UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                    FORM 10-Q

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

                For the quarterly period ended September 30, 2002
                          Commission File No. 33-95538

                         SALTON SEA FUNDING CORPORATION
             (Exact name of registrant as specified in its charter)

                                   47-0790493
                        (IRS Employer Identification No.)

   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 L.L.C.                 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
 (Exact name of Registrants             (State or other        (I.R.S. Employer
as specified in their charters)         jurisdiction of     Identification No.)
                              incorporation or organization)

                 302 S. 36th Street, Suite 400, 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) 341-4500

     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 November 14, 2002.
<PAGE>

                         SALTON SEA FUNDING CORPORATION

                                    Form 10-Q

                               September 30, 2002
                                  _____________

                                 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, 2002 and December 31, 2001                      5

Statements of Operations for the Three and Nine Months Ended
    September 30, 2002 and 2001                                               6

Statements of Cash Flows for the Nine Months Ended
    September 30, 2002 and 2001                                               7

Notes to Financial Statements                                                 8

SALTON SEA GUARANTORS

Independent Accountants' Report                                              10

Combined Balance Sheets, September 30, 2002 and December 31, 2001            11

Combined Statements of Operations for the Three and Nine Months Ended
    September 30, 2002 and 2001                                              12

Combined Statements of Cash Flows for the Nine Months Ended
    September 30, 2002 and 2001                                              13

Notes to Combined Financial Statements                                       14
<PAGE>

PARTNERSHIP GUARANTORS

Independent Accountants' Report                                              17

Combined Balance Sheets, September 30, 2002 and December 31, 2001            18

Combined Statements of Operations for the Three and Nine Months Ended
    September 30, 2002 and 2001                                              19

Combined Statements of Cash Flows for the Nine Months Ended
    September 30, 2002 and 2001                                              20

Notes to Combined Financial Statements                                       21

SALTON SEA ROYALTY LLC

Independent Accountants' Report                                              25

Balance Sheets, September 30, 2002 and December 31, 2001                     26

Statements of Operations for the Three and Nine Months Ended
    September 30, 2002 and 2001                                              27

Statements of Cash Flows for the Nine Months Ended
    September 30, 2002 and 2001                                              28

Notes to Financial Statements                                                29

Item 2.          Management's Discussion and Analysis of
                 Financial Condition and Results of Operations               31
Item 4           Internal Controls and Procedures                            39


                           PART II: OTHER INFORMATION

Item 1.          Legal Proceedings                                           40
Item 2.          Changes in Securities                                       40
Item 3.          Defaults on Senior Securities                               40
Item 4.          Submission of Matters to a Vote of
                 Security Holders                                            40
Item 5.          Other Information                                           40
Item 6.          Exhibits and Reports on Form 8-K                            40

Signatures                                                                   41
<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 (the "Company") as of September 30, 2002, and the related statements
of operations for the  three-month  and nine-month  periods ended  September 30,
2002 and 2001,  and the  related  statements  of cash  flows for the  nine-month
periods ended September 30, 2002 and 2001.  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 the Salton Sea
Funding  Corporation  as of December 31,  2001,  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 17, 2002 (March 1, 2002 as to
Note 4), 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, 2001 is fairly stated, in all material respects, in relation to the
balance sheet from which it has been derived.


/s/ Deloitte & Touche LLP

DELOITTE & TOUCHE LLP
Omaha, Nebraska
November 8, 2002
<PAGE>

                         SALTON SEA FUNDING CORPORATION
                                 BALANCE SHEETS
                (Dollars in Thousands, Except per Share Amounts)



                                                 September 30,      December 31,
                                                     2002               2001
                                                 (unaudited)
ASSETS
Cash                                          $       15,090      $        4,361
Restricted cash                                       36,123               2,949
Accrued interest receivable and other assets          12,956               3,351
Current portion of secured project notes
  from Guarantors                                     28,329              28,572
                                                ------------         -----------
Total current assets                                  92,498              39,233

Secured project notes from Guarantors                477,635             491,678
Investment in 1% of net assets of
    Guarantors                                         9,901               9,669
                                                ------------         -----------
Total assets                                  $      580,034      $      540,580
                                                ============         ===========


LIABILITIES AND STOCKHOLDER'S EQUITY
Liabilities:
Accrued interest                              $       12,867      $        3,333
Due to affiliates                                     47,784               3,899
Current portion of long term debt                     28,329              28,572
                                                ------------         -----------
Total current liabilities                             88,980              35,804

Senior secured notes and bonds                       477,635             491,678
                                                ------------         -----------
    Total liabilities                                566,615             527,482

Commitments and contingencies (Note 3)

Stockholder's equity:
Common stock--authorized 1,000
    shares, par value $.01 per share;
    issued and outstanding 100 shares                    ---                 ---
Additional paid-in capital                             5,564               5,366
Retained earnings                                      7,855               7,732
                                                ------------         -----------
    Total stockholder's equity                        13,419              13,098
                                                ------------         -----------
    Total liabilities and stockholder's equity$      580,034       $     540,580
                                                ============         ===========

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

                         SALTON SEA FUNDING CORPORATION
                            STATEMENTS OF OPERATIONS
                             (Dollars in Thousands)
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                      Three Months Ended                 Nine Months Ended
                                                        September 30,                      September 30,
                                                       2002            2001              2002              2001
<S>                                             <C>               <C>               <C>                <C>
Revenues:

Interest income                                 $     9,984       $    10,753       $    30,057        $  31,489
Equity in earnings of Guarantors                        156                22                34              209
                                                -----------       -----------       -----------        ---------
Total revenues                                       10,140            10,775            30,091           31,698
                                                -----------       -----------       -----------        ---------

General and administrative expenses                     135               283               581              746
Interest expense                                      9,679            10,183            29,301           30,676
                                                -----------       -----------       -----------        ---------
Total expenses                                        9,814            10,466            29,882           31,422
                                                -----------       -----------       -----------        ---------
Income before income taxes                              326               309               209              276
Provision for income taxes                              134               128                86              114

                                                -----------       -----------       -----------        ---------
Income before cumulative effect
of accounting change                                    192               181               123              162

Cumulative effect of accounting
change, net of tax                                      ---               ---               ---             (100)

                                                -----------       -----------       -----------        ---------
Net income                                      $       192       $       181       $       123        $      62
                                                ===========       ===========       ===========        =========
</TABLE>

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

                         SALTON SEA FUNDING CORPORATION
                            STATEMENTS OF CASH FLOWS
                             (Dollars in Thousands)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                     Nine Months Ended
                                                                        September 30,
                                                                    2002              2001

<S>                                                           <C>              <C>
Cash flows from operating activities:
     Net income                                               $        123     $         62
     Adjustments to reconcile net income to net
         cash flow from operating activities:
     Equity in earnings of Guarantors, net of contributions            (34)            (209)
     Equity in cumulative effect of accounting change                  ---              100
     Changes in assets and liabilities:
         Prepaid expenses and other assets                          (9,605)         (10,400)
         Accrued liabilities                                         9,534           10,034
                                                              ------------     ------------
     Net cash flows from operating activities                           18             (413)
                                                              ------------     ------------
Cash flows from investing activities:
     Principal repayments of secured project
     notes from Guarantors                                          14,286           11,830
                                                              ------------     ------------
     Net cash flows from investing activities                       14,286           11,830
                                                              ------------     ------------
Cash flows from financing activities:
     Increase in due to affiliates                                  43,885           38,350
     Increase in restricted cash                                   (33,174)             ---
     Repayment of senior secured notes and bonds                   (14,286)         (11,830)
                                                              ------------     ------------
     Net cash flows from financing activities                       (3,575)          26,520
                                                              ------------     ------------
Net change in cash                                                  10,729           37,937

Cash at the beginning of period                                      4,361            8,467
                                                              ------------     ------------
Cash at the end of period                                     $     15,090     $     46,404
                                                              ============     ============
Supplemental disclosures:
     Interest paid                                            $     19,800     $     20,677
                                                              ============     ============
</TABLE>

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

                         SALTON SEA FUNDING CORPORATION

                          NOTES TO FINANCIAL STATEMENTS
                                   (Unaudited)

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,  2002 and the  results of
operations  for the three and nine months ended  September 30, 2002 and 2001 and
cash flows for the nine-months ended September 30, 2002 and 2001. The results of
operations for the three and  nine-months  ended September 30, 2002 and 2001 are
not necessarily indicative of the results to be expected for the full year.

The  unaudited  financial  statements  should  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, 2001.

Certain prior year amounts have been  reclassified  to conform with current year
classifications.

2.  Accounting Policies:

On January 1, 2002, the Funding  Corporation adopted SFAS No. 142, "Goodwill and
Other Intangible Assets," which establishes the accounting for acquired goodwill
and  other  intangible  assets  and  provides   goodwill  and   indefinite-lived
intangible assets will not be amortized, but will be tested for impairment on an
annual basis. The Funding  Corporation's related amortization consists solely of
its share of the goodwill  amortization at the  Guarantors,  which has no income
tax effect.  Following is a reconciliation of net income as originally  reported
for the three and nine-months ended September 30, 2002 and 2001, to adjusted net
income (in thousands):


                            Three Months                Nine Months
                         Ended September 30,        Ended September 30,
                           2002        2001        2002             2001

Reported net income    $     192    $    181     $    123       $      62
Goodwill amortization        ---          14          ---              43
                       ---------    --------     --------       ---------
Adjusted net income    $     192    $    195     $    123       $     105
                       =========    ========     ========       =========

In accordance with SFAS No. 142, the Guarantors have determined  their reporting
units and completed  their  transitional  impairment  testing of goodwill in the
second quarter  primarily using a discounted cash flow methodology as of January
1, 2002. The results of the transitional  impairment  tests indicated  potential
goodwill impairment at the Salton Sea and Partnership Guarantors. The Guarantors
will determine the potential  impairment  charge, if any, and record such charge
in the financial  statements  during the  quarterending  December 31, 2002.  The
impairment  charge  will  be  recorded  as a  cumulative  effect  of  change  in
accounting as of January 1, 2002.  The  Guarantors  will  complete  their annual
goodwill impairment test during the fourth quarter of 2002.

In August  2001,  FASB  issued SFAS No. 143,  "Accounting  for Asset  Retirement
Obligations".  This standard  addresses  financial  accounting and reporting for
obligations  related to the  retirement  of tangible  long-lived  assets and the
related asset  retirement  costs.  SFAS No. 143 is effective for the Guarantors'
fiscal year beginning  January 1, 2003.  The Guarantors  have not determined the
impact resulting from the adoption of this standard.

In October  2001,  FASB issued  SFAS No.  144,  "Accounting  for  Impairment  or
Disposal of Long-Lived Assets".  The standard addresses financial accounting and
reporting  for the  impairment or disposal of  long-lived  assets.  There was no
financial statement impact as a result of the Funding Corporation's  adoption of
SFAS No. 144 on January 1, 2002.
<PAGE>

3.   Contingencies:

Southern  California  Edison  ("Edison"),  a  wholly-owned  subsidiary of Edison
International,  is a  public  utility  primarily  engaged  in  the  business  of
supplying   electric  energy  to  retail   customers  in  Central  and  Southern
California,  excluding Los Angeles.  Due to reduced liquidity,  Edison failed to
pay  approximately  $119 million owed under the power purchase  agreements  with
certain  Guarantors  (Imperial Valley  Projects,  excluding the Salton Sea V and
Turbo  Projects)  for power  delivered in the fourth  quarter 2000 and the first
quarter  2001.  Due to  Edison's  failure to pay  contractual  obligations,  the
Guarantors had established an allowance for doubtful  accounts of  approximately
$21.0 million as of December 31, 2001.

The final  payment of past due  amounts by Edison  was  received  March 1, 2002.
Following  the  receipt of  Edison's  final  payment of past due  balances,  the
Guarantors released the remaining allowance for doubtful accounts.

As a result of  uncertainties  related  to  Edison,  the  letter of credit  that
supports the debt service  reserve fund at the Funding  Corporation has not been
extended  beyond  its  current  July  2004  expiration  date,  and as such  cash
distributions  are  not  available  to CE  Generation,  LLC  until  the  Funding
Corporation  debt service reserve fund of  approximately  $67.6 million has been
funded or the letter of credit has been extended beyond its July 2004 expiration
date or replaced.

In January 2001, the California Power Exchange ("PX") declared bankruptcy.  As a
result,  the Salton Sea V and Turbo Projects have not received payment for power
sold under the Transaction  Agreements  during December 2000 and January 2001 of
approximately  $3.8 million.  The Guarantors  have  established an allowance for
doubtful accounts for the full amount of this receivable.

Edison has failed to pay  approximately  $3.9 million of capacity bonus payments
for the months from October 2001 through May 2002.  On December 10, 2001 certain
Guarantors  filed a lawsuit  against  Edison  in  California's  Imperial  County
Superior  Court  seeking a court  order  requiring  Edison to make the  required
capacity  bonus  payments  under  the Power  Purchase  Agreements.  The  Project
entities  will  vigorously  pursue  collection of the capacity  bonus  payments.
However,  due to Edison's  failure to pay the contractual  obligations,  certain
Guarantors have established an allowance for doubtful  accounts of approximately
$1.3 million as of September 30, 2002.

<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, 2002,  and the related  combined  statements of
operations for the three-month  and nine-month  periods ended September 30, 2002
and 2001, and the related  statements of cash flows for the  nine-month  periods
ended  September  30,  2002  and  2001.  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,  2001,  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 17, 2002 (March 1,
2002 as to Note 6),  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, 2001 is fairly stated, in
all material  respects,  in relation to the combined balance sheet from which it
has been derived.


/s/ Deloitte & Touche LLP

DELOITTE & TOUCHE LLP
Omaha, Nebraska
November 8, 2002
<PAGE>

                              SALTON SEA GUARANTORS
                             COMBINED BALANCE SHEETS
                             (Dollars in Thousands)

<TABLE>
<CAPTION>
                                                     September 30,    December 31,
                                                         2002              2001
                                                      (unaudited)
<S>                                                  <C>             <C>
ASSETS
Accounts receivable, net of allowance of $3,373 and
    $9,829, respectively                             $     26,424    $      36,647
Prepaid expenses and other assets                           5,927            5,314
                                                     ------------    -------------
Total current assets                                       32,351           41,961

Property, plant, contracts and equipment, net             537,892          543,719
Excess of cost over fair value of net assets
   acquired, net                                           44,270           44,270
                                                     ------------    -------------
   Total assets                                      $    614,513    $     629,950
                                                     ============    =============


LIABILITIES AND GUARANTORS' EQUITY
Liabilities:
Accounts payable                                     $        568    $       2,862
Accrued liabilities                                         7,977            9,414
Accrued interest                                            6,523            1,721
Current portion of long term debt                          21,625           20,487
                                                     ------------    -------------
Total current liabilities                                  36,693           34,484

Due to affiliates                                          25,057           27,109
Senior secured project note                               235,034          246,412
                                                     ------------    -------------
    Total liabilities                                     296,784          308,005

Commitment and contingencies (Note 3)

Total Guarantors' equity                                  317,729          321,945
                                                     ------------    -------------
Total liabilities and Guarantors' equity             $    614,513    $     629,950
                                                     ============    =============
</TABLE>

   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,
                                                      2002             2001             2002              2001
                                                   _________        _________         _________        _________
Revenues:

<S>                                             <C>              <C>               <C>              <C>
Sales of electricity                            $     27,438     $     22,853      $     66,936     $     77,847
Interest and other income                              2,185              652             2,615            1,629
                                                   _________        _________         _________        _________
Total revenues                                        29,623           23,505            69,551           79,476
                                                   _________        _________         _________        _________
Expenses:

Operating, general and
   administration                                     14,374           15,438            42,709           43,004
Depreciation and amortization                          4,721            4,372            15,686           13,382
Interest expense                                       5,053            5,574            15,372           16,878
Less capitalized interest                                ---              ---               ---           (1,692)
                                                   _________        _________         _________        _________

Total expenses                                        24,148           25,384            73,767           71,572
                                                   _________        _________         _________        _________
Income (loss) before cumulative
  effect of accounting change                          5,475           (1,879)           (4,216)           7,904

Cumulative effect of accounting change                   ---              ---               ---           (8,743)
                                                   _________        _________         _________        _________

Net income (loss)                              $       5,475     $     (1,879)      $    (4,216)       $    (839)
                                                   =========        =========         =========        =========
</TABLE>


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


                              SALTON SEA GUARANTORS
                        COMBINED STATEMENTS OF CASH FLOWS
                             (Dollars in Thousands)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                     Nine Months Ended
                                                                        September 30,
                                                                    2002            2001
Cash flows from operating activities:
<S>                                                      <C>                <C>
Net loss                                                 $        (4,216)   $        (839)
Adjustments to reconcile net loss to net
  cash flows from operating activities:
    Cumulative effect of change in accounting principle              ---            8,743
    Depreciation and amortization                                 15,686           13,382
Changes in assets and liabilities:
    Accounts receivable                                           10,223           (4,433)
    Prepaid expenses and other assets                               (613)          (5,777)
    Accounts payable and accrued liabilities                       1,071            5,738
                                                            ____________        _________
Net cash flows from operating activities                          22,151           16,814
                                                            ____________        _________
Cash flows from investing activities:
Capital expenditures                                              (9,859)          (7,055)
Decrease in restricted cash                                          ---               17
                                                            ____________        _________
Net cash flows from investing activities                          (9,859)          (7,038)
                                                            ____________        _________
Cash flows from financing activities:
Decrease in due to affiliates                                     (2,052)          (1,117)
Repayment of senior secured project note                         (10,240)          (8,659)
                                                            ____________        _________
Net cash flows from financing activities                         (12,292)          (9,776)
                                                            ____________        _________
Net change in cash                                                   ---              ---
Cash at beginning of period                                          ---              ---
                                                            ____________        _________
Cash at end of period                                    $           ---    $         ---
                                                            ============        =========
Supplemental disclosures:
Interest paid                                            $        10,077    $      11,020
                                                            ============        =========
</TABLE>

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

                              SALTON SEA GUARANTORS

                     NOTES TO COMBINED FINANCIAL STATEMENTS
                                   (Unaudited)

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, 2002 and the results of  operations  for
the three and  nine-months  ended September 30, 2002 and 2001 and cash flows for
the nine-months ended September 30, 2002 and 2001. The results of operations for
the nine-months ended September 30, 2002 and 2001 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 combined financial  statements included in the Funding  Corporation's annual
report on Form 10-K for the year ended December 31, 2001.

Certain  prior year  amounts  have been  reclassified  in order to conform  with
current year classification.

2.  Accounting Pronouncements:

Effective  January 1, 2001, the Guarantors  changed their accounting  policy for
overhaul and well workover costs.  These costs, had historically  been accounted
for using the deferral method, and are now expensed as incurred.  The Guarantors
have recorded a cumulative  effect of this change of approximately  $8.7 million
in the nine months ended September 30, 2001.

On January 1, 2002,  the  Guarantors  adopted SFAS No. 142,  "Goodwill and Other
Intangible  Assets," which  establishes the accounting for acquired goodwill and
other  intangible  assets,  and  provides  that  goodwill  and  indefinite-lived
intangible assets will not be amortized, but will be tested for impairment on an
annual basis. The Guarantor's related  amortization  consists solely of goodwill
amortization. Following is a reconciliation of net income as originally reported
for the three and nine-months ended September 30, 2002 and 2001, to adjusted net
income (loss) (in thousands):

                                   Three Months             Nine months
                                Ended September 30,    Ended September 30,
                                2002       2001        2002             2001

Reported net income (loss)  $   5,475   $ (1,879)   $ (4,216)      $    (839)
Goodwill amortization             ---        326         ---             978
Adjusted net income (loss)  $   5,475   $ (1,553)   $ (4,216)      $     139

The Guarantors'  acquired intangible assets consists of power purchase contracts
(the  "contracts")  with a cost of $7.9 million and accumulated  amortization of
$3.1  million at  September  30,  2002,  and are  included in  property,  plant,
contracts and equipment in the accompanying combined balance sheet. Amortization
expense on the  contracts  was $0.2 million for the nine months ended  September
30, 2002. The Guarantors expect amortization  expense on the contracts to be $.1
million  for the  remainder  of fiscal 2002 and $.3 million for each of the five
succeeding fiscal years.

In accordance with SFAS No. 142, the Guarantors have determined  their reporting
units and completed  their  transitional  impairment  testing of goodwill in the
second quarter  primarily using a discounted cash flow methodology as of January
1, 2002. The results of the transitional  impairment  tests indicated  potential
goodwill  impairment  at the  Guarantors.  The  Guarantors  will  determine  the
potential  impairment  charge,  if any, and record such charge in the  financial
statements  during the quarter ending  December 31, 2002. The impairment  charge
will be recorded as a cumulative effect of change in accounting as of January 1,
2002. The Guarantors will complete their annual goodwill  impairment test during
the fourth quarter of 2002.  August 2001, FASB issued SFAS No. 143,  "Accounting
for Asset Retirement Obligations".  This standard addresses financial accounting
and reporting for obligations  related to the retirement of tangible  long-lived
assets and the related asset retirement costs. SFAS No. 143 is effective for the
Guarantors'  fiscal year  beginning  January 1, 2003.  The  Guarantors  have not
quantified the impact resulting from the adoption of this standard.
<PAGE>

In October  2001,  FASB issued  SFAS No.  144,  "Accounting  for  Impairment  or
Disposal of Long-Lived Assets".  The standard addresses financial accounting and
reporting  for the  impairment or disposal of  long-lived  assets.  There was no
financial  statement impact as a result of the Guarantors'  adoption of SFAS No.
144 on January 1, 2002.

3.  Contingencies:

A.  Southern California Edison

Southern  California  Edison  ("Edison"),  a  wholly-owned  subsidiary of Edison
International,  is a  public  utility  primarily  engaged  in  the  business  of
supplying   electric  energy  to  retail   customers  in  Central  and  Southern
California,  excluding Los Angeles.  Due to reduced liquidity,  Edison failed to
pay  approximately  $42.3 million owed under the power purchase  agreements with
certain  Guarantors  (excluding the Salton Sea V Project) for power delivered in
the fourth quarter 2000 and the first quarter 2001.  Due to Edison's  failure to
pay  contractual  obligations,  the Guarantors had  established an allowance for
doubtful accounts of approximately $6.8 million as of December 31, 2001.

The final payment of the past due amounts by Edison was received  March 1, 2002.
Following  the  receipt of  Edison's  final  payment of past due  balances,  the
Guarantors released the remaining allowance for doubtful accounts.

As a result of  uncertainties  related  to  Edison,  the  letter of credit  that
supports the debt service reserve fund at Salton Sea Funding Corporation has not
been extended  beyond its current July 2004  expiration  date, and as such, cash
distributions  are not  available  to CE  Generation,  LLC until the  Salton Sea
Funding Corporation debt service reserve fund of approximately $67.6 million has
been  funded or the  letter of credit  has been  extended  beyond  its July 2004
expiration date or replaced.

In January 2001, the California Power Exchange ("PX") declared bankruptcy.  As a
result,  the Salton Sea V Project has not received  payment for power sold under
the   Transaction   Agreements   during   December  2000  and  January  2001  of
approximately  $3.0 million.  The Guarantors  have  established an allowance for
doubtful accounts for the full amount of this receivable.

Edison has failed to pay  approximately  $1.1 million of capacity bonus payments
for the months from October 2001 through May 2002.  On December 10, 2001 certain
Guarantors  (except the Salton Sea V Project) filed a lawsuit  against Edison in
California's  Imperial  County  Superior  Court seeking a court order  requiring
Edison to make the required  capacity  bonus  payments  under the Power Purchase
Agreements.  The Guarantors  will vigorously  pursue  collection of the capacity
bonus  payments.  However,  due to  Edison's  failure  to pay these  contractual
obligations,  the Guarantors have established an allowance for doubtful accounts
of approximately $.3 million.

B.  Stone and Webster

The Salton Sea V Project  was  constructed  by Stone & Webster,  Inc.  (formerly
Stone & Webster Engineering Corporation),  a wholly-owned subsidiary of the Shaw
Group  ("Stone &  Webster"),  pursuant  to date  certain,  fixed-price,  turnkey
engineering,  procure,  construct and manage contract (the "Salton Sea V Project
EPC  Contract").  On March 7, 2002,  Salton Sea Power  L.L.C.,  the owner of the
Salton Sea V Project, filed a Demand for Arbitration against Stone & Webster for
breach of contract and breach of warranty  arising from  deficiencies in Stone &
Webster's design, engineering, construction and procurement of equipment for the
Salton Sea V Project  pursuant  to the Salton Sea V Project  EPC  Contract.  The
arbitration  relating  to the  Salton Sea V Project is  currently  scheduled  to
commence in April 2003,  with no current stated claim amount.
<PAGE>

C.  Environmental Liabilities

The Guarantors are subject to numerous legislative and regulatory  environmental
protection  requirements  involving air and water pollution,  waste  management,
hazardous chemical use, noise abatement, and land use aesthetics.

State and federal  environmental laws and regulations currently have, and future
modifications  may  have,  the  effect of (i)  increasing  the lead time for the
construction of new facilities,  (ii) significantly increasing the total cost of
new  facilities,  (iii)  requiring  modification  of  the  Guarantors'  existing
facilities,  (iv)  increasing the risk of delay on  construction  projects,  (v)
increasing  the  Guarantors'  cost of  waste  disposal  and  (vi)  reducing  the
reliability  of  service  provided  by the  Guarantors  and the amount of energy
available  from the  Guarantors'  facilities.  Any of such  items  could  have a
substantial  impact on amounts  required to be expended by the Guarantors in the
future.  Expenditures for ongoing compliance with environmental regulations that
relate to  current  operations  are  expensed  or  capitalized  as  appropriate.
Expenditures that relate to an existing condition caused by past operations, and
which do not contribute to current or future revenue  generation,  are expensed.
Liabilities   are  recorded  when   environmental   assessments   indicate  that
remediation  efforts are  probable  and the costs can be  reasonably  estimated.
Estimates of the liability are based upon currently  available  facts,  existing
technology and presently enacted laws and regulations  taking into consideration
the likely  effects of  inflation  and other social and  economic  factors,  and
include  estimates of associated legal costs.  These amounts also consider prior
experience in remediating sites, other companies'  clean-up  experience and data
released by the Environmental  Protection Agency or other  organizations.  These
estimated  liabilities are subject to revision in future periods based on actual
costs or new circumstances,  and are included in the accompanying balance sheets
at their undiscounted  amounts.  As of September 30, 2002 and December 31, 2001,
the environmental liabilities recorded on the balance sheet were not material.

4.  Related Party Transactions

On September 29, 2000, Salton Sea Power L.L.C. ("Salton Sea Power") entered into
an  agreement  to sell all  available  power from the Salton Sea V Project to El
Paso Merchant Energy Company  ("EPME").  Under the terms of the agreement,  EPME
purchased  and sold  available  power on behalf of Salton  Sea  Power,  into the
California  ISO  markets.  The  purchase  price  for  the  available  power  was
equivalent  to the value  actually  received by EPME for the sale of such power,
including renewable premiums.

On January 17, 2001,  Salton Sea Power  entered into  Transaction  Agreements to
sell available  power from the Salton Sea V Project to EPME.  Under the terms of
the agreement,  at the option of Salton Sea Power,  EPME purchased all available
power from the Salton Sea V Project  based on day ahead  price  quotes  received
from EPME.

On March 27, 2001 and May 1, 2001,  the Imperial  Valley  Projects  entered into
Transaction  Agreements to sell available  power to EPME based on percentages of
the Dow Jones SP-15  Index.  On June 22,  2001,  the  Imperial  Valley  Projects
(excluding the Salton Sea V Project and Turbo Project) ceased selling  available
power to EPME and  resumed  power  sales to  Edison  under  the  Power  Purchase
Agreements ("PPAs"). Effective September 16, 2002, Salton Sea Power entered into
a Transaction Agreement to sell available power to EPME at increased percentages
of the Dow Jones SP-15 Index.

Pursuant  to these  agreements,  sales to EPME  from the  Company  totaled  $2.7
million and $3.5 million for the three months ended September 30, 2002 and 2001,
respectively  and $6.1  million  and $29.9  million  for the nine  months  ended
September 30, 2002 and 2001, respectively. As of September 30, 2002 and December
31,  2001,  accounts  receivable  from EPME were $.7  million  and $.9  million,
respectively.

Effective  August 1, 2002,  Salton Sea Power  amended the power sales  agreement
with CalEnergy Minerals, LLC ("Minerals") to provide for a fixed price of $31.00
per  Megawatt  hour for all hours of August 1, 2002  through  December 31, 2002.
Pursuant to this agreement,  sales to Minerals from Salton Sea Power totaled $.1
million and $.1 million for the three and nine months ended  September  30, 2002
and 2001, respectively and $.2 million and $.9 million for the nine months ended
September 30, 2002 and 2001, respectively.
<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, 2002,  and the related  combined  statements of
operations for the three-month  and nine-month  periods ended September 30, 2002
and 2001, and the related  statements of cash flows for the  nine-month  periods
ended  September  30,  2002  and  2001.  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,  2001,  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 17, 2002 (March 1,
2002 as to Note 8A),  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, 2001 is fairly stated, in
all material  respects,  in relation to the combined balance sheet from which it
has been derived.


/s/ Deloitte & Touche LLP

DELOITTE & TOUCHE LLP
Omaha, Nebraska
November 8, 2002
<PAGE>

                             PARTNERSHIP GUARANTORS
                             COMBINED BALANCE SHEETS
                             (Dollars in Thousands)

<TABLE>
<CAPTION>
                                                                          September 30,              December 31,
                                                                               2002                      2001
                                                                           (unaudited)
ASSETS
<S>                                                                       <C>                      <C>
Cash                                                                      $         67             $         ---
Accounts receivable, net of allowance of $1,611 and
    $14,925, respectively                                                       34,948                    59,384
Prepaid expenses and other assets                                               19,902                    19,358
                                                                          ------------             -------------
Total current assets                                                            54,917                    78,742

Restricted cash                                                                    ---                    21,282
Property, plant, contracts and equipment, net                                  676,023                   633,574
Management fee                                                                  69,405                    70,806
Due from affiliates                                                             49,051                    13,072
Excess of cost over fair value of net assets
  acquired, net                                                                120,866                   120,866
                                                                          ------------             -------------
Total assets                                                              $    970,262             $     938,342
                                                                          ============             =============


LIABILITIES AND GUARANTORS' EQUITY
Liabilities:
Accounts payable                                                          $      2,254             $       5,480
Accrued liabilities                                                             19,887                    12,853
Accrued interest                                                                 6,289                     1,605
Current portion of long term debt                                                4,822                     4,625
                                                                          ------------             -------------
Total current liabilities                                                       33,252                    24,563

Senior secured project notes                                                   241,607                   244,117
Deferred income taxes                                                          103,958                   102,083
                                                                          ------------             -------------
Total liabilities                                                              378,817                   370,763

Commitments and contingencies (Note 3)

Guarantors' equity:
Common stock                                                                         3                         3
Additional paid-in capital                                                     407,451                   387,663
Retained earnings                                                              183,991                   179,913
                                                                          ------------             -------------
Total Guarantors' equity                                                       591,445                   567,579
                                                                          ------------             -------------
Total liabilities and Guarantors' equity                                  $    970,262              $    938,342
                                                                          ============             =============
</TABLE>


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

                             PARTNERSHIP GUARANTORS
                        COMBINED STATEMENTS OF OPERATIONS
                             (Dollars in Thousands)
                                   (Unaudited)

<TABLE>
<CAPTION>

                                                       Three Months Ended                Nine Months Ended
                                                          September 30,                    September 30,
                                                      2002            2001              2002             2001
                                                   _________        _________         _________        _________
Revenues:

<S>                                              <C>               <C>              <C>                <C>
Sales of electricity                             $    33,229       $   20,782       $    75,724        $  64,352
Interest and other income                              1,103            1,702             1,768            2,642
                                                   _________        _________         _________        _________
Total revenues                                        34,332           22,484            77,492           66,994
                                                   _________        _________         _________        _________
Expenses:

Operating, general and
   administration                                     15,668            8,974            48,373           35,646
Depreciation and amortization                          5,484            5,877            17,636           17,895
Interest expense                                       4,792            4,857            14,328           14,479
Less capitalized interest                             (3,050)          (2,855)           (8,798)         (10,338)
                                                   _________        _________         _________        _________

Total expenses                                        22,894           16,853            71,539           57,682
                                                   _________        _________         _________        _________
Income before income taxes                            11,438            5,631             5,953            9,312
Provision for income taxes                             3,602            1,944             1,875            3,213
                                                   _________        _________         _________        _________

Income before cumulative
  effect of accounting change                          7,836            3,687             4,078            6,099

Cumulative effect of accounting
  change, net of tax                                     ---              ---               ---           (8,254)
                                                   _________        _________         _________        _________
Net income (loss)                                 $    7,836         $  3,687        $    4,078      $    (2,155)
                                                   =========        =========         =========       ==========
</TABLE>
   The accompanying notes are an integral part of these financial statements.
<PAGE>

                             PARTNERSHIP GUARANTORS
                        COMBINED STATEMENTS OF CASH FLOWS
                             (Dollars in Thousands)
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                                            Nine Months Ended
                                                                                               September 30,
                                                                                          2002            2001
Cash flows from operating activities:
<S>                                                                             <C>                <C>
Net income (loss)                                                               $        4,078     $      (2,155)
Adjustments to reconcile net income (loss) to net
    cash flow from operating activities:
       Cumulative effect of change in accounting principle, net of tax                     ---             8,254
       Depreciation and amortization                                                    17,636            17,895
       Deferred income taxes                                                             1,875             3,213
Changes in assets and liabilities:
          Accounts receivable                                                           24,436           (14,007)
          Prepaid expenses and other assets                                             (1,347)           (5,481)
          Accounts payable and accrued
           liabilities                                                                   8,492             8,849
                                                                                ______________     _____________
Net cash flows from operating activities                                                55,170            16,568
                                                                                ______________     _____________
Cash flows from investing activities:
Capital expenditures                                                                   (16,938)          (11,394)
Capital expenditures - construction                                                    (39,453)          (14,322)
Receipt of liquidated damages                                                              ---            29,648
Decrease (increase) in restricted cash                                                  21,282           (29,551)
Management fee                                                                            (724)              163
                                                                                ______________     _____________
Net cash flows from investing activities                                               (35,833)          (25,456)
                                                                                ______________     _____________
Cash flows from financing activities:
Repayments of senior secured project notes                                              (2,313)             (954)
Decrease (increase) in due from affiliates                                             (36,745)            9,842
Equity contribution                                                                     19,788               ---
Net cash flows from financing activities                                               (19,270)            8,888
                                                                                ______________     _____________
Net change in cash                                                                          67               ---

Cash at beginning of period                                                                ---               ---
                                                                                ______________     _____________
Cash at end of period                                                           $           67     $         ---
                                                                                ==============     =============
Supplemental disclosures:
Interest paid                                                                   $        9,465     $       9,547
                                                                                ==============     =============
</TABLE>

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

                             PARTNERSHIP GUARANTORS

                     NOTES TO COMBINED FINANCIAL STATEMENTS
                                   (Unaudited)

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, 2002 and the results of  operations  for
the three and  nine-months  ended September 30, 2002 and 2001 and cash flows for
the nine-months ended September 30, 2002 and 2001. The results of operations for
the three and nine-months  ended September 30, 2002 and 2001 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 combined financial  statements included in the Funding  Corporation's annual
report on Form 10-K for the year ended December 31, 2001.

2.  Accounting Policies:

Effective  January 1, 2001, the Guarantors  changed their accounting  policy for
overhaul and well workover costs.  These costs, had historically  been accounted
for using the deferral method, and are now expensed as incurred.  The Guarantors
have recorded a cumulative effect of this change of approximately  $8.3 million,
net of tax in the nine months ended September 30, 2001.

On January 1, 2002,  the  Guarantors  adopted SFAS No. 142,  "Goodwill and Other
Intangible  Assets," which  establishes the accounting for acquired goodwill and
other intangible  assets and provides goodwill and  indefinite-lived  intangible
assets will not be  amortized,  but will be tested for  impairment  on an annual
basis.  The  Guarantors'  related  amortization   consists  solely  of  goodwill
amortization,  which has no income tax effect.  Following is a reconciliation of
net income (loss) as  originally  reported for the three and  nine-months  ended
September 30, 2002 and 2001, to adjusted net income (in thousands):

                                 Three Months                 Nine Months
                              Ended September 30,         Ended September 30,
                                2002        2001        2002             2001

Reported net income (loss)  $   7,836    $  3,687    $   4,078       $  (2,155)
Goodwill amortization             ---         891          ---           2,673
                            ---------    --------    ---------       ---------
Adjusted net income         $   7,836    $  4,578    $   4,078       $     518
                            =========    ========    =========       =========

The following table  summarizes the acquired  intangible  assets as of September
30, 2002 (in thousands):

                                Gross Carrying          Accumulated
                                    Amount              Amortization

Amortized Intangible Assets:
  Power Purchase Contract       $  123,002              $  96,502
  Patented Technology               46,290                 14,903
                                ----------              ---------
    Total                       $  169,292              $ 111,405
                                ==========              =========
<PAGE>

Amortization  expense on  acquired  intangible  assets was $2.6  million for the
nine-months ended September 30, 2002. The Guarantors expect amortization expense
on acquired intangible assets to be $.9 million for the remainder of fiscal 2002
and $3.5 million for each of the five succeeding fiscal years.

In accordance with SFAS No. 142, the Guarantors have determined  their reporting
units and completed  their  transitional  impairment  testing of goodwill in the
second quarter  primarily using a discounted cash flow methodology as of January
1, 2002. The results of the transitional  impairment  tests indicated  potential
goodwill  impairment  at the  Guarantors.  The  Guarantors  will  determine  the
potential  impairment  charge,  if any, and record such charge in the  financial
statements  during the quarter ending  December 31, 2002. The impairment  charge
will be recorded as a cumulative effect of change in accounting as of January 1,
2002. The Guarantors will complete their annual goodwill  impairment test during
the fourth quarter of 2002.

In August  2001,  FASB  issued SFAS No. 143,  "Accounting  for Asset  Retirement
Obligations".  This standard  addresses  financial  accounting and reporting for
obligations  related to the  retirement  of tangible  long-lived  assets and the
related asset  retirement  costs.  SFAS No. 143 is effective for the Guarantors'
fiscal year beginning  January 1, 2003.  The Guarantors  have not determined the
impact resulting from the adoption of this standard.

In October  2001,  FASB issued  SFAS No.  144,  "Accounting  for  Impairment  or
Disposal of Long-Lived Assets".  The standard addresses financial accounting and
reporting  for the  impairment or disposal of  long-lived  assets.  There was no
financial  statement impact as a result of the Guarantors'  adoption of SFAS No.
144 on January 1, 2002.

3.  Contingency:

A.  Southern California Edison

Southern  California  Edison  ("Edison"),  a  wholly-owned  subsidiary of Edison
International,  is a  public  utility  primarily  engaged  in  the  business  of
supplying   electric  energy  to  retail   customers  in  Central  and  Southern
California,  excluding Los Angeles.  Due to reduced liquidity,  Edison failed to
pay  approximately  $76.9 million owed under the power purchase  agreements with
certain  Guarantors  (excluding  the Turbo  Project) for power  delivered in the
fourth quarter 2000 and the first quarter 2001.  Due to Edison's  failure to pay
contractual  obligations,  the  Guarantors  had  established  an  allowance  for
doubtful accounts of approximately $14.1 million as of December 31, 2001.

The final payment of the past due amounts by Edison was received  March 1, 2002.
Following  the  receipt of  Edison's  final  payment of past due  balances,  the
Guarantors released the remaining allowance for doubtful accounts.

In January 2001, the California Power Exchange ("PX") declared bankruptcy.  As a
result,  the Turbo  Project  has not  received  payment for power sold under the
Transaction  Agreements  during December 2000 and January 2001 of  approximately
$.8 million.  The Guarantors have established an allowance for doubtful accounts
for the full amount of this receivable.

Edison has failed to pay  approximately  $2.7 million of capacity bonus payments
for the months from October 2001 through May 2002.  On December 10, 2001 certain
Guarantors  (excluding  the Turbo  Project)  filed a lawsuit  against  Edison in
California's  Imperial  County  Superior  Court seeking a court order  requiring
Edison to make the required  capacity  bonus  payments  under the Power Purchase
Agreements.  The Guarantors  will vigorously  pursue  collection of the capacity
bonus  payments.  However,  due to  Edison's  failure  to pay these  contractual
obligations,  the Guarantors have established an allowance for doubtful accounts
of approximately $.8 million.
<PAGE>

B.  Stone and Webster

The Turbo Project was  constructed by Stone & Webster,  Inc.  (formerly  Stone &
Webster Engineering  Corporation),  a wholly-owned  subsidiary of the Shaw Group
("Stone & Webster"), pursuant to date certain, fixed-price, turnkey engineering,
procure,  construct and manage contract ( the "Turbo Project EPC Contract").  On
March 7, 2002, Vulcan/BN Geothermal Power Company, Del Ranch, L.P., and CE Turbo
LLC, the owners of the Turbo  Project,  filed a Demand for  Arbitration  against
Stone & Webster  for breach of  contract  and breach of  warranty  arising  from
deficiencies  in  Stone  &  Webster's  design,  engineering,   construction  and
procurement of equipment for the Turbo Project pursuant to the Turbo Project EPC
Contract.  The  arbitration  is currently  scheduled for December  2002,  with a
stated claim amount of  approximately $6 million of actual damages and an as yet
undetermined amount of consequential damages.

C.  Minerals

The  Zinc  Recovery  Project  was  being   constructed  by  Kvaerner  U.S.  Inc.
("Kvaerner")  pursuant  to a date  certain,  fixed-price,  turnkey  engineering,
procure,   construct  and  manage  contract  (the  "Zinc  Recovery  Project  EPC
Contract").   On  June  14,  2001,  Minerals  LLC  issued  notices  of  default,
termination  and demand  for  payment  of  damages  to  Kvaerner  under the Zinc
Recovery Project EPC Contract due to failure to meet performance obligations. As
a result  of  Kvaerner's  default  under the Zinc  Recovery  EPC  Contract,  the
Guarantors drew $29.6 million under the EPC Contract Letter of Credit ("LOC") on
July 20, 2001 and claimed the retainage and balance of the contract  price.  The
LOC draw, retainage and balance of the contract price have been accounted for as
a reduction of the capitalized costs of the project. The Guarantors have entered
into a time and materials engineering,  procurement and construction  management
contract with AMEC E&C Services, Inc. to complete the Zinc Recovery Project.

On July 11,  2001,  Kvaerner  filed an Amended  Demand For  Arbitration  against
Minerals  LLC  characterizing  the nature of the dispute as  concerns  regarding
change orders and  performance  penalties.  Kvaerner did not state the amount of
its claim.

On August 7, 2001,  Minerals LLC filed an Answering  Statement and  Counterclaim
against  Kvaerner.  Minerals LLC denied all material  allegations  in Kvaerner's
Amended Demand for Arbitration, and asserted a counterclaim against Kvaerner for
breach of contract and specific performance. Minerals LLC alleged that its total
estimated   damage  for   Kvaerner's   breach  of  contract  are  in  excess  of
approximately $60 million;  however, Minerals LLC has offset approximately $42.5
million of these  damages by  exercising  its rights  under the EPC  Contract to
claim the balance of the contract  price,  the  retainage  and by drawing on the
LOC.

On May 23, 2002, Minerals LLC and Kvaerner entered into a Settlement  Agreement.
Under the terms of the agreement,  Minerals retained the amounts drawn under the
LOC,  the EPC  retainage  amounts and the EPC  contract  balance and will pay to
Kvaerner three equal  installments  of $2.25 million payable in January of 2003,
2004 and 2005.

D.  Environmental Liabilities

The Guarantors are subject to numerous legislative and regulatory  environmental
protection  requirements  involving air and water pollution,  waste  management,
hazardous chemical use, noise abatement, and land use aesthetics.

State and federal  environmental laws and regulations currently have, and future
modifications  may  have,  the  effect of (i)  increasing  the lead time for the
construction of new facilities,  (ii) significantly increasing the total cost of
new  facilities,  (iii)  requiring  modification  of  the  Guarantors'  existing
facilities,  (iv)  increasing the risk of delay on  construction  projects,  (v)
increasing  the  Guarantors'  cost of  waste  disposal  and  (vi)  reducing  the
reliability  of  service  provided  by the  Guarantors  and the amount of energy
available  from the  Guarantors'  facilities.  Any of such  items  could  have a
substantial  impact on amounts  required to be expended by the Guarantors in the
<PAGE>
future.  Expenditures for ongoing compliance with environmental regulations that
relate to  current  operations  are  expensed  or  capitalized  as  appropriate.
Expenditures that relate to an existing condition caused by past operations, and
which do not contribute to current or future revenue  generation,  are expensed.
Liabilities   are  recorded  when   environmental   assessments   indicate  that
remediation  efforts are  probable  and the costs can be  reasonably  estimated.
Estimates of the liability are based upon currently  available  facts,  existing
technology and presently enacted laws and regulations  taking into consideration
the likely  effects of  inflation  and other social and  economic  factors,  and
include  estimates of associated legal costs.  These amounts also consider prior
experience in remediating sites, other companies'  clean-up  experience and data
released by the Environmental  Protection Agency or other  organizations.  These
estimated  liabilities are subject to revision in future periods based on actual
costs or new circumstances,  and are included in the accompanying balance sheets
at their undiscounted  amounts.  As of September 30, 2002 and December 31, 2001,
the environmental liabilities recorded on the balance sheet were not material.

4.  Related Party Transactions

On September  29, 2000,  CE Turbo LLC ("CE Turbo")  entered into an agreement to
sell all available power from the Turbo Project to EPME.  Under the terms of the
agreement,  EPME purchased and sold available power on behalf of CE Turbo,  into
the  California  ISO markets.  The purchase  price for the  available  power was
equivalent  to the value  actually  received by EPME for the sale of such power,
including renewable premiums.

On January 17,  2001,  CE Turbo  entered  into a  Transaction  Agreement to sell
available  power  from  the  Turbo  Project  to  EPME.  Under  the  terms of the
agreement,  at the option of CE Turbo,  EPME purchased all available  power from
the Turbo Project based on day ahead price quotes received from EPME.

On March 27,  2001 and May 1, 2001,  the  Guarantors  entered  into  Transaction
Agreements to sell available power to EPME based on percentages of the Dow Jones
SP-15 Index.  On June 22, 2001,  the  Guarantors  (excluding  the Turbo Project)
ceased selling  available  power to EPME and resumed power sales to Edison under
the Power  Purchase  Agreements.  Effective  September 16, 2002 CE Turbo entered
into a  Transaction  Agreement  to sell  available  power  to EPME at  increased
percentages of the Dow Jones SP-15 Index.

Pursuant to these agreements, sales to EPME from the Company totaled $.4 million
and $.5 million for the  three-months and $1.0 million and $49.3 million for the
nine months ended September 30, 2002 and 2001, respectively. As of September 30,
2002 and December 31, 2001,  accounts  receivable from EPME were $.1 million and
$.1 million, respectively.

Effective  August 1, 2002,  CE Turbo  amended  the power  sales  agreement  with
CalEnergy Minerals,  LLC ("Minerals") to provide for a fixed price of $31.00 per
megawatt hour for all hours of August 1, 2002 through December 31, 2002.
<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,  2002,  and the  related  statements  of  operations  for the
three-month  and nine-month  periods ended  September 30, 2002 and 2001, and the
related  statements of cash flows for the nine-month periods ended September 30,
2002 and 2001. 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, 2001,  and the related  statements of operations,
equity,  and cash flows for the year then ended (not presented  herein);  and in
our report dated  January 17, 2002 (March 1, 2002 as to Note 5), 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, 2001
is fairly  stated,  in all material  respects,  in relation to the balance sheet
from which it has been derived.


/s/ Deloitte & Touche LLP

DELOITTE & TOUCHE LLP
Omaha, Nebraska
November 8, 2002
<PAGE>

                             SALTON SEA ROYALTY LLC
                                 BALANCE SHEETS
                (Dollars in Thousands, Except per Share Amounts)


                                                 September 30,      December 31,
                                                      2002              2001
                                                  (unaudited)
ASSETS
Prepaid expenses and other assets              $           17    $           31
                                               --------------    --------------
Total current assets                                       17                31

Royalty stream, net                                    14,225            14,865
Excess of cost over fair value of net assets
  acquired,net                                         30,464            30,464
Due from affiliates                                    39,138            33,940
                                               --------------    --------------
Total assets                                   $       83,844    $       79,300
                                               ==============    ==============


LIABILITIES AND EQUITY
Liabilities:
Accrued interest                               $           72    $           29
Current portion of long term debt                       1,882             3,460
                                               --------------    --------------
Total current liabilities                               1,954             3,489

Senior secured project note                               995             1,147
                                               --------------    --------------
    Total liabilities                                   2,949             4,636

Commitment and contingencies (Note 3)

Equity:
Common stock, par value $.01 per share; 100
  share authorized, issued and outstanding                ---               ---
Additional paid-in capital                              1,561             1,561
Retained earnings                                      79,334            73,103
                                               --------------    --------------
Total equity                                           80,895            74,664

Total liabilities and equity                   $      83,844     $       79,300
                                               =============     ==============

   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,
                                                      2002             2001              2002             2001
                                                   _________        _________         _________        _________

Revenues:
<S>                                             <C>              <C>                <C>              <C>
Royalty income                                  $      3,371     $        759       $     9,585      $     6,598

Expenses:
Operating, general and
   administrative expenses                               863              126             2,488            1,655
Amortization of royalty stream
   and goodwill                                          214              487               641            1,462
Interest expense                                          76              139               225              482
                                                ------------     ------------       -----------      -----------
Total expenses                                         1,153              752             3,354            3,599
                                                ------------     ------------       -----------      -----------
Net income                                      $      2,218     $          7       $     6,231      $     2,999
                                                ------------     ------------       -----------      -----------
</TABLE>

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


                             SALTON SEA ROYALTY LLC
                            STATEMENTS OF CASH FLOWS
                             (Dollars in Thousands)
                                   (Unaudited)

                                                        Nine Months Ended
                                                           September 30,
                                                     2002            2001
Cash flows from operating activities:
Net income                                   $       6,231    $       2,999
Adjustments to reconcile net income to net
    cash flow from operating activities:
       Amortization                                    641            1,462
       Changes in assets and liabilities:
       Prepaid expenses and other assets                14               38
       Accrued liabilities                              42              111
                                             -------------    -------------
Net cash flows from operating activities             6,928            4,610
                                             -------------    -------------

Net cash flows from financing activities:
Increase in due from affiliates                     (5,198)          (2,393)
Repayment of senior secured project note            (1,730)          (2,217)
                                             -------------    -------------
Net cash flows from financing activities            (6,928)          (4,610)

Net change in cash                                     ---              ---

Cash at beginning of period                            ---              ---
                                             -------------    -------------
Cash at end of period                        $         ---    $         ---
                                             =============    =============
Supplemental disclosures:
Interest paid                                $         169    $         333
                                             =============    =============

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

                             SALTON SEA ROYALTY LLC

                          NOTES TO FINANCIAL STATEMENTS
                                   (Unaudited)

1.  General:

In the opinion of  management  of 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, 2002 and the results of  operations  for the three
and  nine-months  ended  September  30,  2002 and 2001  and cash  flows  for the
nine-months ended September 30, 2002 and 2001. The results of operations for the
three and nine months  ended  September  30,  2002 and 2001 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, 2001.

2.  Accounting Policies:

On January 1, 2002,  the  Company  adopted  SFAS No.  142,  "Goodwill  and Other
Intangible  Assets," which  establishes the accounting for acquired goodwill and
other intangible  assets and provides goodwill and  indefinite-lived  intangible
assets will not be  amortized,  but will be tested for  impairment  on an annual
basis.   The  Company's   related   amortization   consists  soley  of  goodwill
amortization. Following is a reconciliation of net income as originally reported
for the three and nine-months ended September 30, 2002 and 2001, to adjusted net
income (in thousands):

                              Three Months                  Nine Months
                          Ended September 30,             Ended September,
                          2002           2001          2002             2001

Reported net income   $   2,218       $      7       $  6,231       $   2,999
Goodwill amortization       ---            227            ---             681
                      ---------       --------       --------       ---------
Adjusted net income   $   2,218       $    234       $  6,231       $   3,680
                      =========       ========       ========       =========

The Company's  acquired  intangible  assets consist of the royalty stream with a
cost of $60.5 million and accumulated amortization of $46.3 million at September
30, 2002.  Amortization  expense on the royalty  stream was $0.6 million for the
nine-months ended September 30, 2002. The Company expects  amortization  expense
on the royalty  stream to be $0.2  million for the  remainder of fiscal 2002 and
$0.9 million for each of the five succeeding fiscal years.

In accordance  with SFAS No. 142, the Company has determined its reporting units
and  completed  the  transitional  impairment  testing of goodwill in the second
quarter  primarily  using a discounted  cash flow  methodology  as of January 1,
2002. No impairment  was  indicated as a result of the  transitional  impairment
test.  The Company will  complete  its annual  goodwill  impairment  test in the
fourth quarter of 2002.
<PAGE>

3.  Contingency:

Southern  California  Edison  ("Edison"),  a  wholly-owned  subsidiary of Edison
International,  is a  public  utility  primarily  engaged  in  the  business  of
supplying   electric  energy  to  retail   customers  in  Central  and  Southern
California,  excluding Los Angeles.  Due to reduced liquidity,  Edison failed to
pay  approximately  $119 million owed under the power purchase  agreements  with
certain  Guarantors  (Imperial Valley  Projects,  excluding the Salton Sea V and
Turbo  Projects)  for power  delivered in the fourth  quarter 2000 and the first
quarter  2001.  Due to  Edison's  failure to pay  contractual  obligations,  the
Guarantors had established an allowance for doubtful  accounts of  approximately
$21.0 million as of December 31, 2001.

The final  payment of past due  amounts by Edison  was  received  March 1, 2002.
Following  the  receipt of  Edison's  final  payment of past due  balances,  the
Guarantors released the remaining allowance for doubtful accounts.

As a result of  uncertainties  related  to  Edison,  the  letter of credit  that
supports the debt service reserve fund at Salton Sea Funding Corporation has not
been extended  beyond its current July 2004  expiration  date,  and as such cash
distributions  are not available to CE  Generation  until the Salton Sea Funding
Corporation  debt service reserve fund of  approximately  $67.6 million has been
funded or the letter of credit has been extended beyond its July 2004 expiration
date or replaced.

<PAGE>


                       THE SALTON SEA FUNDING CORPORATION
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                        _________________________________

Forward-Looking Statements

The following is  management's  discussion and analysis of significant  factors,
which have affected the Company's  financial condition and results of operations
during the periods  included in the accompanying  statements of operations.  The
Company's  actual  results in the future  could  differ  significantly  from the
historical results.

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  geothermal  resources,  uncertainties  relating  to  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.

Critical Accounting Policies

The  preparation of financial  statements and related  disclosures in conformity
with  accounting  principles  generally  accepted in the United States  requires
management to make judgments,  assumptions and estimates that affect the amounts
reported in the Combined Financial  Statements and accompanying notes. Note 2 to
the Combined  Financial  Statements in the Annual Report on Form 10-K  describes
the significant  accounting  policies and methods used in the preparation of the
Combined Financial  Statements.  Estimates are used for, but not limited to, the
accounting  for the  allowance for doubtful  accounts,  impairment of long-lived
assets and  contingent  liabilities.  Actual  results  could  differ  from these
estimates. The following critical accounting policies are impacted significantly
by judgments,  assumptions and estimates used in the preparation of the Combined
Financial Statements.

Allowance for Doubtful Accounts

The allowance for doubtful  accounts is based on the  Guarantors'  assessment of
the  collectibility  of specific customer accounts and the aging of the accounts
receivable.  If there is a deterioration of a major customer's credit worthiness
or actual  defaults  are  higher  than the  Guarantors'  historical  experience,
estimates of the recoverability of amounts due could be adversely affected.

Impairment of Long-Lived Assets

The  Guarantors'  long-lived  assets  consist  primarily of property,  plant and
equipment  and  intangible  assets with useful  lives,  which range from 3 to 40
years, and goodwill.  The Guarantors  believe the useful lives of its long-lived
assets are reasonable.  The Guarantors evaluate goodwill impairment on an annual
basis.  The Guarantors  evaluate the long-lived  assets for impairment  whenever
events or changes in circumstances indicate that the carrying amount of an asset
may not be recoverable.  Triggering  events include a significant  change in the
extent or manner in which  long-lived  assets are being used or in its  physical

<PAGE>

condition,  in legal factors,  or in the business  climate that could affect the
value  of  the  long-lived   assets,   including  changes  in  regulation.   The
interpretation  of such events  requires  judgment from management as to whether
such an event has occurred and is required. If an event occurs that could affect
the  carrying  value of the  asset  and  management  does not  identify  it as a
triggering event, future results of operations could be significantly affected.

Upon the occurrence of a triggering  event,  the carrying amount of a long-lived
asset is reviewed to assess  whether the  recoverable  amount has declined below
its carrying  amount.  The  recoverable  amount is the estimated net future cash
flows that the  Guarantors  expect to recover  from the future use of the asset,
undiscounted and without interest,  plus the asset's residual value on disposal.
Where the recoverable  amount of the long-lived  asset is less than the carrying
value,  an  impairment  loss would be  recognized to write down the asset to its
fair value which is based on discounted estimated cash flows from the future use
of the asset.

The  estimated  cash flows arising from future use of the asset that are used in
the impairment  analysis requires  judgment  regarding what the Guarantors would
expect to recover from future use of the asset.  Any changes in the estimates of
cash flows  arising  from future use of the asset or the  residual  value of the
asset on disposal based on changes in the market conditions,  changes in the use
of the assets,  management's  plans, the determination of the useful life of the
assets and  technology  change in the industry  could  significantly  change the
calculation  of the fair  value  or  recoverable  amount  of the  asset  and the
resulting  impairment  loss,  which  could  significantly  affect the results of
operations.

In accordance with SFAS No. 142, the Guarantors have determined  their reporting
units and completed  their  transitional  impairment  testing of goodwill in the
second quarter  primarily using a discounted cash flow methodology as of January
1, 2002. The results of the transitional  impairment  tests indicated  potential
goodwill impairment at the Salton Sea Guarantors and Partnership Guarantors. The
Guarantors will determine the potential  impairment  charge,  if any, and record
such charge in the financial statements no later than the period ending December
31,  2002.  The  impairment  charge will be recorded as a  cumulative  effect of
change in accounting as of January 1, 2002. The  Guarantors  will complete their
annual goodwill impairment test in the fourth quarter of 2002.

Contingent Liabilities

The  Guarantors are subject to the  possibility  of various loss  contingencies,
including  tax,  legal and  environmental,  arising  in the  ordinary  course of
business.  The Guarantors  consider the likelihood of the loss or the incurrence
of a liability as well as the ability to reasonably  estimate the amount of loss
in determining loss contingencies. An estimated loss contingency is accrued when
it is probable  that a liability has been incurred and the amount of loss can be
reasonably  estimated.  The Guarantors  regularly  evaluate current  information
available to determine whether such accruals should be adjusted.

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"),  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.

Revenues:

The Salton Sea Guarantors'  sales of electricity  increased to $27.4 million for
the three months ended September 30, 2002 from $22.9 million for the same period
in 2001, a 19.7% increase. This increase was due to higher production and a $3.2
million  accrual for the allowance for doubtful  accounts in 2001.  For the nine
months ended September 30, 2002 sales of electricity  decreased to $66.9 million
from $77.9  million  for the same  period in 2001,  a 14.0%  decrease.  Sales of
electricity for the nine-months  ended September 30, 2002 included the impact of
a $6.8  million  reduction in the  allowance  for  doubtful  accounts.  Sales of
electricity  for the nine months ended September 30, 2001 included the impact of
a $9.3 million  increase in the allowance for doubtful  accounts.  Excluding the
impact of the adjustments related to the allowance for doubtful accounts,  sales
of  electricity  decreased  $27.0 million or 31.0% to $60.1 million for the nine
months ended September 30, 2002 from $87.1 million for the nine-months September
30, 2001. This decrease was primarily due to lower electricity rates in 2002.
<PAGE>

The following data includes the aggregate capacity and electricity production of
the Salton Sea Guarantors:

                              Three Months Ended         Nine Months Ended
                                September 30,              September 30,
                               2002      2001           2002        2001
Overall capacity factor       85.6%      79.9%          79.4%       79.9%
Capacity (NMW) (average)      168.4      168.4          168.4       168.4
kWh produced (in thousands) 318,300    297,200        875,500     881,900

The overall  capacity  factor for the Salton Sea  Guarantors  increased  for the
three  months  ended  September  30,  2002  compared  to the same period in 2001
primarily due to higher  availability.  For the nine months, ended September 30,
2002 the capacity factor decreased compared to the same period in 2001 primarily
due  to  overhauls  and  other  maintenance.   The  2002  overhauls  include  an
uncontrollable  force event at the Salton Sea II Project.  Salton Sea II's 10 MW
turbine  went out of service on March 25, 2002 and is expected to be placed back
into service in December 2002.  The  Guarantors  expect to collect lost revenues
under  the  Salton  Sea  II  PPA  and  through  insurance   coverage   excluding
deductibles.

The Partnership  Guarantors' sales of electricity increased to $33.2 million for
the three months ended September 30, 2002 from $20.8 million for the same period
in 2001, a 59.6%  increase.  This increase was due to higher rates in 2002.  For
the nine-months ended September 30, 2002 sales of electricity increased to $75.7
million from $64.4 million for the same period in 2001, a 17.5% increase.  Sales
of electricity  for the nine months ended September 30, 2002 included the impact
of $14.1  million  reduction in the allowance  for doubtful  accounts.  Sales of
electricity  for the nine months ended September 30, 2001 included the impact of
a $28.9 million increase in the allowance for doubtful  accounts.  Excluding the
impact of the adjustments related to the allowance for doubtful accounts,  sales
of  electricity  decreased  $31.7 million or 34.0% to $61.6 million for the nine
months  ended  September  30, 2002 from $93.3  million for the nine months ended
September  30,  2001.  This  decrease  was due to lower  electricity  rates  and
decreased production from scheduled overhauls.

The following data includes the aggregate capacity and electricity production of
the Partnership Guarantors:

                                   Three Months Ended         Nine Months Ended
                                     September 30,              September 30,
                                   2002        2001           2002         2001
Overall capacity factor           104.7%       105.9%         100.4%      102.2%
Capacity (NMW) (average)             158          158            158         158
kWh produced (in thousands)      365,200      369,600      1,039,800   1,508,200

The overall  capacity  factor for the Partnership  Guarantors  decreased for the
three and nine months ended  September  30, 2002  compared to the same period in
2001. The decrease for the periods ended September 30, 2002 compared to 2001 was
due to overhauls in 2002.

As a  result  of the  Settlement  Agreements,  Edison  has  elected  to pay  the
Guarantors  (except  Salton Sea Projects IV and V and the Turbo Project) a fixed
energy  price in lieu of  Edison's  Average  Avoided  Cost of Energy.  The fixed
energy price was 3.25  cents/per  kilowatt-hour  from January  through April 30,
2002 and increased to 5.37 cents/per kilowatt hour effective May 1, 2002 through
April 30,  2007.  Edison's  Average  Avoided  Cost of  Energy  was 3.6 cents per
kilowatt-hour  for the three  months  and 8.9 cents  per  kilowatt-hour  for the
nine-months  ended  September  30,  2001,  respectively.  The Royalty  Guarantor
revenue  increased to $3.4 million for the three months ended September 30, 2002
from $.8 million for the same period last year.  The increase  relates to higher
royalties  based on higher revenue at the  Partnership  Guarantor.  For the nine
months  ended  September  30, 2002  revenue  increased to $9.6 million from $6.6
million for the same period in 2001.  The increase  relates to higher revenue at
the Partnership  Guarantors and additional  royalties recognized on the past due
interest payments from Edison.
<PAGE>

Operating Expenses:

The Salton Sea Guarantors' operating expenses, which include royalty, operating,
and general and  administrative  expenses,  decreased  to $14.4  million for the
three months ended  September 30, 2002 from $15.4 million for the same period in
2001. For the nine months ended September 30, 2002 operating  expenses decreased
marginally to $42.7 million from $43.0 million for the same period in 2001.

The  Partnership   Guarantors'   operating  expenses,   which  include  royalty,
operating, and general and administrative  expenses,  increased to $15.7 million
for the three  months  ended  September  30, 2002 from $9.0 million for the same
period in 2001.  The increase was primarily due to higher  royalties from higher
revenues and additional  start-up  costs at the zinc plant.  For the nine months
ended  September  30, 2002  operating  expenses  increased to $48.4 million from
$35.6  million  for the same  period  in 2001.  The  increase  was due to higher
royalties, zinc start-up costs and higher overhaul costs in 2002.

The Royalty  Guarantors'  operating  expenses  increased  to $.9 million for the
three months ended  September 30, 2002,  from $.1 million for the same period in
2001. For the nine months ended September 30, 2002 operating  expenses increased
to $2.5 million from $1.7 million for the same period in 2001. This increase was
due to higher royalty costs resulting from higher revenue.

Depreciation and Amortization:

The Salton Sea  Guarantors'  depreciation  and  amortization  increased  to $4.7
million for the three months ended  September 30, 2002 from $4.4 million for the
same period of 2001. For the nine months ended  September 30, 2002  depreciation
and  amortization  increased to $15.7  million  from $13.4  million for the same
period in 2001.  These increases were due to significant  capital  additions and
the   write   off  of   miscellaneous   equipment,   partially   offset  by  the
discontinuation of goodwill amortization in 2002.

The Partnership  Guarantors'  depreciation  and  amortization  decreased to $5.5
million for the three months ended  September 30, 2002 from $5.9 million for the
same period in 2001.  The  decrease was due to the  discontinuation  of goodwill
amortization in 2002, partially offset by depreciation on capital additions. For
the nine months ended September 30, 2002 depreciation and amortization decreased
to $17.6  million from $17.9  million for the same period in 2001.  The decrease
was due primarily to capital additions,  partially offset by the discontinuation
of goodwill amortization in 2002 of $2.7 million.

The Royalty  Guarantors'  amortization  decreased  to $0.2 million for the three
months ended  September  30, 2002 compared to $.5 million for the same period of
2001. For the nine months ended  September 30, 2002,  amortization  decreased to
$.6 million from $1.5 million for the same period in 2001.  The  decreases  were
due to the discontinuation of goodwill amortization in 2002.

Interest Expense:

The Salton Sea Guarantors'  interest expense,  decreased to $5.1 million for the
three months ended  September  30, 2002 from $5.6 million for the same period in
2001.  The decrease was due to reduced  indebtedness.  For the nine months ended
September  30,  2002  interest  expense,  net of  capitalized  amounts,  amounts
increased to $15.4 million from $15.2  million for the same period in 2001.  The
increase was due to the discontinuation of capitalized  interest on the minerals
extraction process partially offset by reduced indebtedness.

<PAGE>

The  Partnership  Guarantors'  interest  expense,  net of  capitalized  amounts,
decreased to $1.7 million for the three  months  ended  September  30, 2002 from
$2.0  million  for the same  period in 2001.  The  decrease  was due to  reduced
indebtedness. For the nine months ended September 30, 2002 interest expense, net
of capitalized amounts, increased to $5.5 million from $4.1 million for the same
period in 2001. The increase was due to discontinuation of capitalized  interest
on the minerals extraction process.

The Royalty Guarantors' interest expense decreased to $0.1 million for the three
months ended  September 30, 2002 from $0.1 million from the same period in 2001.
For the nine months ended September 30, 2002 interest  expense  decreased to $.2
million from $.5 million  from the same period in 2001.  The decrease was due to
reduced indebtedness.

Income Tax Provision:

The Partnership  Guarantors' income tax provision  increased to $3.6 million for
the three months ended  September  30, 2002 from a provision of $1.9 million for
the same period in 2001. For the nine months ended September 30, 2002 the income
tax provision decreased to $1.9 million from $3.2 million for the same period in
2001.  This decrease was primarily due to a lower pre-tax  income.  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  effective  tax rate was 31.5% and 34.5% for the nine months ended
September 30, 2002 and 2001, respectively.

Cumulative Effect of Accounting Policy Change:

On January 1, 2001,  the  Guarantors  changed their policy of accounting for the
overhaul and well workover  costs.  These costs,  which have  historically  been
accounted for using the deferral  method,  are expensed as incurred.  The Salton
Sea Guarantors  recorded a cumulative  effect of $8.7 million.  The  Partnership
Guarantors  recorded a  cumulative  effect of $8.3  million,  net of tax of $4.3
million.

Related Party Transactions

On September 29, 2000, Salton Sea Power L.L.C. ("Salton Sea Power") and CE Turbo
LLC ("CE Turbo")  entered into an agreement to sell all available power from the
Salton  Sea V Project  and Turbo  Project  to El Paso  Merchant  Energy  Company
("EPME").  Under the terms of the  agreement,  EPME purchased and sold available
power on behalf of Salton  Sea  Power  and CE  Turbo,  into the  California  ISO
markets.  The purchase price for the available power was equivalent to the value
actually  received  by EPME  for the  sale of such  power,  including  renewable
premiums.

On January 17,  2001,  Salton Sea Power and CE Turbo  entered  into  Transaction
Agreements  to sell  available  power from the  Salton  Sea V Project  and Turbo
Project to EPME. Under the terms of the agreements,  at the option of Salton Sea
Power and CE Turbo,  EPME  purchased all  available  power from the Salton Sea V
Project and Turbo Project based on day ahead price quotes received from EPME.

On March 27, 2001 and May 1, 2001,  the Imperial  Valley  Projects  entered into
Transaction  Agreements to sell available  power to EPME based on percentages of
the Dow Jones SP-15  Index.  On June 22,  2001,  the  Imperial  Valley  Projects
(excluding the Salton Sea V Project and Turbo Project) ceased selling  available
power to EPME and  resumed  power  sales to  Edison  under  the  Power  Purchase
Agreements.  Effective  September 16, 2002 Salton Sea Power and CE Turbo entered
into a  Transaction  Agreement  to sell  available  power  to EPME at  increased
percentages of the Dow Jones SP-15 Index.

Pursuant  to these  agreements,  sales to EPME  from the  Company  totaled  $2.7
million and $3.5 million for the three months ended September 30, 2002 and 2001,
respectively  and $6.1  million  and $29.9  million  for the nine  months  ended
September 30, 2002 and 2001, respectively. As of September 30, 2002 and December
31,  2001,  accounts  receivable  from EPME were $.7  million  and $.9  million,
respectively.
<PAGE>

Effective August 1, 2002, Salton Sea Power and CE Turbo amended their respective
power sale agreements with CalEnergy Minerals,  LLC to provide for a fixed price
of $31.00 per megawatt hour for all hours of August 1, 2002 through December 31,
2002. Pursuant to these agreements,  sales to Minerals from Salton Sea Power and
CE Turbo totaled  $.1million and $.1 million for the three and nine months ended
September  30, 2002 and 2001,  respectively  and $.2 million and $.9 million for
the nine months ended September 30, 2002 and 2001, respectively.

Liquidity and Capital Resources

The Salton Sea  Guarantors'  cash flows from operating  activities  increased to
$22.2  million for the nine months ended  September  30, 2002 from $16.8 million
for the same period in 2001. The operating Salton Sea Guarantors' only source of
revenue is payments  received  pursuant to long-term power sales agreements with
Edison,  other than Salton Sea V Project revenue and interest earned on funds on
deposit. The increase was primarily due to the receipt of past due balances from
Edison offset by lower revenues and higher operation and maintenance payments in
2002.

The Partnership  Guarantors' cash flows from operating  activities  increased to
$55.2  million for the nine months ended  September  30, 2002 from $16.6 million
for the same  period in 2001.  The  operating  Partnership  Guarantors'  primary
source of  revenue  is  payments  received  pursuant  to long term  power  sales
agreements  with  Edison,  other than Turbo  Project and Zinc  Recovery  Project
revenue and interest earned on funds on deposit.  The increase was primarily due
to the receipt of past due balances from Edison.

The Royalty  Guarantors' cash flow from operations was $6.9 million for the nine
months ended  September  30, 2002 from $4.6 million for the same period in 2001.
The Royalty Guarantors' only source of revenue is royalties received pursuant to
resource lease agreements with the Partnership Projects.

Edison, a wholly-owned  subsidiary of Edison International,  is a public utility
primarily  engaged  in the  business  of  supplying  electric  energy  to retail
customers  in Central and Southern  California,  excluding  Los Angeles.  Due to
reduced  liquidity,  Edison failed to pay approximately  $119 million owed under
the power purchase agreements with certain Guarantors (Imperial Valley Projects,
excluding the Salton Sea V and Turbo Projects) for power delivered in the fourth
quarter  2000  and the  first  quarter  2001.  Due to  Edison's  failure  to pay
contractual  obligations,  the  Guarantors  had  established  an  allowance  for
doubtful accounts of approximately $21.0 million as of December 31, 2001.

The final payment of the past due amounts by Edison was received  March 1, 2002.
Following  the  receipt of  Edison's  final  payment of past due  balances,  the
Guarantors released the remaining allowance for doubtful accounts.

As a result of  uncertainties  related  to  Edison,  the  letter of credit  that
supports the debt service reserve fund at Salton Sea Funding Corporation has not
been extended  beyond its current July 2004  expiration  date,  and as such cash
distributions  are not available to CE  Generation  until the Salton Sea Funding
Corporation  debt service reserve fund of  approximately  $67.6 million has been
funded or the letter of credit has been extended beyond its July 2004 expiration
date or  replaced.  As of  September  30, 2002 the  balance in the debt  service
reserve fund was approximately $36.1 million.

In January 2001, the California Power Exchange ("PX") declared bankruptcy.  As a
result,  the Salton Sea V and Turbo Projects have not received payment for power
sold under the Transaction  Agreements  during December 2000 and January 2001 of
approximately  $3.8 million.  The Guarantors  have  established an allowance for
doubtful accounts for the full amount of this receivable.

Edison has failed to pay  approximately  $3.9 million of capacity bonus payments
for the months from October 2001 through May 2002.  On December 10, 2001 certain
Guarantors  filed a lawsuit  against  Edison  in  California's  Imperial  County
Superior  Court  seeking a court  order  requiring  Edison to make the  required
capacity bonus payments under the Power Purchase Agreements.  The Guarantors are
vigorously pursuing collection of the capacity bonus payments.  However,  due to
Edison's  failure  to pay  the  contractual  obligations,  the  Imperial  Valley
Projects have  established an allowance for doubtful  accounts of  approximately
$1.1 million.
<PAGE>

The Salton Sea Guarantors' cash flow used in investing  activities  increased to
$9.9 million for the nine months ended  September 30, 2002 from $7.0 million for
the same  period in 2001.  Capital  expenditures  are the primary  component  of
investing activities.

The Partnership  Guarantors' cash flow used in investing activities increased to
$35.8  million for the nine months ended  September  30, 2002 from $25.5 million
for the same period in 2001.  Capital  expenditures are the primary component of
investing activities.

Minerals LLC is constructing the Zinc Recovery Project,  which will recover zinc
from the geothermal  brine (the "Zinc Recovery  Project").  Facilities are being
installed  near the sites of the  Imperial  Valley  Projects  to  extract a zinc
chloride  solution from the  geothermal  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 scheduled to commence initial
commercial  operations in 2002. In September  1999,  Minerals LLC entered into a
sales  agreement  whereby all  high-grade  zinc  produced  by the Zinc  Recovery
Project will be sold to Cominco,  Ltd. The initial term of the agreement expires
in December 2005.

Total  project   costs  of  the  Zinc  Recovery   Project  are  expected  to  be
approximately  $235.3  million,  net of funds  received in  connection  with the
settlement of disputes with Kvaerner U.S. Inc (Kvaerner),  which is being funded
by $140.5  million of debt and the balance from equity  contributions.  The Zinc
Recovery  Project has  incurred  $206.2  million,  net of the funds  received in
connection  with the settlement with Kvaerner,  of such costs through  September
30, 2002.

The Zinc Recovery Project was being  constructed by Kvaerner  pursuant to a date
certain,  fixed-price,  turnkey  engineering,   procure,  construct  and  manage
contract (the "Zinc Recovery Project EPC Contract").  On June 14, 2001, Minerals
LLC issued notices of default,  termination and demand for payment of damages to
Kvaerner  under the Zinc  Recovery  Project EPC  Contract due to failure to meet
performance  obligations.  As a result  of  Kvaerner's  default  under  the Zinc
Recovery EPC Contract,  the  Partnership  Guarantors  claimed the balance of the
contract  price,  the  retainage  and drew $29.6  million under the EPC Contract
Letter of Credit on July 20, 2001. The Partnership  Guarantors have entered into
a time and materials  reimbursable  engineering,  procurement  and  construction
management  contract with AMEC E&C Services,  Inc. to complete the Zinc Recovery
Project.

On July 11,  2001,  Kvaerner  filed an Amended  Demand For  Arbitration  against
Minerals  LLC  characterizing  the nature of the dispute as  concerns  regarding
change orders and  performance  penalties.  Kvaerner did not state the amount of
its claim.

On August 7, 2001,  Minerals LLC filed an Answering  Statement and  Counterclaim
against  Kvaerner.  Minerals LLC denied all material  allegations  in Kvaerner's
Amended Demand for Arbitration, and asserted a counterclaim against Kvaerner for
breach of contract and specific performance. Minerals LLC alleged that its total
estimated   damage  for   Kvaerner's   breach  of  contract  are  in  excess  of
approximately $60 million;  however, Minerals LLC has offset approximately $42.5
million of these  damages by  exercising  its rights  under the EPC  Contract to
claim the balance of the contract  price,  the  retainage  and by drawing on the
LOC.

On May 23, 2002, Minerals LLC and Kvaerner entered into a Settlement  Agreement.
Under the terms of the agreement,  Minerals retained the amounts drawn under the
LOC,  the EPC  retainage  amounts and the EPC  contract  balance and will pay to
Kvaerner three equal  installments  of $2.25 million payable in January of 2003,
2004 and 2005.
<PAGE>

Salton  Sea  Funding  Corporation's  net cash flows  from  financing  activities
decreased to a net cash use of $3.6 million for the nine months ended  September
30,  2002 from a net cash  flow of $26.5  million  for the same  period in 2001.
Salton Sea Guarantors' net cash flows used in financing  activities increased to
$12.3  million  from  $9.8  million  for the same  period  in 2001.  Partnership
Guarantors' net cash used in financing activities increased to $19.3 million for
the nine  months  ended  September  30,  2002 from a net cash  provided  of $8.9
million  for the same  period  in 2001.  The  changes  in net  cash  flows  from
financing activities are primarily the result of the funding of the debt service
reserve  fund and debt  repayments.  These  receipts  were  deposited  into cash
accounts at Salton Sea Funding  Corporation  and are  recorded as amounts due to
the Salton Sea and Partnership Guarantors.

Environmental Liabilities

The Guarantors are subject to numerous legislative and regulatory  environmental
protection  requirements  involving air and water pollution,  waste  management,
hazardous chemical use, noise abatement and land use aesthetics.

State and federal  environmental laws and regulations currently have, and future
modifications  may  have,  the  effect of (i)  increasing  the lead time for the
construction of new facilities,  (ii) significantly increasing the total cost of
new  facilities,  (iii)  requiring  modification  of  the  Guarantors'  existing
facilities,  (iv)  increasing the risk of delay on  construction  projects,  (v)
increasing  the  Guarantors'  cost of  waste  disposal  and  (vi)  reducing  the
reliability  of  service  provided  by the  Guarantors  and the amount of energy
available  from the  Guarantors'  facilities.  Any of such  items  could  have a
substantial  impact on amounts  required to be expended by the Guarantors in the
future.  Expenditures for ongoing compliance with environmental regulations that
relate to  current  operations  are  expensed  or  capitalized  as  appropriate.
Expenditures that relate to an existing condition caused by past operations, and
which do not contribute to current or future revenue  generation,  are expensed.
Liabilities   are  recorded  when   environmental   assessments   indicate  that
remediation  efforts are  probable  and the costs can be  reasonably  estimated.
Estimates of the liability are based upon currently  available  facts,  existing
technology and presently enacted laws and regulations  taking into consideration
the likely  effects of  inflation  and other social and  economic  factors,  and
include  estimates of associated legal costs.  These amounts also consider prior
experience in remediating sites, other companies'  clean-up  experience and data
released by the Environmental  Protection Agency or other  organizations.  These
estimated  liabilities are subject to revision in future periods based on actual
costs or new circumstances,  and are included in the accompanying balance sheets
at their undiscounted  amounts.  As of September 30, 2002 and December 31, 2001,
the Guarantors' environmental liabilities recorded on the balance sheet were not
material.

Inflation

Inflation has not had a significant Impact on the Guarantors' cost structure.

Quantitative and Qualitative Disclosure about Market Risk

There have been no  material  changes in the  market  risk from the  information
provided in Item 7A. Quantitative and Qualitative  Disclosures About Market Risk
of the  Funding  Corporation's  Annual  Report on Form  10-K for the year  ended
December 31, 2001.

Contractual Obligations and Commercial Commitments

There  have  been  no  material  changes  in  the  contractual  obligations  and
commercial  commitments  from the information  provided in Item 7 of the Funding
Corporation's Annual Report on Form 10-K for the year ended December 31, 2001.
<PAGE>

Item 4. Controls and Procedures

The  Company's  chief  executive   officer  and  chief  financial  officer  have
established  "disclosure controls and procedures" (as defined in Rule 13a-14 (C)
and Rule 15d - 14(C) of the  Securities and exchange Act of 1934) to ensure that
material  information of the companies and their  subsidiaries  is made known to
them by others within the  respective  companies.  Under their  supervision,  an
evaluation of the disclosure  controls and  procedures  was performed  within 90
days prior to the filing of this quarterly report. Based on that evaluation, the
above-mentioned  officers have concluded that, as of the date of the evaluation,
the disclosure controls and procedures were operating effectively. Additionally,
the above-mentioned  officers find that there have been no signification changes
in  internal  controls,  or in other  factors  that could  significantly  affect
internal controls, subsequent to the date of that evaluation.
<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  except as noted in footnote 3 of the Salton
     Sea Funding Corporation financial statements.

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:

               Not applicable.

         (b)  Reports on Form 8-K:

               Not applicable.


<PAGE>




                                   SIGNATURES


Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934 the  registrant  has duly  caused  this  report  to be signed on its
behalf and on behalf of the other registrants by the undersigned  thereunto duly
authorized,  in the  City of  Omaha,  State  of  Nebraska,  on this  14th day of
November 2002.


                                      SALTON SEA FUNDING CORPORATION


Date:  November 14, 2002             /s/    Joseph M. Lillo
                                     By:    Joseph M. Lillo
                                            Vice President and Controller

<PAGE>

                     SECTION 302 CERTIFICATION FOR FORM 10-Q

CERTIFICATIONS

I, Edward J. Heinrich, certify that:

1.   I have  reviewed this  quarterly  report on Form 10-Q of Salton Sea Funding
     Corporation;

2.   Based on my knowledge,  this  quarterly  report does not contain any untrue
     statement of a material fact or omit to state a material fact  necessary to
     make the statements  made, in light of the  circumstances  under which such
     statements  were made, not misleading with respect to the period covered by
     this quarterly report;

3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information  included  in this  quarterly  report,  fairly  present  in all
     material respects the financial  condition,  results of operations and cash
     flows of the  registrant  as of, and for,  the  periods  presented  in this
     quarterly report;

4.   The  registrant's  other  certifying  officers  and I are  responsible  for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

     a) designed such disclosure controls and procedures to ensure that material
     information   relating  to  the  registrant,   including  its  consolidated
     subsidiaries,  is  made  known  to  us by  others  within  those  entities,
     particularly  during  the period in which  this  quarterly  report is being
     prepared;

     b) evaluated the effectiveness of the registrant's  disclosure controls and
     procedures  as of a date  within 90 days prior to the  filing  date of this
     quarterly report (the "Evaluation Date"); and

     c)  presented  in  this  quarterly   report  our   conclusions   about  the
     effectiveness  of the  disclosure  controls  and  procedures  based  on our
     evaluation as of the Evaluation Date;

5.   The registrant's other certifying  officers and I have disclosed,  based on
     our most recent  evaluation,  to the  registrant's  auditors  and the audit
     committee of  registrant's  board of directors (or persons  performing  the
     equivalent function):

     a) all  significant  deficiencies  in the design or  operation  of internal
     controls which could adversely affect the  registrant's  ability to record,
     process,  summarize and report  financial data and have  identified for the
     registrant's auditors any material weaknesses in internal controls; and

     b) any fraud,  whether or not material,  that involves  management or other
     employees  who  have  a  significant  role  in  the  registrant's  internal
     controls; and

<PAGE>

6.   The  registrant's  other  certifying  officers and I have indicated in this
     quarterly report whether or not there were significant  changes in internal
     controls  or in other  factors  that could  significantly  affect  internal
     controls  subsequent to the date of our most recent  evaluation,  including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.

Date:  November 14, 2002

                                              /s/ Edward J. Heinrich
                                                Edward J. Heinrich
                                                     President
                                             (chief executive officer)


<PAGE>

                     SECTION 302 CERTIFICATION FOR FORM 10-Q

CERTIFICATIONS

I, Joseph M. Lillo, certify that:

1.   I have  reviewed this  quarterly  report on Form 10-Q of Salton Sea Funding
     Corporation;

2.   Based on my knowledge,  this  quarterly  report does not contain any untrue
     statement of a material fact or omit to state a material fact  necessary to
     make the statements  made, in light of the  circumstances  under which such
     statements  were made, not misleading with respect to the period covered by
     this quarterly report;

3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information  included  in this  quarterly  report,  fairly  present  in all
     material respects the financial  condition,  results of operations and cash
     flows of the  registrant  as of, and for,  the  periods  presented  in this
     quarterly report;

4.   The  registrant's  other  certifying  officers  and I are  responsible  for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

     a) designed such disclosure controls and procedures to ensure that material
     information   relating  to  the  registrant,   including  its  consolidated
     subsidiaries,  is  made  known  to  us by  others  within  those  entities,
     particularly  during  the period in which  this  quarterly  report is being
     prepared;

     b) evaluated the effectiveness of the registrant's  disclosure controls and
     procedures  as of a date  within 90 days prior to the  filing  date of this
     quarterly report (the "Evaluation Date"); and

     c)  presented  in  this  quarterly   report  our   conclusions   about  the
     effectiveness  of the  disclosure  controls  and  procedures  based  on our
     evaluation as of the Evaluation Date;

5.   The registrant's other certifying  officers and I have disclosed,  based on
     our most recent  evaluation,  to the  registrant's  auditors  and the audit
     committee of  registrant's  board of directors (or persons  performing  the
     equivalent function):

     a) all  significant  deficiencies  in the design or  operation  of internal
     controls which could adversely affect the  registrant's  ability to record,
     process,  summarize and report  financial data and have  identified for the
     registrant's auditors any material weaknesses in internal controls; and

     b) any fraud,  whether or not material,  that involves  management or other
     employees  who  have  a  significant  role  in  the  registrant's  internal
     controls; and


<PAGE>

6.   The  registrant's  other  certifying  officers and I have indicated in this
     quarterly report whether or not there were significant  changes in internal
     controls  or in other  factors  that could  significantly  affect  internal
     controls  subsequent to the date of our most recent  evaluation,  including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.

Date:  November 14, 2002

                                               /s/ Joseph M. Lillo
                                                  Joseph M. Lillo
                                           Vice President and Controller
                                            (chief financial officer)