with demand of not more than 100kW.  The calculation of
the
maximum  supply  charge  is based on a Supply Price  Control
Formula,
similar to the DPCF and is set for a four-year period.  In 1993,
OFFER
announced the supply franchise market (i.e., with demand of  not
more
than  100kW) income entitlement for the four-year period ending
March
1998.   A  relatively small efficiency factor of X=2% was
applied  to
Northern  and  is  being  offset by an allowance  for  both  unit
and
customer growth.  The nonfranchise markets (above 1 MW) were
opened to
full  competition  during  privatization  in  1990;  the
nonfranchise
markets above 100kW were opened to full competition starting in
April
1994.

18.  Pension Commitments

Northern participates in the Electricity Supply Pension Scheme,
which
provides  pension and other related defined benefits, based  on
final
pensionable  pay,  to  substantially  all  employees  throughout
the
Electricity Supply Industry in the United Kingdom.

The  actuarial  computation  assumed an  interest  rate  of
7.75%  an
expected  return  on  plan  assets of 8.25%  and  annual
compensation
increases  of  5.75%  over the remaining service  lives  of
employees
covered  under the plan.  Amounts funded to the pension are
primarily
invested in equity and fixed income securities.

The   following  table  details  the  funded  status  and  the
amount
recognized  in  the balance sheet of the Company as of   December
31,
1996.

Actuarial present value of benefit obligations:
 Vested benefits                                 $ 797,932
 Nonvested benefits                                    ---
Accumulated benefit obligation                     797,932
Effect of future increase in compensation           58,218
Projected benefit obligation                       856,150
Fair value of plan assets                          919,163
Prepaid pension asset                            $  63,013

19.  Commitments and Contingencies

There were no material outstanding lawsuits as of December 31,
1996.

Casecnan
In  November  1995,  CE  Casecnan Water and Energy  Company,
Inc.,  a
Philippine  corporation  ("CE Casecnan"),  closed  the  financing
and
commenced  construction of the Casecnan Project, a combined
irrigation
and  150  net MW hydroelectric power generation project (the
"Casecnan
Project")  located in the central part of the island of Luzon  in
the
Republic  of  the  Philippines.   The Casecnan  Project  will
consist
generally  of  diversion structures in the Casecnan and  Denip
Rivers
that  will  divert water into a tunnel of approximately 23
kilometers.
The  tunnel will transfer the water from the Casecnan and Denip
Rivers
in  the Pantabangan Reservoir for irrigation and hydroelectric
use  in
the  Central Luzon area.  An underground powerhouse located at
the end
of the water tunnel and before the Pantabangan Reservoir will
house  a
power  plant  consisting of approximately 150 MW  of  newly
installed
rated  electrical capacity.  A tailrace tunnel of approximately
three
kilometers  will  deliver  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 National
Power
Corporation of the Philippines ("NPC").

CE  Casecnan,  which is presently indirectly owned as to
approximately
35%  of  its  equity by the Company and approximately 35% by
PKS,  is
developing  the  Casecnan  Project under  the  terms  of  the
Project
Agreement   between   CE   Casecnan  and   the   National
Irrigation
Administration ("NIA"). Under the Project Agreement, CE Casecnan
will
develop,  finance and construct the Casecnan Project over an
estimated
four-year  construction period, and thereafter  own  and  operate
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 will pay CE Casecnan a guaranteed
fee
for  the  delivery of water and a guaranteed fee for the
delivery  of
electricity, regardless of the amount of water or electricity
actually
delivered.   In  addition,  NIA will pay a  fee  for  all
electricity
delivered  in  excess of a threshold amount up to a specified
amount.
NIA  will sell the electric energy 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 U.S.  dollars.
The
guaranteed  fees for the delivery of water and energy are
expected  to
provide approximately 70% of CE Casecnan's revenues.

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 Philippines political action, NIA
may
be obligated to buy the Casecnan Project from CE Casecnan at a
buy out
price  expected to be in excess of the aggregate principal
amount  of
the outstanding CE Casecnan debt securities, together with
accrued but
unpaid  interest.  At the end of the Cooperation Period, the
Casecnan
Project  will  be  transferred  to  NIA  and  NPC  for  no
additional
consideration on an "as is" basis.

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.

The Casecnan Project is being constructed on a joint and several
basis
by  Hanbo  Corporation and Hanbo Engineering & Construction  Co.
Ltd.
(formerly  known as You One Engineering & Construction Co., Ltd.,
and
herein  referred  to  as  "HECC"), both  of  which  are  South
Korean
corporations,   pursuant  to  a  fixed-price,  date-certain,
turnkey
construction  contract (the "Turnkey Construction  Contract").
Hanbo
Corporation  and  HECC  (sometimes collectively  referred  to  as
the
"Contractor")  are under common ownership control.  Hanbo
Corporation
is  an  international  construction  company.   HECC,  which
recently
emerged  from a court-administered receivership, is a contractor
with
over 25 years experience in tunnel construction, using both the
drill-
and-blast and tunnel boring machine ("TBM") methods.

The  Contractor's obligations under the Turnkey Construction
Contract
are guaranteed by Hanbo Iron & Steel Company, Ltd. ("Hanbo
Steel"),  a
large  South  Korean  steel  company.  In addition,  the
Contractor's
obligations under the Turnkey Construction Contract are secured
by  an
unconditional,  irrevocable standby letter of credit issued  by
Korea
First  Bank ("KFB") in the approximate amount of $118,000.  The
total
cost  of  the  Casecnan Project, including development,
construction,
testing and startup, is estimated to be approximately $495,000.

In  late  January 1997, the Company was advised that Hanbo
Corporation
and  Hanbo  Steel had each filed to seek court receivership
protection
in  Korea.  At the present time, all of the construction work  on
the
Casecnan Project is being performed by the second contractor
which  is
party  to  the  Turnkey Construction Contract, HECC.   Although
HECC,
Hanbo  Corporation and Hanbo Steel are under common ownership
control,
HECC  has not filed for receivership protection and is believed
to  be
solvent.  However, no assurances can be given that HECC will not
file
for  receivership due to the foregoing developments or  that  it
will
remain  solvent  and able to perform fully its obligations  under
the
Turnkey Construction Contract.

The  work  on  the  Casecnan  Project, which  commenced  in
1995,  is
presently  continuing on schedule and within the budget.  CE
Casecnan
is  presently reviewing its rights, obligations and potential
remedies
in  respect of the recent developments regarding the co-
Contractor and
the  guarantor and is presently unable to speculate as to the
ultimate
effect of such developments on CE Casecnan.  However, CE Casecnan
has
recently  received  confirmation from HECC that it  intends  to
fully
perform  its  obligations under the Turnkey Construction Contract
and
complete  the  Casecnan  Project on schedule and  within  the
budget.
Additionally,  it  has been reported that the South Korean
government
has   informed  the  Philippine  government  that  the  South
Korean
government  will take appropriate actions to support HECC's
completion
of the Casecnan Project.

KFB  has  recently reconfirmed to CE Casecnan that it will  honor
its
obligations under the Casecnan Project letter of credit and  also
has
stated  its  support  for the successful completion  of  the
Casecnan
Project.   However,  Moody's Investors Service has recently
issued  a
warning  for  a  possible ratings downgrade for  KFB  because  of
the
possible  impact  of the Hanbo Steel receivership on  the
substantial
loans  KFB  previously made to Hanbo Steel.  In a related
development,
the  South  Korean  government has recently announced  that  it
would
provide some funding to assist Hanbo Steel's creditor banks
(including
KFB) and its subcontractors.

CE  Casecnan financed a portion of the costs of  the Casecnan
Project
through the issuance of $125,000 of its 11.45% Senior Secured
Series A
Notes  due  2005  and $171,500 of its 11.95% Senior Secured
Series  B
Notes  due 2010 pursuant to an indenture dated November 27,
1995,  as
amended  to date (the "Casecnan Indenture").  Although no default
has
occurred  under  the Casecnan Indenture as a result of  the
announced
receivership  of  Hanbo  Corporation, CE  Casecnan  will
continue  to
closely  monitor  the  Hanbo group and KFB  developments  and
project
construction status and develop appropriate contingency plans.

If  HECC were to materially fail to perform its obligations under
the
Turnkey  Construction Contract and if KFB were to fail  to  honor
its
obligations  under the Casecnan letter of credit, such  actions
could
have  a  material  adverse  effect on  the  Casecnan  Project
and  CE
Casecnan.   However, based on the information presently
available  to
it,  CE Casecnan does not presently expect that either such event
will
occur.

Leases
Certain  retail facilities, buildings and equipment are  leased.
The
leases expire in periods ranging from one to 75 years and some
provide
for renewal options.

At  December  31,  1996, the Company's future minimum rental
payments
with respect to non-cancellable operating leases were as follows:



 1997                                      $  9,137
 1998                                         8,897
 1999                                         5,337
 2000                                         5,279
 2001                                         5,098
 Thereafter                                  61,204
                                            $94,952


20.  Subsequent Event

On  February  26, 1997, CalEnergy Capital Trust II, a special
purpose
Delaware  business trust organized by the Company  (the  "Trust
II"),
pursuant  to  the  Amended  and Restated  Declaration  of  Trust
(the
"Declaration")  dated  as of February 26, 1997,  completed  a
private
placement  (with  certain shelf registration rights)  of
$150,000  of
trust  preferred  convertible  securities,  referred  to  as  Company-
obligated  mandatorily redeemable convertible preferred
securities  of
subsidiary   trust  holding  solely  convertible  debentures
("Trust
Securities").   In addition, an option to purchase an  additional
600
Trust  Securities, or $30,000, was exercised by the initial
purchasers
to cover over-allotments.

The  Trust  has  issued  3,600  of 6  1/4%  Trust  Securities
with  a
liquidation preference of fifty dollars each.  The Company owns
all of
the  common  securities of the Trust.  The Trust  Securities  and
the
common  securities represent undivided beneficial ownership
interests
in the Trust.  The assets of the Trust consist solely of the
Company's
6  1/4%  Convertible Junior Subordinated Debentures  due  2012
in  an
outstanding   aggregate   principal  amount   of   $180,000
("Junior
Debentures") issued pursuant to an indenture dated as of February
20,
1997.   The  indenture includes an agreement by  the  Company  to
pay
expenses  and obligations incurred by the Trust.  Each Trust
Security
will  be  convertible at the option of the holder thereof at any
time
into  1.1655  shares  of  CalEnergy  Common  Stock  (equivalent
to  a
conversion  price of $42.90 per share of the Company's Common
Stock),
subject to customary anti-dilution adjustments.

Until  converted into the Company's Common Stock, the Trust
Securities
will  have  no voting rights with respect to the Company  and,
except
under  certain limited circumstances, will have no voting rights
with
respect  to  the  Trust.  Distributions on the Trust  Securities
(and
Junior  Debentures) are cumulative, accrue from the  date  of
initial
issuance  and  are  payable quarterly in arrears, commencing
June  1,
1997.   The Junior Debentures are subordinated in right of
payment  to
all  senior indebtedness of the Company and the Junior Debentures
are
subject  to  certain  covenants, events of default  and  optional
and
mandatory  redemption  provisions, all  as  described  in  the
Junior
Debenture Indenture.

Pursuant   to   a   Preferred  Securities  Guarantee  Agreement
(the
"Guarantee"),  between the Company and a preferred guarantee
trustee,
the  Company has agreed irrevocably to pay to the holders of the
Trust
Securities, to the extent that the Trust has funds available  to
make
such  payments,  quarterly  distributions,  redemption  payments
and
liquidation  payments  on the Trust Securities.  Considered
together,
the  undertaking  contained  in  the Declaration,  Junior
Debentures,
Indenture  and Guarantee constitute a full and unconditional
guarantee
by the Company of the Trust's obligations under the Trust
Securities.

A  portion  of the net proceeds of the Trust Securities offering
were
used to repay the CalEnergy Credit Facility.

21.  Geographic Information

The Company operates in one principal industry segment:  the
generation, distribution and supply of electricity to customers
located throughout the world.  The Company's operations by
geographic
area are as follows:

                          1996      1995      1994
Revenue
   Americas             457,032   355,112   154,562
   Asia                  35,691       ---       ---
   Europe                39,191       ---       ---
                        531,914   355,112   154,562

Operating income (loss)
   Americas             203,305   155,885    77,450
   Asia                  17,914       ---       ---
   Europe                 6,163       ---       ---
                        227,382   155,885    77,450

                         1996        1995
Identifiable assets
   Americas          $2,613,830  $2,194,873
   Asia                 713,570     459,165
   Europe             2,385,507         ---
                     $5,712,907  $2,654,038

22. QUARTERLY FINANCIAL DATA (UNAUDITED)

Following is a summary of the Company's quarterly results of
operations for the years ended December 31, 1996 and December 31,
1995.
                           Three Months Ended *

   1996: (1)               March 31  June 30  September 30
December 31

 Sales of electricity      $75,944 $104,735    $165,487
$172,768
 and steam
 Total revenue              90,356   115,794    179,048
190,997
 Total costs and            69,398    87,482    123,169
160,433
 expenses
 Income before provision
 for income                 20,958   28,312      55,879
30,564
 taxes and minority          6,497    9,040      18,325
7,959
 interest
 Provision for income
 taxes
 Net income before          14,461    19,272     37,554
22,605
 minority interest             ---       ---        ---
1,431
 Minority interest
 Net income attributable   $14,461  $ 19,272   $ 37,544   $
21,174
 to common shares
 Net income per share -
 primary                   $   .27  $    .35   $    .67   $
33
 Net income per share -
 fully diluted             $   .26  $    .33   $    .59   $
 .32


                                     Three Months Ended *
  1995: (2)                March 31  June 30  September 30
December 31

  Sales of electricity
  and steam                $72,978  $ 81,756   $102,423   $
78,473
  Total revenue             86,685    97,096    119,717
95,225
  Total costs and
  expenses                  68,527    76,957     79,898
76,290
  Income before provision
  for income taxes and
   minority interest        18,158    20,139     39,819
18,935
  Provision for income
  taxes                      5,540     6,248     12,457
6,386
  Net income before
  minority interest         12,618    13,891     27,362
12,549
  Minority interest          3,005       ---        ---        --
-
  Net income                 9,613    13,891     27,362
12,549
  Preferred dividends        1,080       ---        ---        --
-
  Net income attributable
  to common shares         $ 8,533   $13,891    $27,362   $
12,549
  Net income per share -
  primary                  $   .21   $   .27    $   .52   $
 .24
  Net income per share -
  fully diluted            $   .21   $   .27    $   .48   $
 .18

* The Company's operations are seasonal in nature with a
disproportionate percentage of income historically earned in the
second and third quarters.
(1)  Reflects acquisitions of Northern, Falcon Seaboard and the
Partnership Interest.
(2)  Reflects acquisition of Magma.


INDEPENDENT AUDITORS' REPORT

Board of Directors and Shareholders
CalEnergy Company, Inc.
Omaha, Nebraska

We  have  audited the accompanying consolidated balance sheets
of
CalEnergy Company, Inc. and subsidiaries as of December  31,
1996
and  1995,  and the related consolidated statements of
operations,
stockholders' equity and cash flows for each of the three years
in
the period ended December 31, 1996. 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  generally
accepted
auditing  standards.  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,  such consolidated financial statements
present
fairly,  in  all  material  respects, the  financial  position
of
CalEnergy Company, Inc. and subsidiaries at December 31, 1996
and
1995 and the results of their operations and their cash flows
for
each of the three years in the period ended December 31, 1996,
in
conformity with generally accepted accounting principles.



Deloitte & Touche LLP
Omaha, Nebraska
January 31, 1997
(February 27, 1997 as to Notes 6 and 20)
_______________________________