SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    FORM 10-Q

                Annual Report Pursuant to Section 13 or 15 (d) of
                       the Securities Exchange Act of 1934

                For the quarterly period ended September 30, 2000
                          Commission File No. 33-95538

                         SALTON SEA FUNDING CORPORATION
             (Exact name of registrant as specified in its charter)
                                   47-0790493
                        (IRS Employer Identification No.)

(Exact name of Registrants        (State or other      (I.R.S. Employer
as specified in their charters)   jurisdiction of      Identification No.)
                                                  incorporation or organization)
Salton Sea Brine Processing L.P.    California             33-0601721
Salton Sea Power Generation L.P.    California             33-0567411
Fish Lake Power LLC                 Delaware               33-0453364
Vulcan Power Company                Nevada                 95-3992087
CalEnergy Operating Corporation     Delaware               33-0268085
Salton Sea Royalty LLC              Delaware               47-0790492
VPC Geothermal LLC                  Delaware               91-1244270
San Felipe Energy Company           California             33-0315787
Conejo Energy Company               California             33-0268500
Niguel Energy Company               California             33-0268502
Vulcan/BN Geothermal Power Company  Nevada                 33-3992087
Leathers, L.P.                      California             33-0305342
Del Ranch, L.P.                     California             33-0278290
Elmore, L.P.                        California             33-0278294
Salton Sea Power LLC                Delaware               47-0810713
CalEnergy Minerals LLC              Delaware               47-0810718
CE Turbo LLC                        Delaware               47-0812159
CE Salton Sea Inc.                  Delaware               47-0810711
Salton Sea Minerals Corp.           Delaware               47-0811261

 302 S. 36th Street, Suite 400-A, Omaha, NE     68131
(Address  of  principal  executive  offices  and Zip Code of Salton Sea  Funding
Corporation)

Salton Sea Funding  Corporation's  telephone number,  including area code: (402)
231-1641

     Indicate  by check mark  whether the  Registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
Registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days:

         Yes    X                                            No_____

All common stock of Salton Sea Funding  Corporation is indirectly  held by Magma
Power  Company.  100 shares of Common Stock were  outstanding  on September  30,
2000.

<PAGE>



                         SALTON SEA FUNDING CORPORATION

                                    Form 10-Q

                               September 30, 2000
                                  _____________

                                 C O N T E N T S


                          PART I: FINANCIAL INFORMATION


Item 1.          Financial Statements                                       Page

SALTON SEA FUNDING CORPORATION

Independent Accountants' Report                                               4

Balance Sheets, September 30, 2000 and December 31, 1999                      5

Statements of Operations for the Three and Nine Months Ended
    September 30, 2000 and 1999                                               6

Statements of Cash Flows for the Nine Months Ended
    September 30, 2000 and 1999                                               7

Notes to Financial Statements                                                 8

SALTON SEA GUARANTORS

Independent Accountants' Report                                               9

Combined Balance Sheets, September 30, 2000 and December 31, 1999             10

Combined Statements of Operations for the Three and Nine Months Ended
    September 30, 2000 and 1999                                               11

Combined Statements of Cash Flows for the Nine Months Ended
    September 30, 2000 and 1999                                               12

Notes to Combined Financial Statements                                        13

<PAGE>

PARTNERSHIP GUARANTORS

Independent Accountants' Report                                               14

Combined Balance Sheets, September 30, 2000 and December 31, 1999             15

Combined Statements of Operations for the Three and Nine Months Ended
    September 30, 2000 and 1999                                               16

Combined Statements of Cash Flows for the Nine Months Ended
    September 30, 2000 and 1999                                               17

Notes to Combined Financial Statements                                        18

SALTON SEA ROYALTY LLC

Independent Accountants' Report                                               19

Balance Sheets, September 30, 2000 and December 31, 1999                      20

Statements of Operations for the Three and Nine Months Ended
    September 30, 2000 and 1999                                               21

Statements of Cash Flows for the Nine Months Ended
    September 30, 2000 and 1999                                               22

Notes to Financial Statements                                                 23

Item 2.          Management's Discussion and Analysis of
                 Financial Condition and Results of Operations                24


                           PART II: OTHER INFORMATION

Item 1.          Legal Proceedings                                            32
Item 2.          Changes in Securities                                        32
Item 3.          Defaults on Senior Securities                                32
Item 4.          Submission of Matters to a Vote of
                 Security Holders                                             32
Item 5.          Other Information                                            32
Item 6.          Exhibits and Reports on Form 8-K                             32

Signatures                                                                    33

Exhibit Index                                                                 34

<PAGE>


INDEPENDENT ACCOUNTANTS' REPORT

Board of Directors and Stockholder
Salton Sea Funding Corporation
Omaha, Nebraska

We have  reviewed  the  accompanying  balance  sheet of the Salton  Sea  Funding
Corporation as of September 30, 2000,  and the related  statements of operations
for the three and nine month periods ended  September 30, 2000 and 1999 and cash
flows for the nine  month  periods  ended  September  30,  2000 and 1999.  These
financial statements are the responsibility of the Company's management.

We conducted our review in accordance with standards established by the American
Institute  of  Certified  Public  Accountants.  A review  of  interim  financial
information consists principally of applying analytical  procedures to financial
data and of making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with auditing standards generally accepted in the United States of America,  the
objective  of which is the  expression  of an opinion  regarding  the  financial
statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material  modifications that should
be  made  to  such  financial  statements  for  them  to be in  conformity  with
accounting principles generally accepted in the United States of America.

We have  previously  audited,  in accordance with auditing  standards  generally
accepted  in the  United  States of  America,  the  balance  sheet of Salton Sea
Funding  Corporation  as of December 31,  1999,  and the related  statements  of
operations,  stockholder's  equity,  and cash flows for the year then ended (not
presented  herein);  and in our report  dated  January 25, 2000 we  expressed an
unqualified  opinion  on  those  financial  statements.   In  our  opinion,  the
information set forth in the accompanying  balance sheet as of December 31, 1999
is fairly  stated,  in all material  respects,  in relation to the balance sheet
from which it has been derived.


DELOITTE & TOUCHE LLP
Omaha, Nebraska
October 21, 2000

<PAGE>

                         SALTON SEA FUNDING CORPORATION

                                 BALANCE SHEETS
                (Dollars in Thousands, Except per Share Amounts)
<TABLE>
<CAPTION>
                                                                          September 30,               December 31,
                                                                              2000                        1999
                                                                           ___________                 __________
                                                                           (unaudited)
ASSETS
<S>                                                                      <C>                       <C>
Cash                                                                     $      23,935             $       2,086
Prepaid expenses and other assets                                               14,091                     3,617
Due from affiliates                                                                ---                     2,118
Current portion of secured project notes from Guarantors                        14,350                    25,072
Total current assets                                                            52,376                    32,893

Secured project notes from Guarantors                                          532,078                   543,908
Investment in 1% of net assets of Guarantors                                     9,182                     8,847
                                                                         $     593,636             $     585,648
                                                                         =============             =============
LIABILITIES AND STOCKHOLDER'S EQUITY
Liabilities:
Accrued liabilities                                                      $      13,873             $       3,607
Due to affiliates                                                               20,148                       ---
Current portion of long term debt                                               14,350                    25,072
Total current liabilities                                                       48,371                    28,679

Senior secured notes and bonds                                                 532,078                   543,908
    Total liabilities                                                          580,449                   572,587

Stockholder's equity:
Common stock--authorized 1,000
    shares, par value $.01 per share;
    issued and outstanding 100 shares                                              ---                       ---
Additional paid-in capital                                                       5,366                     5,366
Retained earnings                                                                7,821                     7,695
    Total stockholder's equity                                                  13,187                    13,061
                                                                         $     593,636             $     585,648
                                                                         =============             =============

                     The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>

                         SALTON SEA FUNDING CORPORATION
                            STATEMENTS OF OPERATIONS
                             (Dollars in Thousands)
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                       Three Months Ended                   Nine Months Ended
                                                          September 30,                        September 30,
                                                      2000              1999             2000              1999
Revenues:

<S>                                             <C>               <C>                <C>             <C>
Interest income                                 $     10,702      $    11,625        $   32,421      $    35,736
Equity in earnings of Guarantors                         279              225               335              433

Total revenues                                        10,981           11,850            32,756           36,169
_________                                           ________          _______           _______

Expenses:

General and administrative expenses                      234              148               711              551
Interest expense                                      10,434           11,300            31,831           34,659
                                                   _________         ________           _______          _______
Total expenses                                        10,668           11,448            32,542           35,210
                                                   _________         ________           _______          _______
Income before income taxes                               313              402               214              959
Provision for income taxes                               129              164                88              392
                                                   _________         ________           _______          _______
Net income                                      $        184      $       238        $      126      $       567
                                                   =========         ========           =======          =======

                     The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>

                         SALTON SEA FUNDING CORPORATION
                            STATEMENTS OF CASH FLOWS
                             (Dollars in Thousands)
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                   Nine Months Ended
                                                                     September 30,
                                                          ________________________________
                                                              2000               1999
                                                          ___________      _______________
Cash flows from operating activities:
<S>                                                       <C>              <C>
     Net income                                           $       126      $       567

     Adjustments to reconcile net income to net
         cash flows from operating activities:
     Equity in earnings of guarantors                            (335)            (433)
     Changes in assets and liabilities:
         Prepaid expenses and other assets                    (10,474)          (9,054)
         Accrued liabilities                                   10,266           11,105
     Net cash flows from operating activities                    (417)           2,185

Cash flows from investing activities:
     Principal repayments of secured project notes
       from Guarantors                                         22,552           28,918

     Net cash flows from investing activities                  22,552           28,918


Cash flows from financing activities:
     Increase in due from affiliates                           22,266           15,054
     Repayment of senior secured notes and bonds              (22,552)         (28,918)


     Net cash flows from financing activities                    (286)         (13,864)


Net change in cash                                             21,849           17,239
Cash at the beginning of period                                 2,086           17,629


Cash at the end of period                                 $    23,935      $    34,868
                                                          ===========      ===========


   The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>

                         SALTON SEA FUNDING CORPORATION

                          NOTES TO FINANCIAL STATEMENTS
                              _____________________


1.  General:

In the opinion of management of the Salton Sea Funding Corporation (the "Funding
Corporation"),  the  accompanying  unaudited  financial  statements  contain all
adjustments  (consisting only of normal recurring accruals) necessary to present
fairly the  financial  position  as of  September  30,  2000 and the  results of
operations  for the three and nine months ended  September 30, 2000 and 1999 and
cash flows for the nine months ended September 30, 2000 and 1999. The results of
operations  for the three and nine months ended  September 30, 2000 and 1999 are
not necessarily indicative of the results to be expected for the full year.

The  unaudited  financial  statements  shall  be read in  conjunction  with  the
financial statements included in the Funding Corporation's annual report on Form
10-K for the year ended December 31, 1999.

The  Funding  Corporation  was formed on June 20,  1995 for the sole  purpose of
acting as issuer of senior secured notes and bonds.

2.  Revolving Credit Agreement:

On July 21, 1995,  Salton Sea Funding  Corporation  obtained a $15 million seven
year  revolving  credit  agreement  between  Credit Suisse as bank and agent and
other  lenders.  The interest rate is at the Adjusted Base Rate plus .375% or at
the LIBOR  rate plus 100 basis  points.  On May 26,  2000,  Salton  Sea  Funding
Corporation borrowed $15 million under its revolving credit agreement.  The loan
was repaid in two  installments,  $5 million on July 26, 2000 and $10 million on
August 28, 2000.


<PAGE>



INDEPENDENT ACCOUNTANTS' REPORT

Board of Directors and Stockholder
Magma Power Company
Omaha, Nebraska

We have  reviewed  the  accompanying  combined  balance  sheet of the Salton Sea
Guarantors  as of September  30, 2000,  and the related  combined  statements of
operations  for the three and nine month  periods  ended  September 30, 2000 and
1999 and cash flows for the nine month  periods  ended  September  30,  2000 and
1999.  These  financial  statements  are the  responsibility  of the  Salton Sea
Guarantors' management.

We conducted our review in accordance with standards established by the American
Institute  of  Certified  Public  Accountants.  A review  of  interim  financial
information consists principally of applying analytical  procedures to financial
data and of making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with auditing standards generally accepted in the United States of America,  the
objective  of which is the  expression  of an opinion  regarding  the  financial
statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material  modifications that should
be made to such combined financial  statements for them to be in conformity with
accounting principles generally accepted in the United States of America.

We have  previously  audited,  in accordance with auditing  standards  generally
accepted in the United  States of America,  the  combined  balance  sheet of the
Salton  Sea  Guarantors  as of  December  31,  1999,  and the  related  combined
statements of operations,  Guarantors'  equity, and cash flows for the year then
ended (not  presented  herein);  and in our report dated  January 25,  2000,  we
expressed an unqualified opinion on those combined financial statements.  In our
opinion, the information set forth in the accompanying combined balance sheet as
of December 31, 1999 is fairly stated, in all material respects,  in relation to
the combined balance sheet from which it has been derived.


DELOITTE & TOUCHE LLP
Omaha, Nebraska
October 21, 2000

<PAGE>

                              SALTON SEA GUARANTORS

                             COMBINED BALANCE SHEETS
                             (Dollars in Thousands)

                                                 September 30,      December 31,
                                                      2000              1999
                                                   __________        _________
                                                   (unaudited)
ASSETS
Accounts receivable                              $     22,231       $    11,537
Prepaid expenses and other assets                       9,162            11,695
Total current assets                                   31,393            23,232

Restricted cash                                         7,475            10,001
Property, plant, contracts and equipment, net         558,331           552,903
Excess of cost over fair value of net assets
   acquired, net                                       45,900            46,878
                                                 $    643,099       $   633,014
                                                 ============       ===========

LIABILITIES AND GUARANTORS' EQUITY
Liabilities:
Accounts payable                                 $        322       $        33
Accrued liabilities                                    12,558             7,862
Current portion of long term debt                       9,169             9,737
Total current liabilities                              22,049            17,632

Due to affiliates                                      28,291            27,993
Senior secured project note                           275,558           284,217
    Total liabilities                                 325,898           329,842

Total Guarantors' equity                              317,201           303,172
                                                 $    643,099       $   633,014
                                                 ============       ===========

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

                              SALTON SEA GUARANTORS

                        COMBINED STATEMENTS OF OPERATIONS
                             (Dollars in Thousands)
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                        Three Months Ended                Nine Months Ended
                                                            September 30                     September 30
                                                    _________________________          _________________________
                                                       2000            1999             2000              1999
                                                    ________         ________          ________         ________
Revenues:

<S>                                                <C>              <C>               <C>              <C>
Sales of electricity                               $  32,375        $  27,043         $  59,873        $  64,861
Interest and other income                                119              425               332            1,868
                                                     _______          _______           _______          _______
     Total revenues                                   32,494           27,468            60,205           66,729
                                                     _______          _______           _______          _______
Expenses:

Operating, general and
   administration                                     11,288            7,655            23,852           21,190

Depreciation and amortization                          4,751            4,225            13,072           12,668
Interest expense                                       5,745            6,063            17,376           18,234
Less capitalized interest                             (1,988)          (2,489)           (8,124)          (6,140)
                                                     _______          _______           _______          _______
     Total expenses                                   19,796           15,454            46,176           45,952

                                                     _______          _______           _______          _______
Net income                                         $  12,698        $  12,014         $  14,029        $  20,777
                                                     =======          =======           =======          =======

                     The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>

                              SALTON SEA GUARANTORS

                        COMBINED STATEMENTS OF CASH FLOWS
                             (Dollars in Thousands)
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                             Nine Months Ended
                                                                September 30,
                                                            2000             1999

Cash flows from operating activities:
<S>                                                   <C>              <C>
Net income                                            $     14,029     $     20,777

Adjustments to reconcile net income to net
    cash flows from operating activities:
       Depreciation and amortization                        13,072           12,668

       Changes in assets and liabilities:
         Accounts receivable                               (10,694)          (2,369)
         Prepaid expenses and other assets                   2,533             (103)
         Accounts payable and accrued liabilities            4,985              185
Net cash flows from operating activities                    23,925           31,158

Cash flows from investing activities:
Capital expenditures                                       (17,522)         (59,410)
Decrease in restricted cash                                  2,526           51,048
Net cash flows from investing activities                   (14,996)          (8,362)


Cash flows from financing activities:
Increase (decrease) in due to affiliates                       298          (14,758)
Repayments of senior secured project note                   (9,227)          (8,038)

Net cash flows from financing activities                    (8,929)         (22,796)

Net change in cash                                             ---              ---
Cash at beginning of period                                    ---              ---

Cash at end of period                                 $        ---     $        ---
                                                      ============     ============


                     The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
                              SALTON SEA GUARANTORS

                     NOTES TO COMBINED FINANCIAL STATEMENTS
                              ____________________

1.  General:

In the opinion of management of the Salton Sea  Guarantors  (the  "Guarantors"),
the accompanying unaudited combined financial statements contain all adjustments
(consisting only of normal recurring  accruals)  necessary to present fairly the
financial  position as of September 30, 2000 and the results of  operations  for
the three and nine months ended  September  30, 2000 and 1999 and cash flows for
the nine months ended September 30, 2000 and 1999. The results of operations for
the three and nine months ended  September 30, 2000 and 1999 are not necessarily
indicative of the results to be expected for the full year.

The unaudited  combined  financial  statements shall be read in conjunction with
the financial statements included in the Funding  Corporation's annual report on
Form 10-K for the year ended December 31, 1999.

The combined  financial  statements  include the accounts of the partnerships in
which the Guarantors have a 100% interest.

2.  Related Party Transactions:

Salton Sea Power LLC ("Salton Sea Power"),  a Salton Sea Guarantor,  and El Paso
Merchant  Energy  L.P.  ("EPME")  entered  into  a  power  marketing   agreement
commencing  June 13,  2000 and ending on June 30,  2000.  Under the terms of the
agreement, EPME purchased and Salton Sea Power sold all available power from the
Salton Sea Unit V  project.  EPME sold the  available  power into the bulk power
market.  The  purchase  price of the  available  power is the  value of the cash
actually  received  by EPME  for  the  sale of such  power,  plus  any  realized
renewable premiums.

On June 9,  2000,  Salton  Sea  Power,  entered  into an  agreement  to sell all
available  power from the Salton Sea Unit V project to EPME.  Under the terms of
the agreement  commencing on July 1, 2000 and ending on September 30, 2000, EPME
purchased  up to 25 MW of  available  power for $53 per MWh,  together  with any
premiums  related to such power.  EPME also marketed any  available  power which
exceeded 25 MW on behalf of Salton Sea Power.

On September  29, 2000,  Salton Sea Power  entered into an agreement to sell all
available  power from the Salton Sea Unit V project to EPME.  Under the terms of
the agreement,  commencing  October 1, 2000 and ending  September 30, 2001, EPME
will purchase all available  power and sell available  power on behalf of Salton
Sea Power,  into the PX or California  ISO markets.  The purchase  price for the
available  power shall be equivalent to the value actually  received by EPME for
the sale of such power, including renewable premiums.

<PAGE>


INDEPENDENT ACCOUNTANTS' REPORT

Board of Directors and Stockholder
Magma Power Company
Omaha, Nebraska

We have reviewed the  accompanying  combined  balance  sheet of the  Partnership
Guarantors  as of September  30, 2000,  and the related  combined  statements of
operations  for the three and nine month  periods  ended  September 30, 2000 and
1999 and cash flows for the nine month  periods  ended  September  30,  2000 and
1999.  These  financial  statements are the  responsibility  of the  Partnership
Guarantors' management.

We conducted our review in accordance with standards established by the American
Institute  of  Certified  Public  Accountants.  A review  of  interim  financial
information consists principally of applying analytical  procedures to financial
data and of making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with auditing standards generally accepted in the United States of America,  the
objective  of which is the  expression  of an opinion  regarding  the  financial
statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material  modifications that should
be made to such combined financial  statements for them to be in conformity with
accounting principles generally accepted in the United States of America.

We have  previously  audited,  in accordance with auditing  standards  generally
accepted in the United  States of America,  the  combined  balance  sheet of the
Partnership  Guarantors  as of  December  31,  1999,  and the  related  combined
statements of  operations,  Guarantors'  equity and cash flows for the year then
ended (not  presented  herein);  and in our report dated  January 25,  2000,  we
expressed an unqualified opinion on those combined financial statements.  In our
opinion, the information set forth in the accompanying combined balance sheet as
of December 31, 1999 is fairly stated, in all material respects,  in relation to
the combined balance sheet from which it has been derived.


DELOITTE & TOUCHE LLP
Omaha, Nebraska
October 21, 2000
<PAGE>

                             PARTNERSHIP GUARANTORS

                             COMBINED BALANCE SHEETS
                             (Dollars in Thousands)
<TABLE>
<CAPTION>

                                                                            September 30,            December 31,
                                                                                2000                     1999
                                                                              (unaudited)
ASSETS
<S>                                                                       <C>                       <C>
Accounts receivable                                                       $       23,599            $     16,295
Prepaid expenses and other assets                                                 23,802                  18,959
Total current assets                                                              47,401                  35,254

Restricted cash                                                                    4,986                  60,454
Due from affiliates                                                               43,490                  75,274
Property, plant, contracts and equipment, net                                    629,951                 531,427
Management fee                                                                    70,917                  71,489
Excess of cost over fair value of net assets acquired, net                       125,321                 127,994
                                                                          $      922,066            $    901,892
                                                                           =============            ============
LIABILITIES AND GUARANTORS' EQUITY
Liabilities:
Accounts payable                                                          $        4,487            $      3,925
Accrued liabilities                                                               18,070                  13,534
Current portion of long term debt                                                  2,954                  10,562
Total current liabilities                                                         25,511                  28,021

Senior secured project notes                                                     249,696                 250,650
Deferred income taxes                                                            106,706                  98,907
Total liabilities                                                                381,913                 377,578

Guarantors' equity:
Common stock                                                                           3                       3
Additional paid-in capital                                                       387,663                 387,663
Retained earnings                                                                152,487                 136,648
Total Guarantors' equity                                                         540,153                 524,314
                                                                          $      922,066            $    901,892
                                                                          ==============            ============

                     The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>

                             PARTNERSHIP GUARANTORS

                        COMBINED STATEMENTS OF OPERATIONS
                             (Dollars in Thousands)
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                      Three Months Ended                  Nine Months Ended
                                                          September 30,                     September 30,
                                                      2000             1999             2000             1999
                                                   _________        _________         _________        _________
Revenues:

<S>                                                <C>              <C>               <C>            <C>
Sales of electricity                               $  35,063        $  35,940         $  65,080      $    82,192
Interest and other income                              1,783            1,467             2,884            5,941
                                                   _________        _________         _________      ___________
Total revenues                                        36,846           37,407            67,964           88,133
                                                   _________        _________         _________      ___________
Expenses:

Operating, general and
   administration                                     12,119           12,483            29,427           35,548
Depreciation and amortization                          4,966            6,241            14,459           18,721
Interest expense                                       4,984            5,483            15,124           16,818
Less capitalized interest                             (4,855)          (3,662)          (14,684)         (10,409)
                                                   _________        _________         _________      ___________

Total expenses                                        17,214           20,545            44,326           60,678
                                                   _________        _________         _________      ___________
Income before income taxes                            19,632           16,862            23,638           27,455
Provision for income taxes                             6,477            7,318             7,799           11,449
                                                   _________        _________         _________      ___________

Net income                                         $  13,155        $   9,544         $  15,839      $    16,006

                                                   =========        =========         =========      ===========


                     The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>



                             PARTNERSHIP GUARANTORS
                        COMBINED STATEMENTS OF CASH FLOWS
                             (Dollars in Thousands)
                                   (Unaudited)
                                                       Nine Months Ended
                                                         September 30,
                                                    2000               1999
                                                 _________            _______
Cash flows from operating activities:
Net income                                        $  15,839         $  16,006
Adjustments to reconcile net income to net
    cash flows from operating activities:
       Depreciation and amortization                 14,459            18,721
       Deferred income taxes                          7,799            11,449
       Changes in assets and liabilities:
          Accounts receivable                        (7,304)            7,833
          Prepaid expenses and other assets          (4,843)            5,957
          Accounts payable and accrued
           liabilities                                5,098             1,307
                                                  _________         _________
Net cash flows from operating activities             31,048            61,273
                                                  _________         _________
Cash flows from investing activities:
Capital expenditures                               (108,201)          (84,837)
Decrease in restricted cash                          55,468            51,254
Management fee                                       (1,537)           (2,283)
                                                  _________         _________
Net cash flows from investing activities            (54,270)          (35,866)
                                                  _________         _________
Cash flows from financing activities:
Repayments of senior secured project notes           (8,562)          (16,182)
Decrease (increase) in due from affiliates           31,784            (9,225)
                                                  _________         _________
Net cash flows from financing activities             23,222           (25,407)
                                                  _________         _________
Net change in cash                                      ---               ---
Cash at beginning of period                             ---               ---
                                                  _________         _________
Cash at end of period                             $     ---         $     ---

                                                  =========         =========

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


                             PARTNERSHIP GUARANTORS

                     NOTES TO COMBINED FINANCIAL STATEMENTS
                              ____________________

1.  General:

In the opinion of management of the Partnership  Guarantors (the  "Guarantors"),
the accompanying unaudited combined financial statements contain all adjustments
(consisting only of normal recurring  accruals)  necessary to present fairly the
financial  position as of September 30, 2000 and the results of  operations  for
the three and nine months ended  September  30, 2000 and 1999 and cash flows for
the nine months ended September 30, 2000 and 1999. The results of operations for
the three and nine months ended  September 30, 2000 and 1999 are not necessarily
indicative of the results to be expected for the full year.

The unaudited  combined  financial  statements shall be read in conjunction with
the financial statements included in the Funding  Corporation's annual report on
Form 10-K for the year ended December 31, 1999.

The  combined  financial  statements  include  the  proportionate  share  of the
accounts of the partnerships in which the Guarantors have an interest.

2.  Property:

The increase in property, plant, contracts and equipment is primarily due to the
Zinc  Recovery  Project and Region II Brine  Facility  construction  costs.  The
decrease in restricted cash is due to expenditures on these projects.

3.  Revenue:

The decrease in revenue was due to the expiration of the scheduled  price period
at Leathers at December 31, 1999.

4.  Related Party Transaction:

On  September  29,  2000,  CE Turbo LLC entered  into an  agreement  to sell all
available power from the CE Turbo project to El Paso Merchant Energy.  Under the
terms of the  agreement,  commencing  October 1, 2000 and ending  September  30,
2001,  El Paso  Merchant  Energy  will  purchase  all  available  power and sell
available  power on behalf of CE Turbo,  into the PX or California  ISO markets.
The purchase  price for the  available  power shall be  equivalent  to the value
actually  received  by El  Paso  Merchant  Energy  for the  sale of such  power,
including renewable premiums.

<PAGE>


INDEPENDENT ACCOUNTANTS' REPORT

Board of Directors and Stockholder
Magma Power Company
Omaha, Nebraska

We have reviewed the accompanying balance sheet of the Salton Sea Royalty LLC as
of September 30, 2000,  and the related  statements of operations  for the three
and nine month periods ended  September 30, 2000 and 1999 and cash flows for the
nine month periods ended September 30, 2000 and 1999. These financial statements
are the responsibility of the Salton Sea Royalty LLC's management.

We conducted our review in accordance with standards established by the American
Institute  of  Certified  Public  Accountants.  A review  of  interim  financial
information consists principally of applying analytical  procedures to financial
data and of making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with auditing standards generally accepted in the United States of America,  the
objective  of which is the  expression  of an opinion  regarding  the  financial
statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material  modifications that should
be  made  to  such  financial  statements  for  them  to be in  conformity  with
accounting principles generally accepted in the United States of America.

We have  previously  audited,  in accordance with auditing  standards  generally
accepted in the United  States of America,  the balance  sheet of the Salton Sea
Royalty LLC as of December 31, 1999,  and the related  statements of operations,
equity,  and cash flows for the year then ended (not presented  herein);  and in
our report dated January 25, 2000, we expressed an unqualified  opinion on those
financial  statements.  In  our  opinion,  the  information  set  forth  in  the
accompanying  balance  sheet as of December  31, 1999 is fairly  stated,  in all
material  respects,  in  relation  to the  balance  sheet from which it has been
derived.

As discussed in Note 1 to the financial  statements,  Salton Sea Royalty LLC was
converted to a limited  liability company during 1999 and as such the statements
of  operations  for the three and nine months ended  September 30, 2000 and 1999
and cash flows for the nine  months  ended  September  30, 2000 and 1999 are not
comparable due to the change in reporting entity which results in no tax expense
in fiscal 2000.

DELOITTE & TOUCHE LLP
Omaha, Nebraska
October 21, 2000

<PAGE>

                             SALTON SEA ROYALTY LLC

                                 BALANCE SHEETS
                (Dollars in Thousands, Except per Share Amounts)


                                                September 30,       December 31,
                                                    2000                1999
                                                 ___________        ___________
                                                 (unaudited)
ASSETS
Prepaid expenses and other assets              $         120      $          235
Total current assets                                     120                 235

Royalty stream, net                                   15,983              16,776
Excess of cost over fair value of net assets
        acquired, net                                 31,599              32,280
Due from affiliates                                   22,383              21,825
                                               $      70,085       $      71,116
                                               =============       =============


LIABILITIES AND EQUITY
Liabilities:
Accrued liabilities                            $         223      $           82
Current portion of long term debt                      2,227               4,773
Total current liabilities                              2,450               4,855

Senior secured project note                            6,826               9,041
    Total liabilities                                  9,276              13,896

Equity:
Common stock, par value $.01 per share; 100
  share authorized, issued and outstanding                 -                   -
Additional paid-in capital                             1,561               1,561
Retained earnings                                     59,248              55,659
Total equity                                          60,809              57,220
                                               $      70,085       $      71,116
                                               =============       =============

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

                             SALTON SEA ROYALTY LLC

                            STATEMENTS OF OPERATIONS
                             (Dollars in Thousands)
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                        Three Months Ended                   Nine Months Ended
                                                           September 30,                        September 30,
                                                      ________________________           ______________________
                                                       2000             1999               2000           1999
                                                      _______          _______           _______        _______
Revenues:
<S>                                               <C>              <C>               <C>              <C>
Royalty income                                    $    3,816       $    4,495        $    8,083       $   21,724

Expenses:
Operating, general and
     administrative expenses                           1,099            1,258             2,272            3,412
Amortization of royalty stream
   and goodwill                                          491            1,425             1,474            6,322
Interest expense                                         206              398               748            1,312
                                                  __________       __________        __________       __________
Total expenses                                         1,796            3,081             4,494           11,046
                                                  __________       __________        __________       __________

Income before income taxes                             2,020            1,414             3,589           10,678
Provision for income taxes                               ---              488               ---            4,165
                                                  __________       __________        __________       __________

Net income                                        $    2,020       $      926        $    3,589       $    6,513
                                                  ==========       ==========        ==========       ==========

                     The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>

                             SALTON SEA ROYALTY LLC

                            STATEMENTS OF CASH FLOWS
                             (Dollars in Thousands)
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                                            Nine Months Ended
                                                                                              September 30,
                                                                                      __________________________
                                                                                         2000             1999
                                                                                      _________         ________
Cash flows from operating activities:
<S>                                                                                   <C>              <C>
Net income                                                                            $   3,589        $   6,513
Adjustments to reconcile net income to net
    cash flows from operating activities:
       Amortization of royalty stream and goodwill                                        1,474            6,322
       Changes in assets and liabilities:
       Prepaid expenses and other assets                                                    115              209
       Accrued liabilities and deferred income taxes                                        141           (5,183)

Net cash flows from operating activities                                                  5,319            7,861


Net cash flows from financing activities:
Increase in due from affiliates                                                            (558)          (3,163)
Repayment of senior secured project note                                                 (4,761)          (4,698)
                                                                                      _________        _________
Net cash flows from financing activities                                                 (5,319)          (7,861)

Net change in cash                                                                          ---              ---
Cash at beginning of period                                                                 ---              ---
                                                                                      _________        _________
Cash at end of period                                                                 $     ---        $    ----
                                                                                      =========        =========

                     The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>

                             SALTON SEA ROYALTY LLC

                          NOTES TO FINANCIAL STATEMENTS
                              ____________________

1.  General:

In the opinion of management of the Salton Sea Royalty LLC (the "Company"),  the
accompanying unaudited financial statements contain all adjustments  (consisting
only of normal  recurring  accruals)  necessary to present  fairly the financial
position as of September  30, 2000 and the results of  operations  for the three
and nine months  ended  September  30, 2000 and 1999 and cash flows for the nine
months ended  September  30, 2000 and 1999.  The results of  operations  for the
three and nine months  ended  September  30,  2000 and 1999 are not  necessarily
indicative of the results to be expected for the full year.

The Company was converted to a limited liability company during 1999 and as such
the statements of operations  for the three and nine months ended  September 30,
2000 and 1999 and cash flows for the nine months  ended  September  30, 2000 and
1999 are not comparable  due to the change in reporting  entity which results in
no tax expense in fiscal 2000.  Income taxes are now the  responsibility  of the
partners and the Company has no  obligation to provide funds to the partners for
payment of any tax liabilities. Accordingly, the Company has no tax obligations.

The  unaudited  financial  statements  shall  be read in  conjunction  with  the
financial statements included in the Funding Corporation's annual report on Form
10-K for the year ended December 31, 1999.

2.  Revenues:

The third quarter and year to date  decreases  were due primarily to a reduction
in royalty income from Leathers due to lower revenues from the expiration of the
scheduled  price period on December 31, 1999. The year to date decrease was also
due to a decrease in East Mesa royalty income related to a royalty settlement.

<PAGE>

                         SALTON SEA FUNDING CORPORATION

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                       (in thousands, except per kwh data)
                        _________________________________

Results of Operations:

The following is  management's  discussion  and analysis of certain  significant
factors which have affected the Salton Sea Funding  Corporation's  (the "Funding
Corporation"),  the Salton Sea Guarantors,  the  Partnership  Guarantors and the
Salton Sea Royalty LLC's  (collectively,  the "Guarantors")  financial condition
and  results of  operations  during the  periods  included  in the  accompanying
statements of operations.

Funding  Corporation  was  organized for the sole purpose of acting as issuer of
senior  secured notes and bonds (the  "Securities").  The Securities are payable
from the  proceeds  of payments  made of  principal  and  interest on the senior
secured  project  notes  by the  Guarantors  to  the  Funding  Corporation.  The
Securities  are guaranteed on a joint and several basis by the  Guarantors.  The
guarantees of the Partnership  Guarantors and Salton Sea Royalty LLC are limited
to available cash flow. The Funding  Corporation does not conduct any operations
apart from the Securities.

The  Vulcan,  Leathers,  Del Ranch and Elmore  partnerships  (collectively,  the
"Partnership  Projects") sell all electricity generated by the respective plants
pursuant to four  long-term  SO4  Agreements  between the  projects and Southern
California Edison Company ("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 and the capacity payments are  significantly  higher in the months of
June through September.

The scheduled  energy price periods of the  Partnership  Project SO4  Agreements
extended until February 1996 for the Vulcan  Partnership,  December 1998 for the
Hoch (Del Ranch) and Elmore  Partnerships,  and  December  1999 for the Leathers
Partnership.

For 2000, the Partnership Projects are receiving Edison's Avoided Cost of Energy
pursuant to their respective SO4 Agreements.
<PAGE>


                         SALTON SEA FUNDING CORPORATION

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                       (in thousands, except per kwh data)
                        _________________________________

Results of Operations:  (continued)

The Salton  Sea I Project  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
5.6 cents per kWh during the nine months ended September 30, 2000. 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  Salton  Sea II and  Salton  Sea III  Projects  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  expired
April 4, 2000 for Salton Sea II and expired on February  13, 1999 for Salton Sea
III, were levelized at a time period weighted  average of 10.6 cents per kWh and
9.8 cents per kWh for Salton Sea II and Salton Sea III, respectively. Currently,
the monthly energy payments are at 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 March 31, 2004.

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.

The  Salton  Sea Unit V Project  will sell  approximately  one-third  of its net
output to a Zinc facility,  which is owned by a subsidiary of MidAmerican and is
expected to commence  operation in the fourth  quarter of 2000. The remainder of
the Salton Sea Unit V output will be sold through the California  Power Exchange
(the "PX") or in other  market  transactions.  The PX was  created to  establish
markets for the sale of power on a daily and hourly  basis.  Thus, PX prices are
expected to have the  characteristics of short term spot prices and to fluctuate
from time to time in a manner that cannot be predicted with accuracy.

For the nine months ended September 30, 2000 and 1999,  Edison's average Avoided
Cost of Energy was 4.6 and 2.9 cents respectively per kWh. Estimates of Edison's
future  Avoided  Cost of  Energy  vary  substantially  from  year to  year,  and
therefore cannot be predicted with accuracy.


<PAGE>

                         SALTON SEA FUNDING CORPORATION
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                       (in thousands, except per kwh data)
                        _________________________________

Results of Operations:  (continued)

The following data includes the aggregate capacity and electricity production of
Salton Sea Units I, II, III, IV and V:
<TABLE>
<CAPTION>
                                                          Three Months Ended              Nine Months Ended
                                                              September 30,                 September 30,
                                                         _____________________          _____________________
                                                          2000            1999           2000            1999
                                                         _____           _____          _____          ______
<S>                                                      <C>             <C>            <C>             <C>
Overall capacity factor                                  77.6%           96.4%          67.5%           91.2%
Capacity (NMW) (weighted average)                        168.4           119.4          138.5          119.4
kWh produced (in thousands)                            288,400         254,200        614,400         713,500
</TABLE>

The overall capacity factor for the Salton Sea Projects  decreased for the three
and nine months ended September 30, 2000 compared to the same period in 1999 due
to  scheduled  overhauls in 2000 which were more  extensive  compared to 1999, a
lower capacity factor for Salton Sea Unit V related to start up activities.

The following data includes the aggregate capacity and electricity production of
Vulcan, Del Ranch, Elmore and Leathers:
<TABLE>
<CAPTION>

                                                          Three Months Ended              Nine Months Ended
                                                              September 30,                 September 30,
                                                         _____________________          _____________________
                                                          2000            1999           2000            1999
                                                         _____           _____          _____           _____
<S>                                                     <C>             <C>             <C>            <C>
Overall capacity factor                                 103.7%          105.2%          95.5%          102.2%
Capacity (NMW) (weighted average)                        154.6           148.0          150.2           148.0
kWh produced (in thousands)                            353,900         343,600        943,100         991,000
</TABLE>

The overall capacity factor for the Partnership Projects decreased for the three
months  ended  September  30,  2000  compared  to the same period in 1999 due to
production and transmission  line  limitations.  The overall capacity factor for
the Partnership  Projects decreased for the nine months ended September 30, 2000
compared to the same period in 1999 due to scheduled  overhauls at all plants in
the first quarter of 2000.

<PAGE>



                         SALTON SEA FUNDING CORPORATION
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                       (in thousands, except per kwh data)
                        _________________________________

Results of Operations:  (continued)

Revenues:

The Salton Sea  Guarantors'  sales of  electricity  increased to $32,375 for the
three months ended  September 30, 2000 from $27,043 for the same period in 1999,
a 19.7%  increase.  The increase was due to the addition of Salton Sea Unit V in
July,  2000. For the nine months ended September 30, 2000,  sales of electricity
decreased to $59,873 from  $64,861 in 1999,  a 7.7%  decrease.  The decrease was
primarily due to scheduled  overhauls in 2000 which were more extensive compared
to 1999 and the  expiration of the fixed price periods at Salton Sea Unit II and
III in April,  2000 and February,  1999,  respectively  partially  offset by the
addition of Salton Sea Unit V.

The Partnership  Guarantors'  sales of electricity  decreased to $35,063 for the
three months ended  September 30, 2000 from $35,940 for the same period in 1999,
a 2.4% decrease.  For the nine month period ended  September 30, 2000,  sales of
electricity  decreased to $65,080 from $82,192 in 1999, a 20.8% decrease.  These
decreases were due to the  expiration of the scheduled  price period at Leathers
on December  31, 1999 offset by  increases  resulting  from higher  avoided cost
rates and the  commencement  of  operations  of CE Turbo in the third quarter of
2000.

The Royalty  Guarantor  revenue  decreased  to $3,816 for the three months ended
September 30, 2000 from $4,495 for the same period last year.  This decrease was
due  primarily  to a  reduction  in royalty  income from  Leathers  due to lower
revenue.  For the nine month period ended September 30, 2000,  revenue decreased
to $8,083 from $21,724 in 1999. This decrease was due primarily to a decrease in
East Mesa  royalty  income  related  to a royalty  settlement  and,  to a lesser
extent, reduction in royalty income from Leathers due to lower revenue.

Operating Expenses:

The Salton Sea Guarantors' operating expenses, which include royalty, operating,
and general and  administrative  expenses,  increased to $11,288,  for the three
months ended September 30, 2000 from $7,655 for the same period in 1999. For the
nine month period ended  September  30, 2000,  operating  expenses  increased to
$23,852 from $21,190 in 1999.  This increase was due to higher  operating  costs
resulting  from Salton Sea Unit V start up activities  and higher brine disposal
costs.

The  Partnership   Guarantors'   operating  expenses,   which  include  royalty,
operating, and general and administrative expenses, decreased to $12,119 for the
three months ended  September 30, 2000 from $12,483 for the same period in 1999.
For the nine month period ended September 30, 2000, operating expenses decreased
to  $29,427  from  $35,548  in 1999,  a 17.2%  decrease.  These  decreases  were
primarily due to a reduction in royalty expenses due to the lower revenues.

The Royalty  Guarantors'  operating  expenses  decreased to $1,099 for the three
months ended September 30, 2000 from $1,258 for the same period in 1999, a 12.6%
decrease. For the nine month period ended September 30, 2000, operating expenses
decreased to $2,272 from $3,412 in 1999, a 33.4% decrease.  These decreases were
due to lower  royalty  costs  due to the end of the  scheduled  price  period at
Leathers.
<PAGE>


                         SALTON SEA FUNDING CORPORATION
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                       (in thousands, except per kwh data)
                        _________________________________

Results of Operations:  (continued)

Depreciation and Amortization:

The Salton Sea Guarantors' depreciation and amortization increased to $4,751 for
the three  months  ended  September  30, 2000 from $4,225 for the same period of
1999, a 12.4%  increase.  For the nine month period  ended  September  30, 2000,
depreciation  and  amortization  increased to $13,072 from $12,668 in 1999.  The
increases were due to the commencement of operations of Salton Sea Unit V in the
third quarter of 2000.

The Partnership  Guarantors'  depreciation and amortization  decreased to $4,966
for the three months ended September 30, 2000 from $6,241 for the same period in
1999.  For the nine month period ended  September  30,  2000,  depreciation  and
amortization  decreased to $14,459 from $18,721 in 1999.  The decreases were due
primarily to lower step up depreciation  and  amortization  after the end of the
scheduled price period at Leathers.

The  Royalty  Guarantors'  amortization  was $491  for the  three  months  ended
September 30, 2000 compared to $1,425 for the same period of 1999.  For the nine
month  period ended  September  30, 2000,  amortization  was $1,474  compared to
$6,322 in 1999.  The decreases were due to lower  amortization  after the end of
the scheduled price period at the partnership plants.

Interest Expense:

The  Salton  Sea  Guarantors'  interest  expense,  net of  capitalized  amounts,
increased to $3,757 for the three months  ended  September  30, 2000 from $3,574
for the same period in 1999,  a 5.1%  increase.  The  increase  was due to lower
capitalized  interest  on  completed  construction  projects  offset by  reduced
indebtedness.  For the nine month period  ended  September  30,  2000,  interest
expense, net of capitalized  amounts,  decreased to $9,252 from $12,094 in 1999.
The decrease was due to reduced  indebtedness and higher capitalized interest on
construction projects.

The  Partnership  Guarantors'  interest  expense,  net of  capitalized  amounts,
decreased to $129 for the three months ended  September 30, 2000 from $1,821 for
the same period in 1999.  For the nine month  period ended  September  30, 2000,
interest expense, net of capitalized amounts, decreased to $440 from $6,409. The
decreases  were  primarily due to reduced  indebtedness  and higher  capitalized
interest on construction projects.

The Royalty Guarantors'  interest expense decreased to $206 for the three months
ended  September  30, 2000 from $398 from the same period in 1999.  For the nine
month period ended September 30, 2000,  interest expense  decreased to $748 from
$1,312 in 1999.  The  decreases  were due to  reduced  indebtedness.  Income Tax
Provision:

The Salton Sea  Guarantors are comprised of  partnerships.  Income taxes are the
responsibility  of the partners and Salton Sea Guarantors  have no obligation to
provide funds to the partners for payment of any tax  liabilities.  Accordingly,
the Salton Sea Guarantors have no tax obligations.
<PAGE>


                         SALTON SEA FUNDING CORPORATION
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                       (in thousands, except per kwh data)
                        _________________________________

Results of Operations:  (continued)

The  Partnership  Guarantors  income tax  provision  decreased to $6,477 for the
three months ended  September  30, 2000 from $7,318 for the same period in 1999,
an 11.5%  decrease.  For the nine month period  ended  September  30, 2000,  the
provision  for income  taxes  decreased  to $7,799  from  $11,449  in 1999.  The
decreases  were  primarily due to a lower pre-tax  income and the  generation of
energy tax credits.  Income  taxes will be paid by the parent of the  Guarantors
from  distributions  to the parent company by the  Guarantors  which occur after
operating expenses and debt service.

The Royalty  Guarantor's  income tax provision was $0 for the three months ended
September  30, 2000  compared to $488 for the same period in 1999.  For the nine
month period ended  September 30, 2000, the income tax provision was $0 compared
to $4,165 in 1999.  The  decrease in the  provision  is due to the change in the
Royalty Guarantor from a corporation to a limited liability company which is not
taxed. Income taxes are the responsibility of the partners and Royalty Guarantor
has no  obligation  to  provide  funds to the  partners  for  payment or any tax
liabilities. Accordingly, the Royalty Guarantor has no tax obligations.

Net Income:

The Salton Sea  Funding  Corporation's  net  income for the three  months  ended
September  30, 2000  decreased to $184 compared from $238 for the same period in
1999.  For the nine month period ended  September 30, 2000,  net income was $126
compared  to net  income of $567 in 1999.  The net income  primarily  represents
interest  income and expense,  net of applicable tax, and the Salton Sea Funding
Corporation's 1% equity in earnings of the Guarantors.

The Salton Sea Guarantors' net income  increased to $12,698 for the three months
ended  September 30, 2000  compared to $12,014 for the same period of 1999.  For
the nine month period ended September 30, 2000, net income  decreased to $14,029
compared to $20,777 in 1999.

The Partnership Guarantors' net income increased to $13,155 for the three months
ended September 30, 2000 compared to $9,544 for the same period of 1999. For the
nine month period ended September 30, 2000, net income decreased to $15,839 from
$16,006 in 1999.

The  Royalty  Guarantors'  net  income was  $2,020  for the three  months  ended
September 30, 2000 compared to a net income of $926 for the same period of 1999.
For the nine month period ended  September  30,  2000,  net income  decreased to
$3,589 from $6,513 in 1999.

Liquidity and Capital Resources:

On July 21, 1995,  Salton Sea Funding  Corporation  obtained a $15 million seven
year  revolving  credit  agreement  between  Credit Suisse as bank and agent and
other  lenders.  The interest rate is at the Adjusted Base Rate plus .375% or at
the LIBOR  rate plus 100 basis  points.  On May 26,  2000,  Salton  Sea  Funding
Corporation borrowed $15 million under its revolving credit agreement.  The loan
was repaid in two  installments,  $5 million on July 26, 2000 and $10 million
on August 28, 2000.
<PAGE>


                         SALTON SEA FUNDING CORPORATION
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                       (in thousands, except per kwh data)
                        _________________________________

Liquidity and Capital Resources: (continued)

Salton Sea Minerals LLC, a Partnership Guarantor ("Minerals LLC"), developed and
owns the  rights  to  proprietary  processes  for the  extraction  of zinc  from
elements in solution in the geothermal brine and fluids utilized at its Imperial
Valley plants (the "Zinc  Recovery  Project") as well as the production of power
to be used in the extraction  process.  A pilot plant has successfully  produced
commercial quality zinc at the Company's Imperial Valley Project.

Minerals LLC is constructing  the Zinc Recovery  Project which will recover zinc
from the geothermal  brine (the "Zinc Recovery  Project").  Four facilities have
been  installed  near Imperial  Valley  Project sites to extract a zinc chloride
solution from the brine through an ion exchange  process.  This solution will be
transported  to a central  processing  plant  where zinc ingots will be produced
through  solvent  extraction,  electrowinning  and casting  processes.  The Zinc
Recovery Project is designed to have a capacity of  approximately  30,000 metric
tonnes per year and is expected to commence  commercial  operation by the end of
2000 or early  2001.  In  September  1999,  Minerals  LLC  entered  into a sales
agreement  whereby certain grades of zinc produced by the Zinc Recovery  Project
will be sold to Cominco,  Ltd. at market value plus a premium.  The initial term
of the agreement expires in December 2005.

The  Zinc  Recovery   Project  is  being   constructed  by  Kvaerner  U.S.  Inc.
("Kvaerner")  pursuant  to a date  certain,  fixed-price,  turnkey  engineering,
procurement  and   construction   contract  (the  "Zinc  Recovery   Project  EPC
Contract").  Total project costs of the Zinc Recovery Project are expected to be
approximately  $200,900,  which is being  funded by $140,500 of debt and $60,400
from  equity  contributions.  The Company  has  incurred  $172,200 of such costs
through September 30, 2000.

Salton Sea Power LLC, a Salton Sea Guarantor, has constructed Salton Sea V which
is now in operation.  Salton Sea V is a 49 net MW  geothermal  power plant which
will sell approximately one-third of its net output to the Zinc Recovery Project
when the Zinc  Project is  completed.  The  remainder  is being sold through the
California Power Exchange ("PX") or in other market transactions.

CE  Turbo  LLC,  a  Partnership  Guarantor,  completed  construction  and  began
operation of the CE Turbo Project. The CE Turbo Project has a capacity of 10 net
MW. The net output of the CE Turbo Project is being sold to the Zinc facility or
sold through the PX or in other market  transactions.

The  Partnership   Projects  have  upgraded  the  geothermal   brine  processing
facilities  at the  Vulcan  and Del Ranch  Projects  with the  brine  facilities
construction.
<PAGE>

                         SALTON SEA FUNDING CORPORATION
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                       (in thousands, except per kwh data)
                        _________________________________

Liquidity and Capital Resources: (continued)

The operating Salton Sea Guarantors' only source of revenue is payments received
pursuant  to long term power sales  agreements  with  Edison,  other than Unit 5
revenue and  interest  earned on funds on  deposit.  The  operating  Partnership
Guarantors' primary source of revenue is payments received pursuant to long term
power sales  agreements  with  Edison,  other than CE Turbo and Zinc revenue and
interest  earned on funds on  deposit.  The Royalty  Guarantor's  only source of
revenue is Royalties  received  pursuant to resource lease  agreements  with the
Partnership Projects.  These payments, for each of the Guarantors,  are expected
to be  sufficient  to fund  operating  and  maintenance  expenses,  payments  of
interest and principal on the Securities,  projected  capital  expenditures  and
debt service reserve fund requirements.

Certain information included in this report contains forward-looking  statements
made pursuant to the Private  Securities  Litigation Reform Act of 1995 ("Reform
Act"). Such statements are based on current expectations and involve a number of
known and unknown risks and  uncertainties  that could cause the actual  results
and  performance of the Company to differ  materially  from any expected  future
results or performance, expressed or implied, by the forward-looking statements.
In connection with the safe harbor provisions of the Reform Act, the Company has
identified   important  factors  that  could  cause  actual  results  to  differ
materially  from  such  expectations,  including  development  and  construction
uncertainty,  operating  uncertainty,  acquisition  uncertainty,   uncertainties
relating to doing business outside of the United States,  uncertainties relating
to geothermal  resources,  uncertainties  relating to domestic and international
economic and  political  conditions  and  uncertainties  regarding the impact of
regulations,   changes  in  government   policy,   industry   deregulation   and
competition. Reference is made to all of the Company's SEC filings, incorporated
herein by reference,  for a description of such factors.  The Company assumes no
responsibility to update forward-looking information contained herein.
<PAGE>



SALTON SEA FUNDING CORPORATION

                           PART II - OTHER INFORMATION


Item 1 - Legal proceedings.

     Neither the Salton Sea Funding  Corporation  nor the Guarantors are parties
to any material legal matters.

Item 2 - Changes in Securities.

     Not applicable.

Item 3 - Default on Senior Securities.

     Not applicable.

Item 4 - Submission of Matters to a Vote of Security Holders.

     Not applicable.

Item 5 - Other Information.

     Not applicable.

Item 6 - Exhibits and Reports on Form 8-K.

     (a) Exhibits:

                  Exhibit 27 - Financial Data Schedule

     (b) Report on Form 8-K:

                 None.
<PAGE>

                                   SIGNATURES


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


                                SALTON SEA FUNDING CORPORATION


Date:  August 11, 2000          /s/    Joseph M. Lillo
                                       Joseph M. Lillo
                                       Vice President and
                                       Controller

<PAGE>

                                  EXHIBIT INDEX

Exhibit                                                     Page
  No.                                                        No.

  27             Financial Data Schedule                     36