FIRST SUPPLEMENTAL TRUST INDENTURE

	This FIRST SUPPLEMENTAL TRUST INDENTURE, dated as of 
February __, 1997 (the "First Supplemental Indenture"), by and 
between COSO FUNDING CORP., a corporation organized under the 
laws of the state of Delaware ("Coso Funding"), and FIRST BANK 
NATIONAL ASSOCIATION, as trustee (the "Trustee"), a national 
banking association duly existing under the laws of the United 
States of America.

W I T N E S S E T H:

	WHEREAS, Coso Funding is a corporation established for the 
purpose of issuing notes (the "Notes"), as principal and as agent 
for the Partnerships, pursuant to the Trust Indenture, dated as 
of December 16, 1992 (the "Original Indenture"), between Coso 
Funding and the Trustee (as successor to Bank of America National 
Trust and Savings Association), as trustee; and

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

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

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

	WHEREAS, pursuant to the Original Indenture, the 
Partnerships have funded and maintained moneys in the Debt 
Service Reserve Fund; and

	WHEREAS, Coso Funding and the Partnerships propose to amend 
and supplement the Original Indenture, the Original Credit 
Agreements and other Financing Documents to permit the use of a 
Debt Service Reserve Letter of Credit to satisfy the obligation 
to maintain moneys in the Debt Service Reserve Fund; and

	WHEREAS, Section 10.02 of the Original Indenture permits 
Coso Funding and the Trustee to amend the Original Indenture in 
the manner contemplated by this First Supplemental Indenture upon 
approval by the holders of not less than 66-2/3% in aggregate 
principal amount of the Notes then Outstanding, by a supplemental 
indenture filed with, and in a form satisfactory to the Trustee, 
and such consent has been obtained.

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

A G R E E M E N T:

ARTICLE I
Definitions

	Capitalized terms used in this First Supplemental Indenture 
and not otherwise defined in this First Supplemental Indenture 
shall have the meanings assigned to such terms in the Original 
Indenture.

ARTICLE II
Amendment

	Section 2.01  Revenue Fund.  Section 4.05(b)(9) of the 
Indenture is hereby amended by deleting the current Section 
4.05(b)(9) (but not deleting the last paragraph of Section 
4.05(b)) and replacing such deleted provision with the following:

	(9)	from each Partnership's Revenue Account 
(unless on such Note Payment Date funds have been 
transferred on behalf of such Partnership pursuant to 
clause (3) or Section 4.06(b), in which event no 
transfers shall be made pursuant to this clause (9)) in 
the following order of priority:

	(i)	first, to each of the other 
Partnerships' Revenue Accounts, an amount equal to 
the amount due under the applicable Support Loan 
Agreement;

	(ii)	second, to the Debt Service Reserve LOC 
Provider, for interest then due and payable on any 
Debt Service Reserve LOC Loans made in respect of 
such Partnership's account of the Debt Service 
Reserve Fund and for any fees and expenses then 
due and payable to the Debt Service Reserve LOC 
Provider by such Partnership under the Debt 
Service Reserve LOC Reimbursement Agreement;

	(iii)	third, subject to the limitations 
set forth in Section 4.06(f)(ix), to the extent 
that funds are not available from a Partnership's 
Revenue Account for the transfer described in 
clause (ii) immediately above, (A) if such 
Partnership is CED or CPD, (1) from the other of 
CED or CPD's Revenue Account to the deficient 
Partnership's Revenue Account in an aggregate 
among equal to such deficiency, and (2) from CFP's 
Revenue Account to the deficient Partnership's 
Revenue Account, to the extent of any remaining 
deficiency after the application of clause (1) 
above; (B) if such Partnership is CFP, (1) from 
each of CED and CPD's Revenue Accounts to CFP's 
Revenue Account, an amount equal to one-half of 
such deficiency, and (2) to the extent of any 
remaining deficiency should one of CED or CPD be 
unable to pay its share of CFP's deficiency, from 
the other of CED or CPD's Revenue Account to CFP's 
Revenue Account; (C) if any two Partnerships 
experience such deficiency, and one of such 
Partnerships is CFP, from the third Partnership's 
Revenue Account (x) first to the Revenue Account 
of the Partnership that is not CFP to the extent 
of any deficiency therein, and (y) second, to 
CFP's Revenue Account; and (D) if CED and CPD 
experience such deficiency, from CFP's Revenue 
Account in accordance with the directions of the 
managing partner of CFP, which shall allocate 
amounts in its sole discretion;

in each case as set forth in the Revenue Transfer 
Certificate.

	Section 2.02  Debt Service Reserve Letter of Credit.  
Section 4.06 of the Indenture is hereby amended by adding a new 
Section 4.06(f) which shall read as follows:

	(f)	(i)	A Debt Service Reserve Letter of 
Credit may be issued to the Trustee by one or more 
commercial banks or other financial institutions 
to fulfill, to the extent of each Available Amount 
of such Debt Service Reserve Letter of Credit, the 
obligations of this Indenture to maintain amounts 
in the Debt Service Reserve Fund if the long-term 
senior unsecured debt obligations of the Debt 
Service Reserve LOC Provider are rated at least 
"A" by S&P and "A2" by Moody's.  The Debt Service 
Reserve Letter of Credit shall expire not earlier 
than December 31, 2001.  Any Debt Service Reserve 
Letter of Credit shall provide for a revolving 
feature under which the Available Amount in 
respect of a Partnership will be reinstated to the 
extent of any repayment of principal on the Debt 
Service Reserve LOC Loans to such Partnership in 
accordance with clause (A) of the first sentence 
of Section 4.06(f)(v) hereof.  In the event that a 
Debt Service Reserve Letter of Credit is delivered 
to the Trustee, the Available Amount thereof in 
respect of each Partnership will be deemed to be 
deposited in such Partnership's account of the 
Debt Service Reserve Fund for purposes of 
determining if the obligations of such Partnership 
to fund or maintain amounts in such account have 
been satisfied.

		(ii)	One Business Day prior to each date 
on which the Trustee is required to withdraw or 
transfer moneys from a Partnership's account of 
the Debt Service Reserve Fund under this 
Indenture, to the extent that moneys then held in 
such Partnership's account of the Debt Service 
Reserve Fund are insufficient to fund such 
withdrawal and transfer, the Trustee shall deliver 
to the Debt Service Reserve LOC Provider (i) a 
draft on the Debt Service Reserve Letter of Credit 
in an amount equal to the lesser of (A) the 
Available Amount of the Debt Service Reserve 
Letter of Credit in respect of such Partnership or 
(B) the amount of such deficiency and (ii) an 
appropriate certificate with respect thereto if 
required under the Debt Service Reserve Letter of 
Credit.  Prior to making the other transfers 
contemplated by this Section 4.05(b), the Trustee 
shall deposit the moneys received from such draw 
on the Debt Service Reserve Letter of Credit in 
such Partnership's account of the Debt Service 
Reserve Fund for use in accordance with this 
Indenture.

		(iii)	Forty-five (45) days after 
written notice to the Trustee from the Debt 
Service Reserve LOC Provider, Coso Funding or any 
Noteholder that the long-term senior unsecured 
debt securities of such Debt Service LOC Provider 
is less than "A" as determined by S&P or "A2" as 
determined by Moody's (whether or not such day is 
a Note Payment Date), or if such day is not a 
Business Day, the next succeeding Business Day, 
provided that the Debt Service Reserve Letter of 
Credit has not been replaced with cash, permitted 
investments and/or another Debt Service Reserve 
Letter of Credit issued by a new Debt Service 
Reserve LOC Provider meeting the requirements of 
this Indenture, the Trustee shall deliver to the 
Debt Service Reserve LOC Provider on such date (i) 
a draft on the Debt Service Reserve Letter of 
Credit in an amount equal to the Total Available 
Amount under the Debt Service Reserve Letter of 
Credit and (ii) an appropriate certificate with 
respect thereto if required by the Debt Service 
Reserve Letter of Credit.  The Trustee shall 
deposit the moneys received from the Debt Service 
Reserve LOC Provider in respect of each 
Partnership in payment of such draft in such 
Partnership's account of the Debt Service Reserve 
Fund to be applied in accordance with this 
Indenture and the Loan Instruments.

		(iv)	No more than five (5) Business Days 
prior to December 31, 2001, prior to the transfers 
described in Section 4.06(d), the Trustee shall 
draw the lesser of (A) the Total Available Amount 
of any Debt Service Reserve Letter of Credit and 
(B) the amount sufficient to discharge on December 
31, 2001 all the obligations of Coso Funding and 
the Borrowers under the Indenture including 
without limitation all obligations for the 
principal of and interest on the Notes and the 
compensation of the Trustee, for deposit in the 
respective Partnership's account of the Debt 
Service Reserve Fund.

		(v)	Repayment of principal on any Debt 
Service Reserve LOC Loans shall be permitted only 
from moneys that (A) are transferred to the Debt 
Service Reserve Fund pursuant to Sections 
4.05(b)(6) or 4.05(b)(7) of this Indenture and 
then only to the extent that such repayment causes 
a reinstatement in the Available Amount in respect 
of a Partnership under the applicable Debt Service 
Reserve Letter of Credit in an amount equal to the 
amount of principal so repaid, (B) are otherwise 
available for distribution to a Partnership 
pursuant to Section 4.05(b) of the Indenture or 
(C) are not a part of the Trust Estate.  Repayment 
of interest, fees or expenses to the Debt Service 
Reserve LOC Provider shall be permitted only from 
moneys that (A) are paid to the Debt Service 
Reserve LOC Provider pursuant to Sections 
4.05(b)(9)(ii) or 4.05(b)(9)(iii) of this 
Indenture, (B) are otherwise available for 
distribution to a Partnership pursuant to Section 
4.08 of the Indenture or the last paragraph of 
Section 4.05(b) of the Indenture or (C) are not a 
part of the Trust Estate.

		(vi)	The Available Amount in respect of 
a Partnership may be reduced to the amount that 
results when the amount of cash and/or permitted 
investments on deposit in such Partnership's 
account of the Debt Service Reserve Fund is 
subtracted from the Debt Service Reserve Fund 
Requirement of such Partnership.  Any cash on 
deposit in the Debt Service Reserve Fund shall be 
used (or investments purchased with such cash 
shall be liquidated and the proceeds applied as 
required) prior to any drawing on any Debt Service 
Reserve Letter of Credit.  Upon delivery of moneys 
by or on behalf of a Partnership to the Trustee 
for deposit in such Partnership's account of the 
Debt Service Reserve Fund, the Trustee shall so 
deposit such moneys, provided that such moneys (i) 
have been distributed, or are available for 
distribution, to a Partnership pursuant to Section 
4.08 of the Indenture or the last paragraph of 
Section 4.05(b) of the Indenture or (ii) are not 
part of the Trust Estate, as certified to Trustee 
by an Authorized Representative of such Borrower.  
If more than one Debt Service Reserve Letter of 
Credit is delivered to the Trustee, drawings 
thereunder shall be allocated among such letters 
of credit as specified in a certificate by the 
Partnerships, or, in the absence of such a 
certificate, on a pro rata basis calculated by 
reference to the Total Available Amounts under 
such letters of credit.

		(vii)	On any Revenue Transfer Date 
(after making the transfers and payments 
contemplated by section 4.05(b) hereof), upon 
receipt at least one day prior to such date of a 
Debt Service Reserve Transfer Certificate in the 
form of Exhibit J to this Indenture, the Trustee 
shall pay to the Debt Service LOC Provider from 
amounts available in the Debt Service Reserve Fund 
an amount as set forth in the Debt Service Reserve 
Transfer Certificate for repayment of outstanding 
principal of Debt Service Reserve LOC Loans.

		(viii)	Upon issuance of a Debt 
Service Reserve Letter of Credit to the Trustee in 
accordance with this Indenture, the Trustee, upon 
receipt of a certificate in the form of Exhibit K 
hereto, shall promptly distribute to the 
applicable Partnership moneys in such 
Partnership's account of the Debt Service Reserve 
Fund to the extent that such sum of all moneys in 
such account plus the Available Amount in respect 
of such Partnership of the Debt Service Reserve 
Letter of Credit exceeds the Debt Service Reserve 
Fund Requirement for such Partnership, 
notwithstanding the fact that the date of such 
distribution is not a Distribution Date, provided, 
however, the Trustee shall only distribute such 
moneys to the extent that the aggregate of all 
moneys in the Debt Service Reserve Fund plus the 
Total Available Amount of the Debt Service Reserve 
Letter of Credit exceeds the aggregate of the Debt 
Service Reserve Fund Requirements for all the 
Partnerships.

		(ix)	Upon receipt by the Trustee of a 
certificate of Coso Funding or a Partnership 
obligated to make payments under Section 
4.05(b)(9)(iii) of this Indenture to the effect 
that such obligation to make such payments has 
been terminated in accordance with the provisions 
of the applicable LOC Support Loan Agreement, 
transfers shall no longer be made pursuant to 
Section 4.05(b)(9)(iii) from the Revenue Account 
of such Partnership.

	Section 2.03  Debt Incurred by Partnership.  Section 6.04 of 
the Indenture is hereby amended by adding the following sentence 
at the end of such Section:

	Any Debt of any Partnership incurred or existing pursuant to 
clause (x) of Section 4.10(a) of such Partnership's Credit 
Agreement shall (i) be subordinated as provided in, and 
shall include, the Terms of Subordination attached to such 
Credit Agreement as Exhibit G, and (ii) shall state that it 
complies with the applicable Credit Agreement.

	Section 2.04  Amendments to Definitions.  Exhibit A of the 
Indenture is hereby amended by:

	(i)	in the definition of "Credit Agreement", inserting 
the phrase ", as amended or supplemented" immediately after 
"1992" in each place where "1992" appears.

	(ii)	in the definition of "Mortgage", inserting the 
phrase ", in each case as amended or supplemented," in the 
first line of such definition after the phrase "as the 
context requires,".

	(iii)	in the definition of "Subordinated Permitted 
Indebtedness", deleting the phrase "(v) and (vi)" and 
replacing it with "(v), (vi) and (x)".

	(iv)	in the definition of "Partnership Documents", 
inserting the phrase ", in each case as amended or 
supplemented" at the end of such definition immediately 
prior to the period.

	(v)	in the definition of "Pledge Agreements", 
inserting the phrase ", in each case as amended or 
supplemented," in the second line of such definition after 
the phrase "as the context requires,".

	(vi)	in the definition of "Security Agreement", 
inserting the phrase ", in each case as amended or 
supplemented," in the second line of such definition after 
the phrase "as the context requires,".

	(vii)	in the definition of "Support Loan 
Agreement", inserting the phrase ", in each case as amended 
or supplemented," in the second line of such definition 
after the phrase "as the context requires," and inserting 
the phrase "(not including any LOC Support Loan Agreement)" 
after the phrase "any similar agreement" in each case where 
"any similar agreement" appears.

	Section 2.05  New Definitions..  Exhibit A of the Indenture 
is hereby amended by adding the following definitions in the 
appropriate alphabetical order:

	"Debt Service Reserve Letter of Credit" means one or 
more irrevocable, direct pay letters of credit issued by the 
Debt Service Reserve LOC Provider in favor of the Trustee in 
support of any obligations to fund the Debt Service Reserve 
Fund under the Financing Documents.

	"Debt Service Reserve LOC Provider" means the 
commercial bank(s) or other financial institution(s) issuing 
the Debt Service Reserve Letter of Credit.

	"Debt Service Reserve LOC Reimbursement Agreement" 
means an agreement for the issuance of a Debt Service 
Reserve Letter of Credit and reimbursement of any Debt 
Service Reserve LOC Loans, fees and expenses between the 
Debt Service Reserve LOC Provider and one ore more of the 
Partnerships.

	"Debt Service Reserve LOC Loan" means each loan made by 
a Debt Service Reserve LOC Provider pursuant to the Debt 
Service Reserve LOC Reimbursement Agreement in connection 
with a draw on the Debt Service Reserve Letter of Credit.

	"LOC Support Loan" means each loan obtained by one of 
the Partnerships from another of the Partnerships for use to 
pay principal of or interest on Debt Service Reserve LOC 
Loans or to pay fees or expenses in connection with a Debt 
Service Reserve LOC Reimbursement Agreement.

	"LOC Support Loan Agreement" means an agreement for the 
provision and repayment of LOC Support Loans in accordance 
with the requirements of the Indenture and the applicable 
Credit Agreement.

	"Omnibus Agreement" means the Omnibus Acknowledgment 
and Agreement, dated as of the date hereof, among Coso 
Funding, CFP, CED, CPD, the Trustee and the other parties 
thereto.

	"Available Amount" means, in relation to each 
Partnership, the maximum amount available to be drawn from 
time to time under the Debt Service Reserve Letter of Credit 
in respect of such Partnership.

	"Total Available Amount" means the aggregate maximum 
amount available to be drawn from time to time under the 
Debt Service Reserve Letter of Credit in respect of all the 
Partnerships.

	Section 2.06  Amended Exhibits.  The Indenture is hereby 
amended by deleting the current Exhibit C and replacing it with 
the Exhibit C to this First Supplemental Indenture.

	Section 2.07  New Exhibits.  The Indenture is hereby amended 
by adding, as new exhibits to the Indenture, Exhibits J and K 
attached to this First Supplemental Indenture.

ARTICLE III
Miscellaneous

	Section 3.01  Effect of First Supplemental Indenture.  Upon 
the execution of this First Supplemental Indenture, the Indenture 
shall be modified in accordance herewith, and this First 
Supplemental Indenture shall form a part of the Indenture for all 
purposes; and every Holder of Notes previously or thereafter 
authenticated and delivered under the Indenture shall be bound by 
the terms hereof.  This First Supplemental Indenture shall be 
construed as supplemental to the Indenture and shall form a part 
thereof, and the Indenture is hereby incorporated by reference 
herein and hereby ratified, approved and confirmed.  From and 
after the date hereof, whenever referred to in any Financing 
Document, the Indenture shall mean the Indenture as modified, 
amended and supplemented by this First Supplemental Indenture.

	Section 3.02  Headings for Convenience Only.  The 
descriptive headings in this First Supplemental Indenture are 
inserted for convenience only and shall not control or affect the 
meaning or construction of any of the provisions hereof.

	Section 3.03  Counterparts.  This First Supplemental 
Indenture may be executed in any number of counterparts, each of 
which when so executed and delivered shall be an original; but 
such counterparts shall together constitute but one and the same 
instrument.

	Section 3.04  Applicable Law.  THIS FIRST SUPPLEMENTAL 
INDENTURE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH 
THE LAWS OF THE STATE OF CALIFORNIA

	IN WITNESS WHEREOF, COSO FUNDING CORP. has caused this First 
Supplemental Indenture to be executed by its Senior Vice 
President and its corporate seal to be hereunto affixed, attested 
by its Secretary or Assistant Secretary and the Trustee has 
caused this First Supplemental Trust Indenture to be executed by 
one of its duly authorized officers and its seal to be hereunto 
affixed, attested by one of its duly authorized officers, all as 
of the day and year first above written.

[SEAL]						COSO FUNDING CORP., as
							principal and as agent for the
							Partnerships


							By:_________________________
							Title:________________________
Attest:

____________________________
Title:

[SEAL]						FIRST BANK NATIONAL
							ASSOCIATION


							____________________________
							Trustee


							By:_________________________
							Title:________________________


Attest:

____________________________
Title: