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 March 31, 2003

                          Commission File No. 33-95538

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

                                         Delaware                47-0790493
                                         --------            -------------------
                                  (State of Incorporation)    (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                  95-2636765
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                  95-3992087
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

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

Indicate  by check mark  whether  the  registrant  is an  accelerated  filer (as
defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [x]

All common stock of Salton Sea Funding  Corporation is indirectly  held by Magma
Power Company. As of May 12, 2003, 100 shares of common stock were outstanding.



<PAGE>


                                TABLE OF CONTENTS

                         PART I - FINANCIAL INFORMATION

Item 1.    Financial Statements................................................3
Item 2.    Management's Discussion and Analysis of Financial Condition and
           Results of Operations..............................................26
Item 3.    Quantitative and Qualitative Disclosures About Market Risk.........31
Item 4.    Controls and Procedures............................................31

                           PART II - OTHER INFORMATION

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

SIGNATURES....................................................................33
CERTIFICATIONS................................................................34
EXHIBIT INDEX.................................................................36



<PAGE>

                         PART I - FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS.

                         INDEPENDENT ACCOUNTANTS' REPORT

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

We  have  reviewed  the  accompanying   balance  sheet  of  Salton  Sea  Funding
Corporation  (the Company) as of March 31, 2003,  and the related  statements of
operations and cash flows for the  three-month  periods ended March 31, 2003 and
2002.  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,  2002,  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 24, 2003 (January 29, 2003 as
to Note 6), 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, 2002 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
May 8, 2003

                                      -3-
<PAGE>



                         SALTON SEA FUNDING CORPORATION
                                 BALANCE SHEETS
                    (In thousands, except per share amounts)

<TABLE>
<CAPTION>

                                                                           AS OF
                                                                    -----------------------
                                                                    MARCH 31,  DECEMBER 31,
                                                                      2003        2002
                                                                    ---------  ------------
                                                                   (UNAUDITED)

                                     ASSETS
<S>                                                                  <C>        <C>
Current assets:
  Cash ...........................................................   $ 23,236   $ 19,583
  Restricted cash ................................................     46,448     46,293
  Accrued interest receivable and other current assets ...........     12,466      3,228
  Current portion secured project notes from Guarantors ..........     28,086     28,086
                                                                     --------   --------
    Total current assets .........................................    110,236     97,190
                                                                     --------   --------
Secured project notes from Guarantors ............................    463,592    463,592
Investment in 1% of net assets of Guarantors .....................      9,688      9,721
                                                                     --------   --------
TOTAL ASSETS .....................................................   $583,516   $570,503
                                                                     ========   ========

                      LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
  Accrued interest ...............................................   $ 12,453   $  3,156
  Current portion of long-term debt ..............................     28,086     28,086
                                                                     --------   --------
    Total current liabilities ....................................     40,539     31,242
                                                                     --------   --------
Due to affiliates ................................................     65,912     62,251
Senior secured notes and bonds ...................................    463,592    463,592
                                                                     --------   --------
  Total liabilities ..............................................    570,043    557,085
                                                                     --------   --------

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 .....................................      5,911      5,811
  Retained earnings ..............................................      7,562      7,607
                                                                     --------   --------
    Total stockholder's equity ...................................     13,473     13,418
                                                                     --------   --------
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY .......................   $583,516   $570,503
                                                                     ========   ========

</TABLE>

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

                                      -4-
<PAGE>

                         SALTON SEA FUNDING CORPORATION
                            STATEMENTS OF OPERATIONS
                                 (In thousands)

                                                      THREE MONTHS
                                                     ENDED MARCH 31,
                                                   -------------------
                                                     2003       2002
                                                   -------    --------
                                                       (UNAUDITED)
     REVENUE:
       Interest income .........................   $ 9,469    $ 10,047
       Equity in loss of Guarantors ............      (133)         (7)
                                                   -------    --------
         Total revenue .........................     9,336      10,040
                                                   -------    --------
     COSTS AND EXPENSES:
       General and administrative expenses .....       115         227
       Interest expense ........................     9,297       9,825
                                                   -------    --------
         Total costs and expenses ..............     9,412      10,052
                                                   -------    --------
     LOSS BEFORE INCOME TAXES ..................       (76)        (12)
       Benefit for income taxes ................       (31)         (5)
                                                   -------    --------
     NET LOSS ..................................   $   (45)   $     (7)
                                                   =======    ========


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

                                      -5-
<PAGE>

                         SALTON SEA FUNDING CORPORATION
                            STATEMENTS OF CASH FLOWS
                                 (In thousands)
<TABLE>
<CAPTION>

                                                                                       THREE MONTHS
                                                                                      ENDED MARCH 31,
                                                                                   ---------------------
                                                                                     2003         2002
                                                                                   --------     --------
                                                                                        (UNAUDITED)

<S>                                                                                <C>         <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss .......................................................................   $    (45)   $     (7)
  Adjustments to reconcile net loss to net cash flows from operating activities:
    Equity in loss of Guarantors ...............................................        133           7
    Changes in assets and liabilities:
      Accrued interest receivable and other current assets .....................     (9,238)     (9,945)
      Accrued interest .........................................................      9,297       9,826
                                                                                   --------    --------
        Net cash flows from operating activities ...............................        147        (119)
                                                                                   --------    --------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Increase in restricted cash ..................................................       (155)         (7)
  Due to affiliates ............................................................      3,661      94,985
                                                                                   --------    --------
    Net cash flows from financing activities ...................................      3,506      94,978
                                                                                   --------    --------
NET CHANGE IN CASH .............................................................      3,653      94,859
Cash at the beginning of period ................................................     19,583       4,361
                                                                                   --------    --------
CASH AT THE END OF PERIOD ......................................................   $ 23,236    $ 99,220
                                                                                   ========    ========
</TABLE>

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

                                      -6-
<PAGE>


                         SALTON SEA FUNDING CORPORATION
                          NOTES TO FINANCIAL STATEMENTS
                                   (UNAUDITED)

1.  GENERAL

In the opinion of  management  of 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 March 31, 2003 and the results of operations
and cash flows for the  three-month  periods ended March 31, 2003 and 2002.  The
results of operations  for the  three-month  period ended March 31, 2003 are not
necessarily indicative of the results to be expected for the full year.

The  unaudited  financial  statements  and  notes  thereto  should  be  read  in
conjunction with the audited financial  statements and notes thereto included in
the Funding Corporation's annual report on Form 10-K for the year ended December
31, 2002.

Certain amounts in the prior year financial statements have been reclassified in
order to conform to current year presentation.  Such  reclassifications  did not
impact previously reported net income (loss) or retained earnings.

2.  NEW ACCOUNTING PRONOUNCEMENTS

Effective  January  1, 2003,  the  Funding  Corporation  adopted  SFAS No.  143,
"Accounting  for Asset  Retirement  Obligations"  ("SFAS 143").  This  statement
provides  accounting and  disclosure  requirements  for  retirement  obligations
associated with long-lived  assets.  The cumulative effect of initially applying
this  statement  did not have a  material  effect on the  Funding  Corporation's
financial position, results of operations or cash flows.

3.  CONTINGENCY

Due to reduced  liquidity,  Southern  California Edison ("Edison") had failed to
pay  approximately  $119 million owed under the power purchase  agreements  with
certain Guarantors (Imperial Valley Projects,  excluding the Salton Sea V and CE
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.

Pursuant  to a  settlement  agreement  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.

Edison has disputed a portion of the settlement  agreement and 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.  Due to Edison's  failure to pay the contractual
obligations,  certain Guarantors  established an allowance for doubtful accounts
of approximately $3.1 million and $2.7 million as of March 31, 2003 and December
31, 2002, respectively.

On March 25,  2002,  Salton Sea II's 10 MW turbine went out of service due to an
uncontrollable force event. Such uncontrollable force event ended and Salton Sea
II returned to service on December 17, 2002.  Edison has failed to recognize the
uncontrollable  force event and, as such, has not paid amounts otherwise due and
owing, and has improperly  derated Salton Sea II from 15 MW to 12.5 MW under the
Salton Sea II power purchase  agreement.  On January 29, 2003,  Salton Sea Power
Generation  L.P.,  owner of Salton Sea II, served a complaint on Edison for such
unpaid amount and to rescind such deration.

                                      -7-
<PAGE>

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 ("CE Generation") until the
Funding Corporation debt service reserve fund of approximately $65.4 million has
been  funded or the  letter of credit  has been  extended  beyond  its July 2004
expiration  date or replaced.  The fund had a cash balance of $46.4  million and
$46.3 million as of March 31, 2003 and December 31, 2002, respectively.

4.  RELATED PARTY TRANSACTIONS

On  January  29,  2003,  TransAlta  USA,  Inc.  ("TransAlta"),  a  wholly  owned
subsidiary of TransAlta  Corporation,  purchased El Paso's Merchant Energy's 50%
interest in CE Generation.

Pursuant to a Transaction  Agreement dated January 29, 2003, CE Turbo and Salton
Sea Power began selling  available power to TransAlta on February 12, 2003 based
on  percentages  of the Dow Jones SP-15  Index.  Such  agreement  will expire on
October  15,  2003.  Sales to  TransAlta  from the  Partnership  and  Salton Sea
Guarantors  totaled $2.3 million for the three months ended March 31, 2003.  The
accounts receivable balance at March 31, 2003 was $2.3 million.

At December 31, 2002 accounts  receivable from El Paso Merchant Energy were $1.4
million.

                                      -8-

<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  March  31,  2003,  and the  related  combined  statements  of
operations and cash flows for the  three-month  periods ended March 31, 2003 and
2002.  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,  2002,  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 24, 2003 (January
29, 2003 as to Note 7), 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, 2002 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
May 8, 2003

                                      -9-
<PAGE>


                              SALTON SEA GUARANTORS
                             COMBINED BALANCE SHEETS
                                 (In thousands)

<TABLE>
<CAPTION>

                                                                       AS OF
                                                               ------------------------
                                                               MARCH 31,   DECEMBER 31,
                                                                 2003          2002
                                                               ---------   ------------
                                                              (UNAUDITED)
                                     ASSETS
<S>                                                             <C>         <C>
Current assets:
  Accounts receivable, net .................................    $ 16,932    $ 20,524
  Prepaid expenses and other current assets ................       4,659       5,283
                                                                --------    --------
    Total current assets ...................................      21,591      25,807
                                                                --------    --------
Properties, plants, contracts and equipment, net ...........     534,407     535,220
Excess of cost over fair value of net assets acquired ......      23,252      23,252
                                                                --------    --------
TOTAL ASSETS ...............................................    $579,250    $584,279
                                                                ========    ========

                       LIABILITIES AND GUARANTORS' EQUITY
Current liabilities:
  Accounts payable .........................................    $  1,810    $    328
  Accrued interest .........................................       6,219       1,593
  Other accrued liabilities ................................      14,141      12,304
  Current portion of long-term debt ........................      22,765      22,765
                                                                --------    --------
    Total current liabilities ..............................      44,935      36,990
                                                                --------    --------
Due to affiliates ..........................................      29,122      35,665
Senior secured project note ................................     223,654     223,654
                                                                --------    --------
  Total liabilities ........................................     297,711     296,309
                                                                --------    --------

Commitments and contingencies (Notes 4 and 5)

Guarantors' equity .........................................     281,539     287,970
                                                                --------    --------
TOTAL LIABILITIES AND GUARANTORS' EQUITY ...................    $579,250    $584,279
                                                                ========    ========
</TABLE>


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

                                      -10-
<PAGE>


                              SALTON SEA GUARANTORS
                        COMBINED STATEMENTS OF OPERATIONS
                                 (In thousands)


                                                                 THREE MONTHS
                                                               ENDED MARCH 31,
                                                            --------------------
                                                              2003         2002
                                                            --------     -------
                                                                (UNAUDITED)

REVENUE:
  Operating revenue ....................................... $ 18,124     $23,405
  Interest and other income (loss), net ...................     (162)        430
                                                            --------     -------
    Total revenue .........................................   17,962      23,835
                                                            --------     -------
COSTS AND EXPENSES:
  Royalty, operating, general and administrative expense ..   14,724      11,890
  Depreciation and amortization ...........................    4,893       4,275
  Interest expense ........................................    4,776       5,162
                                                            --------     -------
    Total costs and expenses ..............................   24,393      21,327
                                                            --------     -------
NET INCOME (LOSS) ......................................... $ (6,431)    $ 2,508
                                                            ========     =======


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


                                      -11-
<PAGE>

                              SALTON SEA GUARANTORS
                        COMBINED STATEMENTS OF CASH FLOWS
                                 (In thousands)

                                                              THREE MONTHS
                                                             ENDED MARCH 31,
                                                          ----------------------
                                                            2003         2002
                                                          --------     --------
                                                         (UNAUDITED)

CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income (loss) ..................................    $ (6,431)    $  2,508
  Adjustments to reconcile net income (loss)
    to net cash flows from operating activities:
    Depreciation and amortization ....................       4,893        4,275
    Changes in assets and liabilities:
      Accounts receivable, net .......................       3,592       25,442
      Prepaid expenses and other current assets ......         624         (675)
      Accounts payable and accrued liabilities .......       7,945          622
                                                          --------     --------
        Net cash flows from operating activities .....      10,623       32,172
                                                          --------     --------
CASH FLOWS FROM INVESTING ACTIVITIES -
  Capital expenditures ...............................      (4,080)      (2,598)
                                                          --------     --------
CASH FLOWS FROM FINANCING ACTIVITIES -
  Due to affiliates ..................................      (6,543)     (29,574)
                                                          --------     --------
NET CHANGE IN CASH ...................................          --           --
Cash at the beginning of period ......................          --           --
                                                          --------     --------
CASH AT THE END OF PERIOD ............................    $     --     $     --
                                                          ========     ========


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

                                      -12-
<PAGE>


                              SALTON SEA GUARANTORS
                     NOTES TO COMBINED FINANCIAL STATEMENTS
                                   (UNAUDITED)

1.  GENERAL

In the opinion of management of Salton Sea Guarantors  (the  "Guarantors"),  the
accompanying unaudited financial statements contain all adjustments  (consisting
only of normal  recurring  accruals)  necessary to present  fairly the financial
position as of March 31, 2003 and the results of  operations  and cash flows for
the three-month periods ended March 31, 2003 and 2002. The results of operations
for the three months ended March 31, 2003 are not necessarily  indicative of the
results to be expected for the full year.

The  unaudited  financial  statements  and  notes  thereto  should  be  read  in
conjunction with the audited financial  statements and notes thereto included in
the Guarantors' annual report on Form 10-K for the year ended December 31, 2002.

Certain amounts in the prior year financial statements have been reclassified in
order to conform to current year presentation.  Such  reclassifications  did not
impact previously reported net income (loss) or Guarantors' equity.

2.  NEW ACCOUNTING PRONOUNCEMENTS

Effective January 1, 2003, the Guarantors adopted SFAS No. 143,  "Accounting for
Asset Retirement  Obligations"  ("SFAS 143"). This statement provides accounting
and  disclosure   requirements  for  retirement   obligations   associated  with
long-lived  assets.  The cumulative effect of initially  applying this statement
did not have a material effect on the Guarantors' financial position, results of
operations or cash flows.

3.  INTANGIBLE ASSETS

The Guarantors'  acquired  intangible assets consist of power purchase contracts
(the "contracts")  with a cost of $33.4 million and accumulated  amortization of
$9.1million  and  $8.8  million  at  March  31,  2003  and  December  31,  2002,
respectively.  Amortization  expense on the  contracts  was $0.3 million for the
three-month  periods  ended  March 31,  2003 and 2002.  The  Guarantors'  expect
amortization  expense on the contracts to be $0.9 million for the remaining nine
months of 2003 and $1.2 million for each of the four succeeding fiscal years.

4.  CONTINGENCIES

Due to reduced  liquidity,  Southern  California Edison ("Edison") had failed to
pay  approximately  $42.3 million owed under the power purchase  agreements with
certain  Guarantors  (Imperial  Valley  Projects,  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.

Pursuant  to a  settlement  agreement  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.

Edison has disputed a portion of the settlement  agreement and 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. Due to
Edison's  failure  to  pay  the  contractual  obligations,   certain  Guarantors
established an allowance for doubtful accounts of approximately $0.9 million and
$0.8 million as of March 31, 2003 and December 31, 2002, respectively.

                                      -13-
<PAGE>

On March 25,  2002,  Salton Sea II's 10 MW turbine went out of service due to an
uncontrollable force event. Such uncontrollable force event ended and Salton Sea
II returned to service on December 17, 2002.  Edison has failed to recognize the
uncontrollable  force event and, as such, has not paid amounts otherwise due and
owing, and has improperly  derated Salton Sea II from 15 MW to 12.5 MW under the
Salton Sea II power purchase  agreement.  On January 29, 2003,  Salton Sea Power
Generation  L.P.,  owner of Salton Sea II served a complaint  on Edison for such
unpaid amount and to rescind such deration.

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 ("CE Generation") until the
Funding Corporation debt service reserve fund of approximately $65.4 million has
been  funded or the  letter of credit  has been  extended  beyond  its July 2004
expiration  date or replaced.  The fund had a cash balance of $46.4  million and
$46.3 million as of March 31, 2003 and December 31, 2002, respectively.

Stone & 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 a 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. ("Salton Sea Power"),
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 demand for  arbitration  did not include a stated
claim  amount.  On April 25,  2003,  Salton Sea Power  entered into a settlement
agreement with Stone & Webster.  The Settlement Agreement will result in a total
payment of $12.1 million from Stone & Webster in the second  quarter of 2003 and
the arbitration will be dismissed.

5.  RELATED PARTY TRANSACTIONS

On January 29, 2003, TransAlta USA Inc. ("TransAlta"), a wholly owned subsidiary
of TransAlta  Corporation,  purchased  El Paso  Merchant  Energy North  American
Company's 50% interest in CE Generation.

Pursuant to a Transaction  Agreement  dated  January 29, 2003,  Salton Sea Power
began  selling  available  power to  TransAlta  on  February  12,  2003 based on
percentages of the Dow Jones SP-15 Index.  Such agreement will expire on October
15, 2003.  Sales to TransAlta from the  Guarantors  totaled $1.8 million for the
three months ended March 31, 2003. The accounts  receivable balance at March 31,
2003 was $1.8 million.

At December 31, 2002 accounts  receivable from El Paso Merchant Energy were $1.1
million.


                                      -14-

<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  March  31,  2003,  and the  related  combined  statements  of
operations and cash flows for the  three-month  periods ended March 31, 2003 and
2002.  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,  2002,  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 24, 2003 (January
29, 2003 as to Note 9), 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, 2002 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
May 8, 2003

                                      -15-
<PAGE>


                             PARTNERSHIP GUARANTORS
                             COMBINED BALANCE SHEETS
                                 (In thousands)

<TABLE>
<CAPTION>
                                                                       AS OF
                                                               ------------------------
                                                               MARCH 31,   DECEMBER 31,
                                                                 2003         2002
                                                               ---------   ------------
                                                              (UNAUDITED)
                                     ASSETS
<S>                                                             <C>         <C>
Current assets:
  Accounts receivable, net .................................    $ 13,511    $ 14,330
  Prepaid expenses and other current assets ................      19,003      19,516
                                                                --------    --------
    Total current assets ...................................      32,514      33,846
                                                                --------    --------
Restricted cash ............................................         132           1
Properties, plants, contracts and equipment, net ...........     667,687     664,722
Management fee .............................................      67,621      68,679
Due from affiliates ........................................      91,240      82,083
Excess of fair value over net assets acquired ..............     120,866     120,866
                                                                --------    --------
TOTAL ASSETS ...............................................    $980,060    $970,197
                                                                ========    ========

                       LIABILITIES AND GUARANTORS' EQUITY
Current liabilities:
  Accounts payable .........................................    $  3,506    $  2,903
  Accrued interest .........................................       6,182       1,576
  Other accrued liabilities ................................      17,043      15,464
  Current portion of long-term debt ........................       5,017       5,017
                                                                --------    --------
Total current liabilities ..................................      31,748      24,960
                                                                --------    --------
Senior secured project note ................................     239,099     239,099
Deferred income taxes ......................................     106,753     104,850
                                                                --------    --------
  Total liabilities ........................................     377,600     368,909
                                                                --------    --------

Commitments and contingencies (Notes 4 and 5)

Guarantors' equity:
  Common stock .............................................           3           3
  Additional paid-in capital ...............................     442,225     432,200
  Retained earnings ........................................     160,232     169,085
                                                                --------    --------
    Total guarantors' equity ...............................     602,460     601,288
                                                                --------    --------
TOTAL LIABILITIES AND GUARANTORS' EQUITY ...................    $980,060    $970,197
                                                                ========    ========
</TABLE>


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

                                      -16-
<PAGE>


                             PARTNERSHIP GUARANTORS
                        COMBINED STATEMENTS OF OPERATIONS
                                 (In thousands)

                                                              THREE MONTHS
                                                             ENDED MARCH 31,
                                                          ---------------------
                                                            2003         2002
                                                          --------     --------
                                                               (UNAUDITED)

REVENUE:
  Operating revenue ..................................... $ 19,723     $ 22,199
  Interest and other income (loss), net .................     (131)         536
                                                          --------     --------
    Total revenue .......................................   19,592       22,735
                                                          --------     --------
COSTS AND EXPENSES:
  Royalty, operating, general and administrative costs ..   24,199       18,286
  Depreciation and amortization .........................    5,633        6,787
  Interest expense ......................................    4,664        4,754
  Capitalized interest ..................................       --       (2,838)
                                                          --------     --------
    Total costs and expenses ............................   34,496       26,989
                                                          --------     --------
LOSS BEFORE INCOME TAXES ................................  (14,904)      (4,254)
Benefit for income taxes ................................   (6,051)      (1,340)
                                                          --------     --------
NET LOSS ................................................ $ (8,853)    $ (2,914)
                                                          ========     ========


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

                                      -17-
<PAGE>


                             PARTNERSHIP GUARANTORS
                        COMBINED STATEMENTS OF CASH FLOWS
                                 (In thousands)
<TABLE>
<CAPTION>

                                                                  THREE MONTHS
                                                                 ENDED MARCH 31,
                                                               --------------------
                                                                 2003        2002
                                                               --------    --------
                                                                   (UNAUDITED)

<S>                                                            <C>         <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss .................................................   $ (8,853)   $ (2,914)
  Adjustments to reconcile net loss to
    net cash flows from operating activities:
    Depreciation and amortization ..........................      5,633       6,787
    Deferred income taxes ..................................      1,903      (1,340)
    Changes in assets and liabilities:
      Accounts receivable, net .............................        819      47,608
      Prepaid expenses and other current assets ............        513         623
      Accounts payable and accrued liabilities .............      6,788         169
                                                               --------    --------
        Net cash flows from operating activities ...........      6,803      50,933
                                                               --------    --------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Capital expenditures pertaining to operating projects ....     (6,582)     (6,191)
  Construction .............................................     (1,098)     (6,351)
  Decrease (increase) in restricted cash ...................       (131)      7,013
  Management fee ...........................................        350         358
                                                               --------    --------
    Net cash flows from investing activities ...............     (7,461)     (5,171)
                                                               --------    --------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Due from affiliates ......................................     (9,367)    (43,086)
  Equity contribution ......................................     10,025          --
                                                               --------    --------
    Net cash flows from financing activities ...............        658     (43,086)
                                                               --------    --------
NET CHANGE IN CASH .........................................         --       2,676
Cash at beginning of period ................................         --          --
                                                               --------    --------
CASH AT THE END OF PERIOD ..................................   $     --    $  2,676
                                                               ========    ========
</TABLE>

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

                                      -18-
<PAGE>


                             PARTNERSHIP GUARANTORS
                     NOTES TO COMBINED FINANCIAL STATEMENTS
                                   (UNAUDITED)

1.  GENERAL

In the opinion of management of Partnership  Guarantors (the "Guarantors"),  the
accompanying unaudited financial statements contain all adjustments  (consisting
only of normal  recurring  accruals)  necessary to present  fairly the financial
position as of March 31, 2003 and the results of  operations  and cash flows for
the three-month periods ended March 31, 2003 and 2002. The results of operations
for the three-month  period ended March 31, 2003 are not necessarily  indicative
of the results to be expected for the full year.

The  unaudited  financial  statements  and  notes  thereto  should  be  read  in
conjunction with the audited financial  statements and notes thereto included in
the Guarantors' annual report on Form 10-K for the year ended December 31, 2002.

Certain amounts in the prior year financial statements have been reclassified in
order to conform to current year presentation.  Such  reclassifications  did not
impact previously reported net income (loss) or retained earnings.

2.  NEW ACCOUNTING PRONOUNCEMENTS

Effective January 1, 2003, the Guarantors adopted SFAS No. 143,  "Accounting for
Asset Retirement  Obligations"  ("SFAS 143"). This statement provides accounting
and  disclosure   requirements  for  retirement   obligations   associated  with
long-lived  assets.  The cumulative effect of initially  applying this statement
did not have a material effect on the Guarantors' financial position, results of
operations or cash flows.

3.  INTANGIBLE ASSETS

The following table  summarizes the acquired  intangible  assets as of March 31,
2003 and December 31, 2002 (in thousands):

<TABLE>
<CAPTION>
                                           MARCH 31, 2003               DECEMBER 31, 2002
                                    ----------------------------   ----------------------------
                                    GROSS CARRYING   ACCUMULATED   GROSS CARRYING   ACCUMULATED
                                       AMOUNT       AMORTIZATION      AMOUNT       AMORTIZATION

     <S>                                <C>           <C>             <C>            <C>
     Amortized Intangible Assets:
     Power Purchase Contracts .....     $123,002      $ 97,286        $123,002       $ 96,894
     Patented Technology ..........       46,290        15,867          46,290         15,385
                                        --------      --------        --------       --------
       Total ......................     $169,292      $113,153        $169,292       $112,279
                                        ========      ========        ========       ========
</TABLE>

Amortization  expense on  acquired  intangible  assets was $0.9  million for the
three-month  periods  ended  March 31,  2003 and  2002.  The  Guarantors  expect
amortization  expense on acquired  intangible  assets to be $2.6 million for the
nine months  remaining in 2003 and $3.5 million for each of the four  succeeding
fiscal years.

4.  CONTINGENCY

Due to reduced  liquidity,  Southern  California Edison ("Edison") failed to pay
approximately  $76.9  million  owed  under the power  purchase  agreements  with
certain  Guarantors  (excluding  CE 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.

                                      -19-
<PAGE>

Pursuant  to a  settlement  agreement  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.

Edison has disputed a portion of the settlement  agreement and 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  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.  Due to Edison's  failure to pay the contractual
obligations,  certain  Guarantors  have  established  an allowance  for doubtful
accounts of approximately $2.2 million and $1.9 million as of March 31, 2003 and
December 31, 2002, respectively.

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 ("CE Generation") until the
Funding Corporation debt service reserve fund of approximately $65.4 million has
been  funded or the  letter of credit  has been  extended  beyond  its July 2004
expiration  date or replaced.  The fund had a cash balance of $46.4  million and
$46.3 million as of March 31, 2003 and December 31, 2002, respectively.

5.  RELATED PARTY TRANSACTIONS

On  January  29,  2003,  TransAlta  USA,  Inc.  ("TransAlta"),  a  wholly  owned
subsidiary of TransAlta  Corporation,  purchased El Paso  Merchant  Energy North
American Company's 50% interest in CE Generation.

Pursuant to a Transaction  Agreement  dated January 29, 2003, CE Turbo LLC began
selling  available  power to TransAlta on February 12, 2003 based on percentages
of the Dow Jones SP-15 Index.  Such  agreement  will expire on October 15, 2003.
Sales to TransAlta from the Guarantors totaled $0.5 million for the three months
ended March 31, 2003. The accounts receivable balance at March 31, 2003 was $0.5
million.

During  the  three  months  ended  March  31,  2003,  the  Guarantors   received
approximately  $10.0 million in contributions  from MidAmerican  Energy Holdings
Company, one of its partners, to be used for capital expenditures.

At December 31, 2002 accounts  receivable from El Paso Merchant Energy were $0.3
million.

                                      -20-
<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 March 31, 2003,  and the related  statements of operations and cash flows for
the  three-month  periods  ended  March  31,  2003  and  2002.  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, 2002,  and the related  statements of operations,
members' equity,  and cash flows for the year then ended (not presented herein);
and in our report  dated  January 24, 2003  (January  29, 2003 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,
2002 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
May 8, 2003

                                      -21-
<PAGE>


                             SALTON SEA ROYALTY LLC
                                 BALANCE SHEETS
                    (In thousands, except per share amounts)

<TABLE>
<CAPTION>

                                                                   AS OF
                                                            -----------------------
                                                            MARCH 31,  DECEMBER 31,
                                                              2003        2002
                                                            --------   ------------
                                                           (UNAUDITED)
                                     ASSETS
<S>                                                          <C>         <C>
Prepaid expenses and other current assets ..............     $    11     $    13
Royalty stream, net ....................................      13,798      14,011
Excess of cost over fair value of net assets acquired ..      30,464      30,464
Due from affiliates ....................................      41,742      39,501
                                                             -------     -------
TOTAL ASSETS ...........................................     $86,015     $83,989
                                                             =======     =======

                         LIABILITIES AND MEMBERS' EQUITY
Current liabilities:
   Accrued interest ....................................     $    28     $     7
   Current portion of long-term debt ...................         304         304
                                                             -------     -------
     Total current liabilities .........................         332         311
Senior secured project note ............................         843         843
                                                             -------     -------
   Total liabilities ...................................       1,175       1,154
                                                             -------     -------

Commitments and contingencies (Note 4)

Members' equity:
   Common stock, par value $.01 per share;
     100 shares authorized, issued and outstanding .....          --          --
   Additional paid-in capital ..........................       1,561       1,561
   Retained earnings ...................................      83,279      81,274
                                                             -------     -------
     Total members' equity .............................      84,840      82,835
                                                             -------     -------
TOTAL LIABILITIES AND MEMBERS' EQUITY ..................     $86,015     $83,989
                                                             =======     =======

</TABLE>

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

                                      -22-
<PAGE>


                             SALTON SEA ROYALTY LLC
                            STATEMENTS OF OPERATIONS
                                 (In thousands)

                                                                 THREE MONTHS
                                                                ENDED MARCH 31,
                                                              ------------------
                                                                2003       2002
                                                              --------    ------
                                                                  (UNAUDITED)

REVENUE - ROYALTY INCOME ...................................    $3,039    $3,682
COSTS AND EXPENSES:
  Royalty, operating, general and administrative expenses ..       798     1,092
  Amortization of royalty stream ...........................       213       214
  Interest expense .........................................        23        89
                                                                ------    ------
    Total costs and expenses ...............................     1,034     1,395
                                                                ------    ------
NET INCOME .................................................    $2,005    $2,287
                                                                ======    ======


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

                                      -23-
<PAGE>

                             SALTON SEA ROYALTY LLC
                            STATEMENTS OF CASH FLOWS
                                 (In thousands)
<TABLE>
<CAPTION>

                                                                                           THREE MONTHS
                                                                                          ENDED MARCH 31,
                                                                                      --------------------
                                                                                       2003        2002
                                                                                      -------     -------
                                                                                            (UNAUDITED)
<S>                                                                                   <C>         <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income .....................................................................    $ 2,005     $ 2,287
  Adjustments to reconcile net income to net cash flows from operating activities:
    Amortization of royalty stream and goodwill ..................................        213         214
    Changes in assets and liabilities:
      Prepaid expenses and other current assets ..................................          2           5
      Accrued interest ...........................................................         21          84
                                                                                      -------     -------
        Net cash flows form operating activities .................................      2,241       2,590
                                                                                      -------     -------
NET CASH FLOWS FROM FINANCING ACTIVITIES:
  Due from affiliates ............................................................     (2,241)     (2,590)
                                                                                      -------     -------
NET CHANGE IN CASH ...............................................................         --          --
Cash at beginning of period ......................................................         --          --
                                                                                      -------     -------
CASH AT THE END OF PERIOD ........................................................    $    --     $    --
                                                                                      =======     =======
</TABLE>

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

                                      -24-
<PAGE>

                               SALTON SEA ROYALTY
                          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 March 31, 2003 and the results of  operations  and cash flows for
the three-month periods ended March 31, 2003 and 2002. The results of operations
for the three-month  period ended March 31, 2003 are not necessarily  indicative
of the results to be expected for the full year.

The  unaudited  financial  statements  and  notes  thereto  should  be  read  in
conjunction with the audited financial  statements and notes thereto included in
the Company's annual report on Form 10-K for the year ended December 31, 2002.

Certain amounts in the prior year financial statements have been reclassified in
order to conform to current year presentation.  Such  reclassifications  did not
impact previously reported net income or retained earnings.

2.  NEW ACCOUNTING PRONOUNCEMENTS

Effective  January 1, 2003, the Company  adopted SFAS No. 143,  "Accounting  for
Asset Retirement  Obligations"  ("SFAS 143"). This statement provides accounting
and  disclosure   requirements  for  retirement   obligations   associated  with
long-lived  assets.  The cumulative effect of initially  applying this statement
did not have a material effect on the Company's financial  position,  results of
operations or cash flows.

3.  ROYALTY STREAM

The Royalty Company's policy is to provide  amortization  expense beginning upon
the commencement of revenue production over the estimated  remaining useful life
of the identifiable assets.

The royalty  streams have been assigned  values  separately  for each of (1) the
remaining  portion of the fixed  price  periods  of the  Projects'  power  sales
agreements and (2) the 20-year avoided cost periods of the Projects' power sales
agreements  and are  amortized  separately  over such periods using the straight
line  method.  The royalty  stream has a cost of $60.5  million and  accumulated
amortization  $46.7  million and $46.5 million as of March 31, 2003 and December
31, 2002, respectively. Royalty stream amortization expense was $0.2 million for
the three-month periods ended March 31, 2003 and 2002 and is expected to be $0.6
million for the  remaining  nine months of 2003 and $0.8 million for each of the
four succeeding four fiscal years.

4.  CONTINGENCY

Due to reduced  liquidity,  Southern  California Edison ("Edison") failed to pay
approximately $119 million owed under the power purchase agreements with certain
Guarantors  Partnership  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  LLC until Salton Sea Funding
Corporation  debt service reserve fund

                                      -25-
<PAGE>

of approximately  $65.4 million has been funded or the letter of credit has been
extended beyond its July 2004  expiration date or replaced.  The fund had a cash
balance of $46.4 million and $46.3 million as of March 31, 2003 and December 31,
2002, respectively.

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS.

The following is  management's  discussion  and analysis of certain  significant
factors which have affected the financial condition and results of operations of
Salton Sea Funding  Corporation (the "Funding  Corporation")  and the Salton Sea
Guarantors, the Partnership Guarantors, and Salton Sea Royalty LLC (the "Royalty
Guarantors",  or collectively the "Guarantors"),  during the periods included in
the  accompanying  statements of operations.  This discussion  should be read in
conjunction  with  the  Funding  Corporation's  and the  Guarantors'  historical
financial  statements and the notes to those  statements.  Actual results in the
future could differ significantly from the historical results.

FORWARD-LOOKING STATEMENTS

From  time to  time,  the  Funding  Corporation  and  the  Guarantors  may  make
forward-looking  statements  within the meaning of the federal  securities  laws
that  involve  judgments,  assumptions  and  other  uncertainties  beyond  their
control. These forward-looking  statements may include, among others, statements
concerning revenue and cost trends, cost recovery, cost reduction strategies and
anticipated  outcomes,  pricing  strategies,  changes in the  utility  industry,
planned capital  expenditures,  financing needs and availability,  statements of
the Funding Corporation's or the Guarantors' expectations, beliefs, future plans
and strategies,  anticipated  events or trends and similar  comments  concerning
matters that are not historical facts. These types of forward-looking 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 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 Private Securities  Litigation Reform Act of 1995, the Funding
Corporation  and the Guarantors  have  identified  important  factors that could
cause actual results to differ  materially  from those  expectations,  including
weather  effects on revenues and other  operating  uncertainties,  uncertainties
relating to economic and political  conditions and  uncertainties  regarding the
impact of regulations, changes in government policy and competition. Neither the
Funding  Corporation  nor the  Guarantors  assume any  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 Consolidated Financial Statements and accompanying notes. Note 2
to the Funding  Corporation's and the Guarantors'  financial statements included
in their  annual  report  on Form  10-K for the year  ended  December  31,  2002
describes  the  significant   accounting   policies  and  methods  used  in  the
preparation of the financial statements. Estimates are used for, but not limited
to, the  accounting  for the allowance for doubtful  accounts and  impairment of
long-lived assets. Actual results could differ from these estimates.

For additional  discussion of the Funding Corporation's and Guarantors' critical
accounting  policies,  see  "Management's  Discussion  and Analysis of Financial
Condition and Results of Operations  included in the Funding  Corporation's  and
the Guarantors' Annual Report on Form 10-K for the year ended December 31, 2002.

NEW ACCOUNTING PRONOUNCEMENTS

Effective  January 1, 2003, the Funding  Corporation and the Guarantors  adopted
SFAS No. 143,  "Accounting for Asset Retirement  Obligations" ("SFAS 143"). This
statement  provides  accounting  and  disclosure   requirements  for  retirement
obligations   associated  with  long-lived  assets.  The  cumulative  effect  of
initially  applying this statement did not have a material effect on the Funding
Corporation's or the Guarantors'  financial  position,  results of operations or
cash flows.

                                      -26-
<PAGE>

RESULTS OF OPERATIONS FOR THE PERIOD ENDED MARCH 31, 2003 AND 2002

For purposes of consistency in financial  presentation,  plant capacity  factors
for the Salton Sea I,  Salton Sea II,  Salton Sea III,  Salton Sea IV and Salton
Sea V plants are based on nominal  capacity amounts of 10, 20, 50, 40 and 49 net
mega-watts  ("NMW"),  respectively  and for the Vulcan,  Elmore,  Leathers,  Del
Ranch,  and CE Turbo plants are based on capacity  amounts of 34, 38, 38, 38 and
10 NMW, respectively. Each plant possesses an operating margin, which allows for
production in excess of the amounts listed above.  Utilization of this operating
margin is based upon a variety of factors and can be expected to vary throughout
the year under normal operating conditions.

The following  operating data represents the aggregate  capacity and electricity
production  of Salton Sea I,  Salton Sea II,  Salton Sea III,  Salton Sea IV and
Salton Sea V:

                                                PERIOD ENDED MARCH 31,
                                               -----------------------
                                                 2003           2002
                                               --------       --------
         Overall capacity factor...........       71.6%          89.3%
         Capacity NMW (weighted average)...      168.4          168.4
         MWh produced......................    260,600        324,800

The overall capacity factor for the Salton Sea Guarantor decreased for the three
months ended March 31, 2003 compared to the same period in 2002 primarily due to
the timing of  scheduled  outages  which are  typically  scheduled  from January
through May.

The following  operating data represents the aggregate  capacity and electricity
production of Vulcan, Elmore, Leathers, Del Ranch and CE Turbo:

                                                 PERIOD ENDED MARCH 31,
                                               -------------------------
                                                 2003             2002
                                               --------       ----------
         Overall capacity factor..........       101.9%          89.3%
         Capacity NMW (weighted average)..       158.0          158.0
         MWh produced.....................     347,900        306,000

The overall  capacity  factor for the  Partnership  Guarantor  increased for the
three months ended March 31, 2003 compared to the same period in 2002  primarily
due to the  timing of  scheduled  outages  which are  typically  scheduled  from
January through May.

Southern  California  Edison's ("Edison") Average Avoided Cost of Energy was 6.2
cents per  kilowatt-hour  and 2.9 cents per  kilowatt-hour  for the three months
ended  March 31,  2003 and 2002,  respectively.  Estimates  of  Edison's  future
Avoided Cost of Energy vary  substantially  from year to year. During 2002, as a
result of certain  settlement  agreements,  Edison 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  in the first  quarter 2002 and  increased to 5.37
cents per kilowatt hour effective May 1, 2002 through April 30, 2007.

The Salton Sea Guarantors'  operating revenue decreased $5.3 million,  or 22.6%,
to $18.1  million for the three months  ended March 31, 2003 from $23.4  million
for the same period in 2002.  The decrease was  primarily due to the impact of a
$6.8 million adjustment to the Edison provision in 2002 and lower production due
to more overhauls in 2003, offset by higher rates in 2003.

The Salton Sea  Guarantors'  interest and other  income  (loss)  decreased  $0.6
million to a net loss of $0.2  million for the three months ended March 31, 2003
from a net income of $0.4 million for the same period in 2002.  The decrease was
due to interest earned on the past due balances from Edison in 2002.

                                      -27-
<PAGE>

The Partnership  Guarantors' operating revenue decreased $2.5 million, or 11.3%,
to $19.7  million for the three months  ended March 31, 2003 from $22.2  million
for the same period in 2002.  The decrease was  primarily due to the impact of a
$14.1 million  adjustment to the Edison  provision in 2002  partially  offset by
higher rates and, to a lesser degree, higher production in 2003.

The  Partnership  Guarantors'  interest and other income (loss)  decreased  $0.6
million to a net loss of $0.1  million for the three months ended March 31, 2003
from a net income of $0.5 million for the same period in 2002.  The decrease was
due to lower  interest  income due to interest  earned on the past due  balances
from Edison in 2002.

The Royalty  Guarantors'  revenue  decreased  $0.7  million,  or 18.9%,  to $3.0
million for the three months ended March 31, 2003 from $3.7 million for the same
period in 2002.  The  decrease  was the  result of lower  energy  revenue at the
Partnership Projects resulting in lower royalty income.

The Salton Sea Guarantors' operating expenses, which include royalty, operating,
general and administrative expenses,  increased $2.8 million, or 23.5%, to $14.7
million for the three months ended March 31,  2003,  from $11.9  million for the
same period in 2002  primarily  due to the timing of  overhauls  and higher pipe
repair costs, partially offset by lower royalty expense.

The  Partnership   Guarantors'   operating  expenses,   which  include  royalty,
operating,  general and  administrative  expenses,  increased  $5.9 million,  or
32.2%,  to $24.2  million for the three months ended March 31, 2003,  from $18.3
million for the same period in 2002.  The increase in expenses was primarily due
to operating expenses at the zinc recovery plant, which began limited production
in December 2002, partially offset by lower royalty expense.

The Royalty Guarantors'  operating expenses,  which include royalty,  operating,
general and administrative expenses,  decreased $0.3 million to $0.8 million for
the three  months  ended March 31, 2003 from $1.1 million for the same period in
2002. The decrease was primarily due to lower royalty expense.

The Salton Sea Guarantors'  depreciation and amortization increased $0.6 million
to $4.9  million for the three months ended March 31, 2003 from $4.3 million for
the same  period in 2002.  The  increase  was due to a change in  salvage  value
assumptions and higher depreciable asset balances.

The Partnership Guarantors' depreciation and amortization decreased $1.2 million
to $5.6  million for the three months ended March 31, 2003 from $6.8 million for
the same period in 2002.  The  decrease was due to the write off of an abandoned
project  during 2002 partially  offset by a change in salvage value  assumptions
and higher depreciable asset balances.

The Salton Sea  Guarantors'  interest  expense  decreased  $0.4  million to $4.8
million for the three months ended March 31, 2003 from $5.2 million for the same
period in 2002. The decrease was due to reduced indebtedness.

The  Partnership  Guarantors'  interest  expense,  net of  capitalized  amounts,
increased $2.8 million to $4.7 million for the three months ended March 31, 2003
from $1.9  million  for the same  period in 2002.  The  increase  was due to the
discontinuance of capitalizing  interest on the minerals  extraction process, as
the zinc recovery  plant began limited  production in December  2002,  partially
offset by reduced indebtedness.

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

The Partnership  Guarantors' benefit for income taxes, increased to $6.1 million
for the three  months ended March 31, 2003 from $1.3 million for the same period
in 2002. The increase was due to higher pre-tax loss. The effective tax rate was
40.6% and 31.5% in 2003 and 2002, respectively. The changes from year to year in
the effective  rate are due  primarily to the  generation of energy tax credits,
the  resolution  of certain  tax issues,  primarily  related to  depletion,  and
depletion deductions.  Income taxes will be paid by the parent of the Guarantors
from  distributions  to the parent company by the Guarantors,  which occur after
payment of operating expenses and debt service.

                                      -28-
<PAGE>

The Royalty Guarantors are substantially comprised of partnerships. Income taxes
are the responsibility of the partners and Royalty Guarantors have no obligation
to  provide  funds  to  the  partners  for  payment  of  any  tax   liabilities.
Accordingly, the Royalty Guarantors have no tax obligations.

The Funding  Corporation's  net losses were not significant for the three months
ended March 31, 2003 and 2002. The net loss primarily represents interest income
and expense,  net of applicable tax, and the Funding  Corporation's 1% equity in
earnings of the Guarantors.

LIQUIDITY AND CAPITAL RESOURCES

The Salton Sea  Guarantors'  cash flows from operating  activities  decreased to
$10.6  million for the three months ended March 31, 2003 from $32.2  million for
the same period in 2002.  The 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 decrease was  primarily  due to the receipt of past due balances from Edison
in 2002.

The Partnership  Guarantors' cash flows from operating  activities  decreased to
$6.8  million for the three  months  ended March 31, 2003 from a source of $50.9
million for the same period in 2002. The 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  decrease  was  primarily  due to the
receipt of past due balances from Edison in 2002.

The Royalty Guarantors' cash flow from operations  decreased to $2.2 million for
the three  months  ended March 31, 2003 from $2.6 million for the same period in
2002.  The  Royalty  Guarantors'  only source of revenue is  royalties  received
pursuant to resource lease agreements with the Partnership Projects.

Due to reduced  liquidity,  Edison had 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.

Pursuant to a settlement  agreement 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.

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.  Due to Edison's
failure to pay the  contractual  obligations,  the Imperial Valley Projects have
established an allowance for doubtful accounts of approximately  $3.1 million as
of March 31, 2003.

On March 25,  2002,  Salton Sea II's 10 MW turbine went out of service due to an
uncontrollable  force event. Such  uncontrollable  force event ended, and Salton
Sea II returned to service, on December 17, 2002. Edison has failed to recognize
the  uncontrollable  force event and as such has not paid amounts  otherwise due
and owing and has improperly  derated Salton Sea II from 15 MW to 12.5 MW, under
the Salton Sea II Power  Purchase  Agreement.  On January 29,  2003,  Salton Sea
Power Generation,  L.P. served a complaint on Edison for such unpaid amounts and
to rescind such deration.

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  Salton Sea  Funding
Corporation  debt service reserve

                                      -29-
<PAGE>

fund of approximately  $65.4 million has been funded or the letter of credit has
been extended beyond its July 2004  expiration date or replaced.  The fund had a
cash  balance  of $46.4  million  and $46.3  million  as of March  31,  2003 and
December 31, 2002, respectively.

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 a 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. ("Salton Sea Power"),
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.  On April 25,  2003,  Salton Sea Power  entered  into a
settlement  agreement with Stone & Webster. The Settlement Agreement will result
in a $12.1  million  payment  from Stone & Webster and the  arbitration  will be
dismissed.

The Salton Sea Guarantors' cash flow used in investing  activities  increased to
$4.1 million for the three months ended March 31, 2003 from $2.6 million for the
same period in 2002. Capital expenditures are the primary component of investing
activities.

The Partnership  Guarantors' cash flow used in investing activities increased to
$7.5 million for the three months ended March 31, 2003 from $5.2 million for the
same period in 2002. Capital expenditures are the primary component of investing
activities.

Minerals LLC  constructed  the Zinc Recovery  Project,  which is recovering zinc
from the geothermal  brine (the "Zinc Recovery  Project").  Facilities have been
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 is being  transported  to a central  processing  plant where zinc
ingots are being 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.  Limited  production  began during
December 2002 and full  production is expected by late-2003.  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  capital  costs,  excluding  interest  during  construction,  of the  Zinc
Recovery  Project  are  approximately   $153.4  million,  net  of  payments  for
liquidated   damages,   through  March  31,  2003.  The  Zinc  Recovery  Project
anticipates incurring $14.5 million in capital expenditures during the remainder
of 2003 to optimize production.

The Funding  Corporation's net cash flows from financing activities decreased to
$3.5 million for the three  months  ended March 31, 2003 from $95.0  million for
the same period in 2002  primarily due to reduced  borrowings  from  affiliates.
Salton Sea Guarantors' net cash flows used in financing  activities decreased to
$6.5  million  from  $29.6  million  for the same  period  in 2002.  Partnership
Guarantors' net cash flows from financing  activities  increased to $0.7 million
for the three months  ended March 31, 2003 from a net cash use of $43.1  million
for the same period in 2002 primarily due to an equity contribution  received in
2003. The changes in net cash flows from financing  activities are primarily the
result of the funding of the debt service  reserve  fund.  These  receipts  were
deposited  into cash  accounts at the Funding  Corporation  and are  recorded as
amounts due to the Salton Sea and Partnership Guarantors.

RELATED PARTY TRANSACTIONS

On  January  29,  2003,  TransAlta  USA,  Inc.  ("TransAlta"),  a  wholly  owned
subsidiary of TransAlta  Corporation,  purchased El Paso  Merchant  Energy North
American Company's 50% interest in CE Generation.

Pursuant to a Transaction Agreement dated January 29, 2003, Salton Sea Power and
CE Turbo and began selling  available power to TransAlta,  on February 12, 2003,
based on percentages of the Dow Jones SP-15 Index. Such agreement will expire on
October 15, 2003.  Sales to TransAlta from the  Guarantors  totaled $2.3 million
for the three months ended March 31, 2003.  The accounts  receivable  balance at
March 31, 2003 was $2.3 million

                                      -30-
<PAGE>

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, 2002.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES 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, 2002.

ITEM 4.  CONTROLS AND PROCEDURES.

Salton Sea Funding  Corporation'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 significant changes in internal controls, or in other factors that could
significantly  affect  internal  controls,   subsequent  to  the  date  of  that
evaluation.


                                      -31-

<PAGE>


                           PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS.

In  addition  to  the  proceedings  described  in  Note 3 in  the  notes  to the
consolidated financial statements,  the Funding Corporation and its subsidiaries
are currently parties to various minor items of litigation or arbitration,  none
of which, if determined  adversely,  would have a material adverse effect on the
Funding Corporation.

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS.

Not applicable.

ITEM 3.  DEFAULTS UPON 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:

         The exhibits listed on the accompanying Exhibit Index are filed as part
         of this Quarterly Report.

(B)      REPORTS ON FORM 8-K:

         None.


                                      -32-

<PAGE>


                                   SIGNATURES


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



                         SALTON SEA FUNDING CORPORATION
                                  (Registrant)





Date:  May 12, 2003          /s/  Wayne F. Irmiter
                         ------------------------------
                                  Wayne F. Irmiter
                         Vice President & Controller


                                      -33-
<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

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:  May 12, 2003

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

                                      -34-
<PAGE>


                     SECTION 302 CERTIFICATION FOR FORM 10-Q
CERTIFICATIONS
--------------

I, Wayne F. Irmiter, 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

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: May 12, 2003

                              /s/ Wayne F. Irmiter
                              --------------------
                                Wayne F. Irmiter
                          Vice President and Controller
                           (chief accounting officer)

                                      -35-
<PAGE>



                                  EXHIBIT INDEX
Exhibit No.
-----------

99.1      Chief Executive Officer's  Certificate  Pursuant to Section 906 of the
          Sarbanes-Oxley Act of 2002.


99.2      Chief Accounting Officer's  Certificate Pursuant to Section 906 of the
          Sarbanes-Oxley Act of 2002.

                                      -36-