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 AND EXCHANGE ACT OF 1934

For the Quarterly Period EndedJune 30, 2001

Commission File Number: 33-95928

LS Power Funding Corporation
(Exact name of registrant as specified in its charter)

|                                                                        |  |                                                
|----------------------------------------------------------------------- |  | -----------------------------------------------
|Delaware
(State or other jurisdiction of
incorporation or organization) |  | 81-0502366
(I.R.S. Employer Identification No.)

9405 Arrowpoint Boulevard
Charlotte, NC 28273
(704) 525-3800
(Address, including zip code, and telephone number, including area code,
of registrants principal executive offices)

LSP-Cottage Grove, L.P.
LSP-Whitewater Limited Partnership
(Exact name of registrant as specified in its charter)

|                                                                                 |  |                                                               
|-------------------------------------------------------------------------------- |  | --------------------------------------------------------------
|Delaware
Delaware
(State or other jurisdiction of
incorporation or organization) |  | 81-0493289
81-0493287
(I.R.S. Employer Identification Numbers)

9405 Arrowpoint Boulevard
Charlotte, NC 28273
(704) 525-3800
(Address, including zip code, and telephone number, including area code,
of registrants principal executive offices)

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, and (2) has been subject to such filing
requirements for the past 90 days. Yes  [ X ]   No  [   ]

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LS POWER FUNDING CORPORATION
LSP-COTTAGE GROVE, L.P.
LSP-WHITEWATER LIMITED PARTNERSHIP

Index
To the Quarterly Report on Form 10-Q
For the Quarterly Period Ended June 30, 2001

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|PART I  |  |                                                                                       |  | Page No.
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|Item 1. |  | Condensed Financial Statements                                                        |  |          | 3 | 
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|Item 2. |  | Managements Discussion and Analysis of
Financial Condition and Results of Operations |  |          | 3 | 

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|PART II                   |  |                                  |  |  
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|Item 6.                   |  | Exhibits and Reports on Form 8-K |  | 8
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|Signatures                |  | 9                               
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|Financial Statement Index |  | F-1                             

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PART I/ITEM 1.   CONDENSED FINANCIAL STATEMENTS

The unaudited condensed financial statements contained herein have been
prepared pursuant to the rules and regulations of the United States Securities
and Exchange Commission (the Commission). Certain information and footnote
disclosures normally included in annual financial statements prepared in
accordance with accounting principles generally accepted in the United States
have been condensed or omitted. While the management of LS Power Funding
Corporation (Funding), LSP-Cottage Grove, L.P. (Cottage Grove) and
LSP-Whitewater Limited Partnership (Whitewater), (Cottage Grove and
Whitewater sometimes referred to herein individually as a Partnership and
collectively as the Partnerships) believes that the disclosures made are
adequate to make the information presented not misleading, these unaudited
condensed financial statements should be read in conjunction with the audited
financial statements included in the Annual Report on Form 10-K for the year
ended December 31, 2000, filed by Funding, and the Partnerships.

PART I/ITEM 2.   MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS

OF OPERATIONS


In addition to discussing and analyzing Funding and the Partnerships
recent historical financial results and condition, the following Managements
Discussion and Analysis of Financial Condition and Results of Operations
includes statements concerning certain trends and other forward-looking
information affecting or relating to Funding and the Partnerships which are
intended to qualify for the protections afforded Forward-Looking Statements
under the Private Securities Litigation Reform Act of 1995, Public Law 104-67.
The forward-looking statements made herein are inherently subject to risks and
uncertainties which could cause Fundings and the Partnerships actual results
to differ materially from the forward-looking statements.

General

Cottage Grove is a single purpose Delaware limited partnership established
in December 1993 to develop, finance, construct and own a gas-fired
cogeneration facility located in Cottage Grove, Minnesota (the Cottage Grove
Facility). The 1% general partner, LSP-Cottage Grove, Inc., and the 72%
limited partner, Cogentrix Cottage Grove, LLC, are indirect subsidiaries of
Cogentrix Energy, Inc. (Cogentrix Energy). The other limited partner is TPC
Cottage Grove, Inc. (TPC Cottage Grove) and is not affiliated with Cogentrix
Energy. Whitewater is a single purpose Delaware limited partnership
established in December 1993 to develop, finance, construct and own a gas-fired
cogeneration facility located in Whitewater, Wisconsin (the Whitewater
Facility, and collectively with the Cottage Grove Facility, the Facilities).
The 1% general partner, LSP-Whitewater I, Inc., and the 73% limited partner,
Cogentrix Whitewater, LLC, are indirect subsidiaries of Cogentrix Energy. The
other limited partner is TPC Whitewater (TPC Whitewater), an affiliate of TPC
Cottage Grove that is not affiliated with Cogentrix Energy. The Partnerships
sell electric capacity and energy generated by their Facilities to two
utilities under separate long-term power purchase agreements (individually, the
Power Purchase Agreement and collectively, the Power Purchase Agreements).
Whitewater sells up to 236.5 megawatts of electric capacity and associated
energy generated by the Whitewater Facility to Wisconsin Electric Power Company
(WEPCO) pursuant to a 25-year Power Purchase Agreement expiring in September
2022. Whitewater may also sell to third parties up to 12 megawatts of electric
capacity and any energy not dispatched by WEPCO. All of the electric capacity
and energy generated by the Cottage Grove Facility is sold to Northern States
Power Company (NSP) pursuant to a 30-year Power Purchase Agreement which runs
through October 2027. The Partnerships also have long-term steam supply
agreements with steam hosts to supply thermal energy produced by the
Facilities.

The Whitewater Facility commenced commercial operations on September 18,
1997, and the Cottage Grove Facility commenced commercial operations on October
1, 1997. The Whitewater and Cottage Grove Power Purchase Agreements meet the
criteria of a sales-type capital lease as described in Statement of Financial
Accounting Standards (SFAS) No. 13, Accounting for Leases. Cottage Grove
and Whitewater each recognized a gain on sales-type capital lease for the
difference between the estimated fair market value and the historical cost of
the Facilities as of the commencement of each respective Power Purchase
Agreements terms (commencement of commercial operations). The Partnerships
each recorded a net investment in lease that reflects the present value of
future minimum lease payments. Future minimum lease payments represent the
amount of capacity payments due from the utilities under the Power Purchase
Agreements in excess of fixed operating costs (i.e., executory costs).

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The difference between the undiscounted future minimum lease payments due from the
utilities and the net investment in lease represents unearned income. This
unearned income will be recognized as lease revenue over the respective terms
of the Power Purchase Agreements using the effective interest rate method. The
Partnerships will also recognize service revenue related to the reimbursement
of costs incurred in operating the Facilities and providing electricity and
thermal energy. The amount of service revenue recognized by each Partnership
will be directly related to the level of dispatch of the Facilities by the
respective utilities and to a lesser extent the level of thermal energy
required by the steam hosts.

Funding

Funding was organized in June 1995 as a special purpose Delaware
corporation to issue debt securities in connection with financing the
construction of the Facilities. Fundings sole business activities are limited
to maintaining its organization and activities necessary pursuant to the
offering of the Senior Secured Bonds (defined below) and its acquisition of the
First Mortgage Bonds (defined below) from the Partnerships.

The Senior Secured Bonds are the following:

7.19% Senior Secured Bonds Due 2010, Series A of LS Power
Funding Corporation


8.08% Senior Secured Bonds Due 2016, Series A of LS Power Funding Corporation


The First Mortgage Bonds are the following:

7.19% First Mortgage Bonds of LSP-Cottage Grove, L.P. Due 2010


8.08% First Mortgage Bonds of LSP-Cottage Grove, L.P. Due 2016


7.19% First Mortgage Bonds of LSP-Whitewater Limited Partnership Due 2010


8.08% First Mortgage Bonds of LSP-Whitewater Limited Partnership Due 2016


Cottage Grove and Whitewater each own 50% of the outstanding stock of
Funding.

Results of Operations

Cottage Grove

Operating revenues increased approximately 12.5% to $12.6 million for the
second quarter of 2001 as compared to $11.2 million for the second quarter of
2000. This increase was primarily the result of an increase in service revenue
which was partially offset by a decrease in commodity sales. The increase in
service revenue resulted from an increase in the variable energy rate charged
to the purchasing utility and steam purchaser as a result of an increase in
natural gas prices. The increase in service revenue was partially offset by a
decrease in megawatt hours provided to the purchasing utility. The decrease in
commodity sales was attributable to a lower volume of sales of remarketed fuel
to third party purchasers which was partially offset by increased natural gas
prices.

Operating revenues increased approximately 12.2% to $27.5 million for the
six months ended June 30, 2001 as compared to $24.5 million for the
corresponding period of 2000 for the same reasons listed above for the quarter.

Operating expenses increased approximately 17.6% to $8.0 million for the
second quarter of 2001 as compared to $6.8 million for the second quarter of
2000. This increase was the result of an increase in cost of services which
was partially offset by a decrease in commodity sales expense. The increase in
cost of services resulted from an increase in fuel expense, a component of cost
of services, as a result of increased natural gas prices. The increase in fuel
expense was partially offset by a decrease in megawatt hours sold to the
purchasing utility. Commodity cost of sales decreased due to a decrease in
remarketed fuel sales to third party purchasers.

Operating expenses increased approximately 22.2% to $18.7 million for the
six-month period ended June 30, 2001 as compared to $15.3 million for the
corresponding period of 2000. This increase was the result of an increase in
cost of services. The increase in cost of services is attributable to an
increase in fuel expense, a component of cost of services, as a result of
increased natural gas prices. The increase in fuel expense was partially
offset by a decrease in megawatt hours sold to the purchasing utility.

Interest expense consists primarily of interest expense on the First
Mortgage Bonds and amortization of the costs incurred to issue the bonds.

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Whitewater

Operating revenues decreased approximately 15.1% to $12.9 million for the
second quarter of 2001 as compared to $15.2 million for the second quarter of
2000. This decrease was primarily a factor of decreased availability of the
facility as a result of a scheduled maintenance outage in the second quarter of
2001 that did not occur during the corresponding period in 2000.

Megawatt hours produced by the facility for the six months ended June 30,
2001 were lower than for the same period in 2000. However, the variable energy
rate charged to the purchasing utility was higher during the six months ended
June 30, 2001 as compared to the same period in 2000. These two factors offset
one another resulting in revenues remaining consistent for the six-month period
ended June 30, 2001 as compared to the corresponding period of 2000.

Operating expenses decreased approximately 20.5% to $7.0 million for the
second quarter of 2001 as compared to $8.8 million for the second quarter of
2000. This decrease was mainly attributable to decreases in cost of services
and greenhouse operating expenses. The decrease in cost of services was the
result of a decrease in fuel expense, a component of cost of services,
resulting from a decrease in megawatt hours sold to the purchasing utility.
This decrease was partially offset by increased maintenance costs in 2001 for
the scheduled outage which did not take place during the corresponding period
in 2000. The decrease in expenses incurred by the greenhouse related to a
decrease in production of greenhouse products.

Operating expenses increased approximately 7.8% to $19.4 million for the
six-month period ended June 30, 2001 as compared to $18.0 million for the
corresponding period of 2000. This increase is primarily the result of
increases in cost of services and commodity sales expense. The increase in
cost of services resulted from increased maintenance costs, a component of cost
of services, from the scheduled outage in the second quarter of 2001 which did
not take place during the corresponding period in 2000. The increase in
commodity sales expense increased due to an increase in remarketed fuel sales
to third party purchasers.

Interest expense consists primarily of interest expense on the First
Mortgage Bonds and amortization of the costs incurred to issue the bonds.

Liquidity and Capital Resources

Cottage Grove

The principal components of operating cash flow for the six-month period
ending June 30, 2001 were net income of $3.0 million, $0.2 million for
amortization of debt issuance and financing costs and a net $1.4 million of
cash provided by changes in other working capital assets and liabilities, which
were partially offset by amortization of unearned lease income, net of minimum
lease payments received of $0.1 million. Cash flows provided by operating
activities of $4.5 million and $0.4 million in funds released from escrow were
primarily used to make partner distributions of $3.7 million, repay $0.8
million of First Mortgage Bonds and lend $0.2 million to an affiliate.

Whitewater

The principal components of operating cash flow for the six-month period
ended June 30, 2001 were net income of $3.9 million, $0.4 million for
depreciation and amortization of debt issuance and financing costs, a net $0.5
million of cash provided by changes in other working capital assets and
liabilities, and amortization of unearned lease income, net of minimum lease
payments received of $0.5 million. Cash flows provided by operating activities
of $5.3 million and $0.4 million in funds released from escrow were primarily
used to make partner distributions of $4.0 million, repay $0.9 million of First
Mortgage Bonds and lend $0.3 million to an affiliate.

Other Financial Information

A portion of the proceeds received by the Partnerships from the sale of
the First Mortgage Bonds was used by

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the Partnerships to maintain a debt
service reserve fund as required by certain financing documents. During 2001
and 2000, the Partnerships transferred the cash held in their debt service
reserve funds to Cogentrix Energy. The funds, currently equal to $7.0 million
and $8.0 million for Cottage Grove and Whitewater, respectively, are included
on the respective balance sheets as a note receivable from affiliate. The
receivables are backed by an irrevocable letter of credit issued on behalf of a
subsidiary of Cogentrix Energy.

Each Partnership has a letter of credit facility which expires in June
2002 and provides for letters of credit in a face amount not to exceed
$5,000,000 for Whitewater and $5,500,000 for Cottage Grove, which may be drawn
on by the respective Partnership from time to time. Such letters of credit
will satisfy certain requirements of the Partnerships under various project
agreements. Cottage Grove has issued a $500,000 letter of credit under the
Cottage Grove letter of credit facility to secure certain obligations of
Cottage Grove under the Cottage Grove Power Purchase Agreement.

In order to provide for the Partnerships working capital needs, the
Partnerships have each entered into a working capital facility. Each working
capital facility will provide for working capital loans in an aggregate
principal amount not to exceed $3,000,000 for each Partnership. At June 30,
2001, no amounts were outstanding under the working capital facilities.

The Partnerships expect that payments from the utilities under the Power
Purchase Agreements will provide the substantial majority of their revenues.
Under and subject to the terms of the Power Purchase Agreements, each utility
is obligated to purchase electric capacity made available to it and energy that
it requests from the related Partnership. For additional information regarding
NSP and WEPCO, reference is made to the respective Annual Reports filed on Form
10-K, the Quarterly Reports filed on Form 10-Q, proxy, and any other filings
made by NSP and WEPCO with the Commission.

The Power Purchase Agreements are dispatchable contracts that provide the
utilities the right to suspend or reduce purchases of electricity from the
Facilities. The Power Purchase Agreements are structured such that the
Partnerships will continue to receive capacity payments during any period of
dispatch. Each Partnership is dependent on capacity payments under its Power
Purchase Agreement to meet its fixed obligations, including the payment of debt
service under each Partnerships First Mortgage Bonds (which will be Fundings
sole source of revenues for payment of debt service under the Senior Secured
Bonds). Capacity payments by each of NSP and WEPCO are based on the tested
capacity and availability of the Facilities and are unaffected by levels of
dispatch. Each Facilitys capacity is subject to semi-annual verification
through testing. Capacity payments are subject to reduction if a Facility is
operating at reduced or degraded capacity at the time of such test, although
each Facility is permitted a retest subject to certain retest limitations.
Also, capacity payments for each Facility are subject to rebate or reduction if
the respective Facility does not maintain certain minimum levels of
availability. Under the Cottage Grove Power Purchase Agreement, capacity
payments are further adjusted by, among other things, the capacity loss factor
which is determined in accordance with procedures jointly agreed to by Cottage
Grove and NSP. The Partnerships expect to achieve the minimum capacity and
availability levels; however, any material shortfall in tested capacity or
availability over a significant period could result in a shortage of funds to
the Partnerships.

Each Partnership presently believes that funds available from cash and
investments on hand, restricted funds, operations and letter of credit and
working capital facilities will be more than sufficient to meet the
Partnerships obligations as they come due, pay project debt service and make
required contributions to project reserve accounts.

As with any power generation facility, operation of the Facilities will
involve certain risks, including the performance of a Facility below expected
levels of output or efficiency, interruptions in fuel supply, pipeline
disruptions, disruptions in the supply of thermal or electrical energy, power
shut-downs due to the breakdown or failure of equipment or processes, violation
of permit requirements (whether through operation, or change in law), operator
error, labor disputes or catastrophic events such as fires, earthquakes,
explosions, floods or other similar occurrences affecting a Facility or its
power purchasers, thermal energy purchasers, fuel suppliers or fuel
transporters. The occurrence of any of these events could significantly reduce
or eliminate revenues generated by a Facility or significantly increase the
expenses of that Facility, thereby impacting the ability of a Partnership to
make payments of the amounts necessary to fund principal of and interest on its
First Mortgage Bonds, and, consequently, Fundings ability to make payments of
principal of and interest on the Senior Secured Bonds. Not all risks are
insured and the proceeds of such insurance applicable to covered risks may not
be adequate to cover a Facilitys lost

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revenues or increased expenses. In
addition, extended unavailability under the Power Purchase Agreements, which
may result from one or more of such events, may entitle the respective power
purchaser to terminate its Power Purchase Agreement.

Impact of Energy Price Changes, Interest Rates and Inflation

The Partnerships have attempted to mitigate the risk of increases in fuel
and transportation costs by providing contractually for matching increases in
the energy payments the Partnerships receive from the utilities purchasing
electricity generated by the Facilities. In addition, the Partnerships have
mitigated the risk of fluctuations in interest rates by arranging fixed-rate
financing.

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PART 2/ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits

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|3.1   |  | Certificate of Incorporation of LS Power Funding Corporation (1)                                                                                                                                                                                                                                                                                                                      
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|3.2   |  | Bylaws of LS Power Funding Corporation (1)                                                                                                                                                                                                                                                                                                                                            
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|3.3   |  | Certificate of Limited Partnership of LSP-Cottage Grove, L.P. (1)                                                                                                                                                                                                                                                                                                                     
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|3.4   |  | Amended and Restated Partnership Agreement dated as of June 30, 1995 among LSP-Cottage
Grove, Inc., Granite Power Partners, L.P. and TPC Cottage Grove, Inc. (1)                                                                                                                                                                                                                      
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|3.4.1 |  | Amendment No. 1 to the Cottage Grove Partnership Agreement (2)                                                                                                                                                                                                                                                                                                                        
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|3.4.2 |  | Consent, Waiver and Amendment No. 2 dated March 20, 1998 to the Amended and Restated
Limited Partnership Agreement of LSP-Cottage Grove, L.P. (3)                                                                                                                                                                                                                                     
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|3.4.3 |  | Third Amendment, dated December 11, 1998, to the Amended and Restated Limited Partnership
Agreement of LSP-Cottage Grove, L.P. (4)                                                                                                                                                                                                                                                    
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|3.5   |  | Certificate of Limited Partnership of LSP-Whitewater Limited Partnership (1)                                                                                                                                                                                                                                                                                                          
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|3.6   |  | Amended and Restated Partnership Agreement dated as of June 30, 1995 among LSP-Whitewater
I, Inc., Granite Power Partners, L.P. and TPC Whitewater, Inc. (1)                                                                                                                                                                                                                          
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|3.6.1 |  | Consent, Waiver and Amendment No. 1 dated March 20, 1998 to the Amended and Restated
Limited Partnership Agreement of LSP-Whitewater Limited Partnership (3)                                                                                                                                                                                                                          
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|3.6.2 |  | Second Amendment, dated December 11, 1998, to the Amended and Restated Limited Partnership
Agreement of LSP-Whitewater Limited Partnership (3)                                                                                                                                                                                                                                        
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|4.1   |  | Trust Indenture dated as of May 1, 1995 by and among LS Power Funding Corporation and IBJ
Schroder Bank & Trust Company, as Trustee, with respect to the Senior Secured Bonds (as
Supplemented by the First Supplemental Indenture dated as of May 1, 1995 by and among LS
Power Funding Corporation and IBJ Schroder Bank & Trust Company, as Trustee (1)                            
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|4.2   |  | Trust Indenture dated as of May 1, 1995 by and among LSP-Cottage Grove, L.P. and IBJ
Schroder Bank & Trust Company, as Trustee, with respect to the Cottage Grove First Mortgage
Bonds (as supplemented by the First Supplemental Indenture dated as of May 1, 1995 by and
among LSP-Cottage Grove, L.P. and IBJ Schroder Bank & Trust Company, as Trustee) (1)                       
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|4.3   |  | Trust and Indenture dated as of May 1, 1995 by and among LSP-Whitewater Limited Partnership
and IBJ Schroder Bank & Trust Company, as Trustee, with respect to the Whitewater First
Mortgage Bonds (as supplemented by the First Supplemental Indenture dated as of May 1, 1995
by and among LSP-Whitewater Limited Partnership and IBJ Schroder Bank & Trust Company, as
Trustee) (1)
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|4.4   |  | Registration Rights Agreement dated as of June 30, 1995 by and among Chase Securities,
Inc., Morgan Stanley & Co. Incorporated, LS Power Funding Corporation, LSP-Cottage Grove,
L.P., and LSP-Whitewater Limited Partnership (1)                                                                                                                                                     
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|4.5   |  | Form of Senior Secured Bond (included in Exhibit 4.1) (1)                                                                                                                                                                                                                                                                                                                             
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|4.6   |  | Form of Cottage Grove First Mortgage Bond (included in Exhibit 4.2) (1)                                                                                                                                                                                                                                                                                                               
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|4.7   |  | Form of Whitewater First Mortgage Bond (included in Exhibit 4.3) (1)                                                                                                                                                                                                                                                                                                                  

(b) Reports on Form 8-K

No reports on Form 8-K were filed during the quarter covered by this report.



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|(1) |  | Incorporated herein by reference to the Registration Statement on Form S-4 (File No.
33-95928) filed by LS Power Funding Corporation, LSP-Cottage Grove, L.P. and LSP-Whitewater
Limited Partnership on August 16, 1995, as amended, or to the Form 10-K (File No. 33-95928)
filed for the fiscal year ended December 31, 1995 by LS Power Funding Corporation,
LSP-Cottage Grove, L.P. and LSP-Whitewater Limited Partnership.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
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|(2) |  | Incorporated herein by reference to the Form 10-Q (File No. 33-95928) filed August 14, 1996.                                                                                                                                                                                                                                                                                                                                   
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|(3) |  | Incorporated herein by reference to the Form 10-K (File No. 33-95928) filed April 15, 1998.                                                                                                                                                                                                                                                                                                                                    
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|(4) |  | Incorporated herein by reference to the Form 10-K (File No. 33-95928) filed March 31, 1999.                                                                                                                                                                                                                                                                                                                                    

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

LS POWER FUNDING CORPORATION

|    |  |                                                                                                                                                          
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------
|By: |  | /s/ Thomas F. SchwartzName:    Thomas F. Schwartz
Title:   Senior Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)

Date: August 14, 2001

LSP-COTTAGE GROVE, L.P.

|         |  |                                        
|-------- |  | ---------------------------------------
|By:
Its: |  | LSP-Cottage Grove, Inc.
General Partner

|    |  |                                                                                                                                                          
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------
|By: |  | /s/ Thomas F. SchwartzName:    Thomas F. Schwartz
Title:   Senior Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)

Date: August 14, 2001

LSP-WHITEWATER LIMITED PARTNERSHIP

|         |  |                                       
|-------- |  | --------------------------------------
|By:
Its: |  | LSP-Whitewater I, Inc.
General Partner

|    |  |                                                                                                                                                          
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------
|By: |  | /s/ Thomas F. SchwartzName:    Thomas F. Schwartz
Title:   Senior Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)

Date: August 14, 2001

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LS POWER FUNDING CORPORATION
LSP-COTTAGE GROVE, L.P.
LSP-WHITEWATER LIMITED PARTNERSHIP

Financial Statement Index

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|---------------------------------- | ------------------------------------------------------------------------------------------------- |  | ---- | ---- | 
|                                   |                                                                                                   |  | Page
|                                   |                                                                                                   |  |     
|LS POWER FUNDING CORPORATION       |                                                                                                   |  |      |     
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|                                  
|                                   | Balance Sheets as of June 30, 2001 (unaudited) and December 31, 2000                              |  |      | F-2  | 
|                                  
|                                  
|                                  
|                                  
|                                   | Statements of Income for the Three Months and Six Months
Ended June 30, 2001 and 2000 (unaudited) |  |      | F-3  | 
|                                  
|                                  
|                                  
|                                  
|                                   | Statements of Cash Flows for the Six Months Ended June 30, 2001 and 2000 (unaudited)              |  |      | F-4  | 
|                                  
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|                                  
|                                  
|                                   | Notes to Condensed Financial Statements (unaudited)                                               |  |      | F-5  | 
|                                  
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|LSP-COTTAGE GROVE, L.P.            |                                                                                                   |  |      |     
|                                  
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|                                   |                                                                                                   |  |      |     
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|                                   | Balance Sheets as of June 30, 2001 (unaudited) and December 31, 2000                              |  |      | F-6  | 
|                                  
|                                  
|                                  
|                                  
|                                   | Statements of Income for the Three Months and Six Months
Ended June 30, 2001 and 2000 (unaudited) |  |      | F-7  | 
|                                  
|                                  
|                                  
|                                  
|                                   | Statements of Cash Flows for the Six Months Ended June 30, 2001 and 2000 (unaudited)              |  |      | F-8  | 
|                                  
|                                  
|                                  
|                                  
|                                   | Notes to Condensed Financial Statements (unaudited)                                               |  |      | F-9  | 
|                                  
|                                  
|                                  
|                                  
|                                   |                                                                                                   |  |      |     
|                                  
|                                  
|                                  
|                                  
|LSP-WHITEWATER LIMITED PARTNERSHIP |                                                                                                   |  |      |     
|                                  
|                                  
|                                  
|                                  
|                                   |                                                                                                   |  |      |     
|                                  
|                                  
|                                  
|                                  
|                                   | Balance Sheets as of June 30, 2001 (unaudited) and December 31, 2000                              |  |      | F-10 | 
|                                  
|                                  
|                                  
|                                  
|                                   | Statements of Income for the Three Months and Six Months
Ended June 30, 2001 and 2000 (unaudited) |  |      | F-11 | 
|                                  
|                                  
|                                  
|                                  
|                                   | Statements of Cash Flows for the Six Months Ended June 30, 2001 and 2000 (unaudited)              |  |      | F-12 | 
|                                  
|                                  
|                                  
|                                  
|                                   | Notes to Condensed Financial Statements (unaudited)                                               |  |      | F-13 | 

F-1



---



LS POWER FUNDING CORPORATION
BALANCE SHEETS
June 30, 2001 and December 31, 2000
(dollars in thousands)

|                                   |                                                                                          |                                            |                                      |       |         |             |         |              |         |  |  | 
|---------------------------------- | ---------------------------------------------------------------------------------------- | ------------------------------------------ | ------------------------------------ | ----- | ------- | ----------- | ------- | ------------ | ------- |  |  | 
|                                   |                                                                                          |                                            |                                      |       |         | June 30,    |         | December 31,
|                                   |                                                                                          |                                            |                                      |       |         | 2001        |         | 2000        
|                                   |                                                                                          |                                            |                                      |       |         |             |         |             
|                                   |                                                                                          |                                            |                                      |       |         | (Unaudited) |         |              |         | 
|                                  
|                                  
|                                  
|                                  
|                                   |                                                                                          |                                            | ASSETS                               |       |         |             |         |              |         |  | 
|                                  
|                                  
|                                  
|                                  
|                                   |                                                                                          |                                            |                                      |       |         |             |         |             
|                                  
|                                  
|                                  
|                                  
|CURRENT
ASSETS:                    |                                                                                          |                                            |                                      |       |         |             |         |             
|                                  
|                                  
|                                  
|                                  
|                                   | Cash                                                                                     |                                            | $                                    | 1     |         |             | $       | 1            |        
|                                  
|                                  
|                                  
|                                  
|                                   | Current portion of investment in First Mortgage Bonds                                    |                                            |                                      | 3,884 |         |             |         | 3,314        |        
|                                   |                                                                                          |                                            |                                      |       |         |             |         |             
|                                   |                                                                                          |                                            | 3,885                                |       |         |             | 3,315   |             
|                                  
|                                  
|                                  
|                                  
|                                   |                                                                                          |                                            |                                      |       |         |             |         |             
|                                  
|                                  
|                                  
|                                  
|INVESTMENT IN FIRST MORTGAGE BONDS |                                                                                          |                                            | 324,137                              |       |         |             | 326,364 |             
|                                   |                                                                                          |                                            |                                      |       |         |             |         |             
|                                   |                                                                                          |                                            |                                      |       |         |             |         |             
|                                  
|                                  
|                                  
|                                  
|                                   |                                                                                          | Total assets                               |                                      | $     | 328,022 |             |         | $            | 329,679 | 
|                                   |                                                                                          |                                            |                                      |       |         |             |         |             
|                                   |                                                                                          |                                            |                                      |       |         |             |         |             
|                                  
|                                  
|                                  
|                                  
|                                   |                                                                                          |                                            | LIABILITIES AND STOCKHOLDERS EQUITY |       |         |             |         |              |         |  | 
|                                  
|                                  
|                                  
|                                  
|                                   |                                                                                          |                                            |                                      |       |         |             |         |             
|                                  
|                                  
|                                  
|                                  
|CURRENT LIABILITIES:               |                                                                                          |                                            |                                      |       |         |             |         |             
|                                  
|                                  
|                                  
|                                  
|                                   | Current portion of Senior Secured Bonds payable                                          |                                            | $                                    | 3,884 |         |             | $       | 3,314        |        
|                                  
|                                  
|                                  
|                                  
|                                   |                                                                                          |                                            |                                      |       |         |             |         |             
|                                  
|                                  
|                                  
|                                  
|SENIOR SECURED BONDS PAYABLE       |                                                                                          |                                            | 324,137                              |       |         |             | 326,364 |             
|                                   |                                                                                          |                                            |                                      |       |         |             |         |             
|                                   |                                                                                          |                                            |                                      |       |         |             |         |             
|                                  
|                                  
|                                  
|                                  
|                                   |                                                                                          | Total liabilities                          |                                      |       | 328,021 |             |         |              | 329,678 | 
|                                   |                                                                                          |                                            |                                      |       |         |             |         |             
|                                   |                                                                                          |                                            |                                      |       |         |             |         |             
|                                  
|                                  
|                                  
|                                  
|COMMITMENTS AND CONTINGENCIES      |                                                                                          |                                            |                                      |       |         |             |         |             
|                                  
|                                  
|                                  
|                                  
|STOCKHOLDERS EQUITY:              |                                                                                          |                                            |                                      |       |         |             |         |             
|                                  
|                                  
|                                  
|                                  
|                                   | Common stock, $.01 par value, 1,000 shares authorized;
100 shares issued and outstanding |                                            |                                      |      |         |             |         |             |        
|                                  
|                                  
|                                  
|                                  
|                                   | Additional paid-in capital                                                               |                                            |                                      | 1     |         |             |         | 1            |        
|                                   |                                                                                          |                                            |                                      |       |         |             |         |             
|                                   |                                                                                          |                                            |                                      |       |         |             |         |             
|                                  
|                                  
|                                  
|                                  
|                                   |                                                                                          | Total stockholders equity                 |                                      |       | 1       |             |         |              | 1       | 
|                                   |                                                                                          |                                            |                                      |       |         |             |         |             
|                                   |                                                                                          |                                            |                                      |       |         |             |         |             
|                                  
|                                  
|                                  
|                                  
|                                   |                                                                                          | Total liabilities and stockholders equity |                                      | $     | 328,022 |             |         | $            | 329,679 | 
|                                   |                                                                                          |                                            |                                      |       |         |             |         |             

F-2



---



LS POWER FUNDING CORPORATION
STATEMENTS OF INCOME (UNAUDITED)
For the Three Months and Six Months Ended June 30, 2001 and 2000
(dollars in thousands)

|                                           |  |                             |       |                           |  |      |       |      |  |   |        |  |  |   |        | 
|------------------------------------------ |  | --------------------------- | ----- | ------------------------- |  | ---- | ----- | ---- |  | - | ------ |  |  | - | ------ | 
|                                           |  | Three Months Ended June 30, |       | Six Months Ended June 30, |  |      |       |     
|                                           |  |                             |       |                           |  |      |       |     
|                                           |  | 2001                        |       | 2000                      |  | 2001 |       | 2000 |  |   |        | 
|                                           |  |                             |       |                           |  |      |       |      |  |  
|INTEREST INCOME                            |  | $                           | 6,430 |                           |  | $    | 6,472 |      |  | $ | 12,860 |  |  | $ | 12,944 | 
|                                          
|                                          
|                                          
|                                          
|                                           |  |                             |       |                           |  |      |       |      |  |   |        |  |  |   |        | 
|                                          
|                                          
|                                          
|                                          
|INTEREST EXPENSE                           |  |                             | 6,430 |                           |  |      | 6,472 |      |  |   | 12,860 |  |  |   | 12,944 | 
|                                           |  |                             |       |                           |  |      |       |      |  |   |        |  |  |   |        | 
|                                           |  |                             |       |                           |  |      |       |      |  |   |        |  |  |   |        | 
|                                          
|                                          
|                                          
|                                          
|NET INCOME                                 |  | $                           |      |                           |  | $    |      |      |  | $ |       |  |  | $ |       | 
|                                           |  |                             |       |                           |  |      |       |      |  |   |        |  |  |   |        | 
|                                           |  |                             |       |                           |  |      |       |      |  |   |        |  |  |   |        | 
|                                          
|                                          
|                                          
|                                          
|EARNINGS PER COMMON SHARE                  |  | $                           |      |                           |  | $    |      |      |  | $ |       |  |  | $ |       | 
|                                           |  |                             |       |                           |  |      |       |      |  |   |        |  |  |   |        | 
|                                           |  |                             |       |                           |  |      |       |      |  |   |        |  |  |   |        | 
|                                          
|                                          
|                                          
|                                          
|WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING |  | $                           |      |                           |  | $    |      |      |  | $ |       |  |  | $ |       | 
|                                           |  |                             |       |                           |  |      |       |      |  |   |        |  |  |   |        | 

F-3



---



LS POWER FUNDING CORPORATION
STATEMENTS OF CASH FLOWS (UNAUDITED)
For the Six Months Ended June 30, 2001 and 2000
(dollars in thousands)

|                                       |                                                 |                                                            |   |                           |        |      |   |   |        |  
|-------------------------------------- | ----------------------------------------------- | ---------------------------------------------------------- | - | ------------------------- | ------ | ---- | - | - | ------ | -
|                                       |                                                 |                                                            |   | Six Months Ended June 30,
|                                       |                                                 |                                                            |   |                          
|                                       |                                                 |                                                            |   | 2001                      |        | 2000
|                                       |                                                 |                                                            |   |                           |        |     
|CASH PROVIDED BY OPERATING ACTIVITIES: |                                                 |                                                            |   |                           |        |      |   |  
|                                      
|                                      
|                                      
|                                      
|                                       |                                                 | Receipt of principal on investment in
First Mortgage Bonds |   | $                         | 1,657  |      |   | $ | 1,161  |  
|                                      
|                                      
|                                      
|                                      
|                                       |                                                 | Repayment of Senior Secured Bonds                          |   |                           | (1,657 | )    |   |   | (1,161 | )
|                                       |                                                 |                                                            |   |                           |        |      |   |  
|                                       | Net cash flows provided by operating activities |                                                            |   |                          |        |      |   |  |       
|                                       |                                                 |                                                            |   |                           |        |      |   |  
|                                       |                                                 |                                                            |   |                           |        |      |   |  
|                                      
|                                      
|                                      
|                                      
|CASH FLOWS FROM INVESTING ACTIVITIES:  |                                                 |                                                            |   |                           |        |      |   |  
|                                      
|                                      
|                                      
|                                      
|                                       |                                                 |                                                            |   |                           |        |      |   |  
|                                      
|                                      
|                                      
|                                      
|                                       | Net cash flows provided by investing activities |                                                            |   |                          |        |      |   |  |       
|                                       |                                                 |                                                            |   |                           |        |      |   |  
|                                       |                                                 |                                                            |   |                           |        |      |   |  
|                                      
|                                      
|                                      
|                                      
|CASH PROVIDED BY FINANCING ACTIVITIES: |                                                 |                                                            |   |                           |        |      |   |  
|                                      
|                                      
|                                      
|                                      
|                                       |                                                 |                                                            |   |                           |        |      |   |  
|                                      
|                                      
|                                      
|                                      
|                                       | Net cash flows provided by financing activities |                                                            |   |                          |        |      |   |  |       
|                                       |                                                 |                                                            |   |                           |        |      |   |  
|                                       |                                                 |                                                            |   |                           |        |      |   |  
|                                      
|                                      
|                                      
|                                      
|NET INCREASE (DECREASE) IN CASH        |                                                 |                                                            |  |                           |        |      |  |  
|                                      
|                                      
|                                      
|                                      
|                                       |                                                 |                                                            |   |                           |        |      |   |  
|                                      
|                                      
|                                      
|                                      
|CASH, beginning of period              |                                                 |                                                            | 1 |                           |        |      | 1 |  
|                                       |                                                 |                                                            |   |                           |        |      |   |  
|                                       |                                                 |                                                            |   |                           |        |      |   |  
|                                      
|                                      
|                                      
|                                      
|CASH, end of period                    |                                                 | $                                                          | 1 |                           |        | $    | 1 |  
|                                       |                                                 |                                                            |   |                           |        |      |   |  

F-4



---



LS POWER FUNDING CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
UNAUDITED

1.   FINANCIAL STATEMENTS

The balance sheet as of June 30, 2001, the statements of income for the
three-month and six-month periods ended June 30, 2001 and 2000 and cash flows
for the six-month periods ended June 30, 2001 and 2000 have been prepared by LS
Power Funding Corporation (Funding), without audit. In the opinion of
management, these unaudited condensed financial statements include all
adjustments (consisting of normal recurring adjustments) necessary to present
fairly Fundings financial position as of June 30, 2001, and the results of its
operations for the three-month and six-month periods ended June 30, 2001 and
2000 and its cash flows for the six-month periods ended June 30, 2001 and 2000.

The unaudited condensed financial statements have been prepared pursuant
to the rules and regulations of the United States Securities and Exchange
Commission. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with accounting principles
generally accepted in the United States have been condensed or omitted. While
management believes that the disclosures made are adequate to make the
information presented not misleading, these unaudited condensed financial
statements should be read in conjunction with Fundings audited financial
statements included in Fundings Annual Report on Form 10-K for the fiscal year
ended December 31, 2000.

2.   ORGANIZATION

Funding was established on June 23, 1995 as a special purpose Delaware
corporation to issue debt securities in connection with financing construction
of two gas-fired cogeneration facilities, one located in Cottage Grove,
Minnesota and the other located in Whitewater, Wisconsin. LSP-Cottage Grove,
L.P. (Cottage Grove) and LSP-Whitewater Limited Partnership (Whitewater)
are single purpose Delaware limited partnerships established to develop,
finance, construct and own the facilities at Cottage Grove and Whitewater,
respectively. Cottage Grove and Whitewater each owns 50% of the outstanding
stock of Funding. Fundings sole business activities are limited to
maintaining its organization, the offering of the Senior Secured Bonds and its
acquisition of the First Mortgage Bonds issued by Cottage Grove and Whitewater.

3.   RECLASSIFICATIONS

Certain reclassifications have been made to the prior period financial
statements to conform with the classification used in the financial statements
for the six months ended June 30, 2001.

F-5



---



LSP-COTTAGE GROVE, L.P.
BALANCE SHEETS
June 30, 2001 and December 31, 2000
(dollars in thousands)

|                                                                                                      |                                                 |                                         |                                   |        |         |             |         |              |         |  |  | 
|----------------------------------------------------------------------------------------------------- | ----------------------------------------------- | --------------------------------------- | --------------------------------- | ------ | ------- | ----------- | ------- | ------------ | ------- |  |  | 
|                                                                                                      |                                                 |                                         |                                   |        |         | June 30,    |         | December 31,
|                                                                                                      |                                                 |                                         |                                   |        |         | 2001        |         | 2000        
|                                                                                                      |                                                 |                                         |                                   |        |         |             |         |             
|                                                                                                      |                                                 |                                         |                                   |        |         | (Unaudited) |         |              |         | 
|                                                                                                      |                                                 |                                         |                                   | ASSETS |         |             |         |              |         |  |  | 
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                      |                                                 |                                         |                                   |        |         |             |         |             
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|CURRENT ASSETS:                                                                                       |                                                 |                                         |                                   |        |         |             |         |             
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                      | Cash and cash equivalents                       |                                         | $                                 | 1,380  |         |             | $       | 1,212        |        
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                      | Restricted cash                                 |                                         |                                   |       |         |             |         | 363          |        
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                      | Accounts receivable  trade                     |                                         |                                   | 3,885  |         |             |         | 9,200        |        
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                      | Fuel inventories                                |                                         |                                   | 445    |         |             |         | 438          |        
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                      | Fuel held for resale                            |                                         |                                   |       |         |             |         | 610          |        
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                      | Spare parts inventories                         |                                         |                                   | 522    |         |             |         | 536          |        
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                      | Other current assets                            |                                         |                                   | 476    |         |             |         | 224          |        
|                                                                                                      |                                                 |                                         |                                   |        |         |             |         |             
|                                                                                                      |                                                 | Total current assets                    |                                   |        | 6,708   |             |         |              | 12,583  | 
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                      |                                                 |                                         |                                   |        |         |             |         |             
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|NET INVESTMENT IN LEASE                                                                               |                                                 |                                         | 236,973                           |        |         |             | 236,834 |             
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                      |                                                 |                                         |                                   |        |         |             |         |             
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|DEBT ISSUANCE AND FINANCING COSTS, net of accumulated
amortization of $1,680 and $1,509, respectively |                                                 |                                         | 5,442                             |        |         |             | 5,613   |             
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                      |                                                 |                                         |                                   |        |         |             |         |             
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|NOTE RECEIVABLE FROM AFFILIATE                                                                        |                                                 |                                         | 6,988                             |        |         |             | 6,777   |             
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                      |                                                 |                                         |                                   |        |         |             |         |             
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|INVESTMENT IN UNCONSOLIDATED AFFILIATE                                                                |                                                 |                                         | 1                                 |        |         |             | 1       |             
|                                                                                                      |                                                 |                                         |                                   |        |         |             |         |             
|                                                                                                      |                                                 |                                         |                                   |        |         |             |         |             
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                      |                                                 | Total assets                            |                                   | $      | 256,112 |             |         | $            | 261,808 | 
|                                                                                                      |                                                 |                                         |                                   |        |         |             |         |             
|                                                                                                      |                                                 |                                         |                                   |        |         |             |         |             
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                      |                                                 |                                         | LIABILITIES AND PARTNERS CAPITAL |        |         |             |         |              |         |  | 
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                      |                                                 |                                         |                                   |        |         |             |         |             
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|CURRENT LIABILITIES:                                                                                  |                                                 |                                         |                                   |        |         |             |         |             
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                      | Current portion of First Mortgage Bonds payable |                                         | $                                 | 1,813  |         |             | $       | 1,547        |        
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                      | Accounts payable                                |                                         |                                   | 2,533  |         |             |         | 5,440        |        
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                      | Other accrued expenses                          |                                         |                                   | 389    |         |             |         | 1,725        |        
|                                                                                                      |                                                 |                                         |                                   |        |         |             |         |             
|                                                                                                      |                                                 | Total current liabilities               |                                   |        | 4,735   |             |         |              | 8,712   | 
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                      |                                                 |                                         |                                   |        |         |             |         |             
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|FIRST MORTGAGE BONDS PAYABLE                                                                          |                                                 |                                         | 151,329                           |        |         |             | 152,369 |             
|                                                                                                      |                                                 |                                         |                                   |        |         |             |         |             
|                                                                                                      |                                                 |                                         |                                   |        |         |             |         |             
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                      |                                                 | Total liabilities                       |                                   |        | 156,064 |             |         |              | 161,081 | 
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                      |                                                 |                                         |                                   |        |         |             |         |             
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|COMMITMENTS AND CONTINGENCIES                                                                         |                                                 |                                         |                                   |        |         |             |         |             
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                      |                                                 |                                         |                                   |        |         |             |         |             
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|PARTNERS CAPITAL                                                                                     |                                                 |                                         | 100,048                           |        |         |             | 100,727 |             
|                                                                                                      |                                                 |                                         |                                   |        |         |             |         |             
|                                                                                                      |                                                 |                                         |                                   |        |         |             |         |             
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                      |                                                 | Total liabilities and partners capital |                                   | $      | 256,112 |             |         | $            | 261,808 | 
|                                                                                                      |                                                 |                                         |                                   |        |         |             |         |             

F-6



---



LSP-COTTAGE GROVE, L.P.
STATEMENTS OF INCOME (UNAUDITED)
For the Three Months and Six Months Ended June 30, 2001 and 2000
(dollars in thousands)

|                                |                         |   |                             |        |                           |   |        |        |      |   |        |        |   |   |        |        |  
|------------------------------- | ----------------------- | - | --------------------------- | ------ | ------------------------- | - | ------ | ------ | ---- | - | ------ | ------ | - | - | ------ | ------ | -
|                                |                         |   | Three Months Ended June 30, |        | Six Months Ended June 30, |   |        |        |     
|                                |                         |   |                             |        |                           |   |        |        |     
|                                |                         |   | 2001                        |        | 2000                      |   | 2001   |        | 2000 |   |        |        |  
|                                |                         |   |                             |        |                           |   |        |        |      |   |       
|OPERATING REVENUES:             |                         |   |                             |        |                           |   |        |        |      |   |        |        |   |   |        |       
|                               
|                               
|                               
|                               
|                                | Lease revenue           |   | $                           | 5,335  |                           |   | $      | 5,331  |      |   | $      | 10,669 |   |   | $      | 10,660 |  
|                               
|                               
|                               
|                               
|                                | Service revenue         |   |                             | 7,156  |                           |   |        | 5,205  |      |   |        | 14,953 |   |   |        | 11,547 |  
|                               
|                               
|                               
|                               
|                                | Commodity sales         |   |                             | 111    |                           |   |        | 664    |      |   |        | 1,689  |   |   |        | 2,080  |  
|                               
|                               
|                               
|                               
|                                | Other                   |   |                             |       |                           |   |        |       |      |   |        | 235    |   |   |        | 233    |  
|                                |                         |   |                             |        |                           |   |        |        |      |   |        |        |   |   |        |       
|                                |                         |   | 12,602                      |        |                           |   | 11,200 |        |      |   | 27,546 |        |   |   | 24,520 |       
|                                |                         |   |                             |        |                           |   |        |        |      |   |        |        |   |   |        |       
|                                |                         |   |                             |        |                           |   |        |        |      |   |        |        |   |   |        |       
|                               
|                               
|                               
|                               
|OPERATING EXPENSES:             |                         |   |                             |        |                           |   |        |        |      |   |        |        |   |   |        |       
|                               
|                               
|                               
|                               
|                                | Cost of services        |   |                             | 7,909  |                           |   |        | 6,103  |      |   |        | 16,741 |   |   |        | 13,362 |  
|                               
|                               
|                               
|                               
|                                | Commodity cost of sales |   |                             | 112    |                           |   |        | 662    |      |   |        | 1,998  |   |   |        | 1,934  |  
|                                |                         |   |                             |        |                           |   |        |        |      |   |        |        |   |   |        |       
|                                |                         |   | 8,021                       |        |                           |   | 6,765  |        |      |   | 18,739 |        |   |   | 15,296 |       
|                                |                         |   |                             |        |                           |   |        |        |      |   |        |        |   |   |        |       
|                                |                         |   |                             |        |                           |   |        |        |      |   |        |        |   |   |        |       
|                               
|                               
|                               
|                               
|OPERATING INCOME                |                         |   | 4,581                       |        |                           |   | 4,435  |        |      |   | 8,807  |        |   |   | 9,224  |       
|                               
|                               
|                               
|                               
|                                |                         |   |                             |        |                           |   |        |        |      |   |        |        |   |   |        |       
|                               
|                               
|                               
|                               
|NON-OPERATING INCOME
(EXPENSE): |                         |   |                             |        |                           |   |        |        |      |   |        |        |   |   |        |       
|                               
|                               
|                               
|                               
|                                | Interest expense        |   |                             | (3,091 | )                         |   |        | (3,144 | )    |   |        | (6,190 | ) |   |        | (6,234 | )
|                               
|                               
|                               
|                               
|                                | Interest income         |   |                             | 186    |                           |   |        | 251    |      |   |        | 372    |   |   |        | 414    |  
|                                |                         |   |                             |        |                           |   |        |        |      |   |        |        |   |   |        |       
|                                |                         |   |                             |        |                           |   |        |        |      |   |        |        |   |   |        |       
|                               
|                               
|                               
|                               
|NET INCOME                      |                         | $ | 1,676                       |        |                           | $ | 1,542  |        |      | $ | 2,989  |        |   | $ | 3,404  |       
|                                |                         |   |                             |        |                           |   |        |        |      |   |        |        |   |   |        |       

F-7



---



LSP-COTTAGE GROVE, L.P.
STATEMENTS OF CASH FLOWS (UNAUDITED)
For the Six Months Ended June 30, 2001 and 2000
(dollars in thousands)

|                                                     |                                                                                   |                                                   |                                        |        |                           |     |      |        |         |     |  
|---------------------------------------------------- | --------------------------------------------------------------------------------- | ------------------------------------------------- | -------------------------------------- | ------ | ------------------------- | --- | ---- | ------ | ------- | --- | -
|                                                     |                                                                                   |                                                   |                                        |        | Six Months Ended June 30,
|                                                     |                                                                                   |                                                   |                                        |        |                          
|                                                     |                                                                                   |                                                   |                                        |        | 2001                      |     | 2000
|                                                     |                                                                                   |                                                   |                                        |        |                           |     |     
|CASH FLOWS FROM OPERATING ACTIVITIES:                |                                                                                   |                                                   |                                        |        |                           |     |      |       
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Net income                                                                        |                                                   | $                                      | 2,989  |                           |     | $    | 3,404  |        
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Adjustments to reconcile net income to net
cash provided by operating activities: |                                                   |                                        |        |                           |     |      |        |        
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                                                                   | Amortization of debt issuance and financing costs |                                        |        | 171                       |     |      |        | 160     |    
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                                                                   | Amortization of unearned lease income             |                                        |        | (10,669                   | )   |      |        | (10,660 | )  
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                                                                   | Minimum lease payments received                   |                                        |        | 10,530                    |     |      |        | 10,572  |    
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                                                                   | Decrease in accounts receivable  trade           |                                        |        | 5,315                     |     |      |        | 1,015   |    
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                                                                   | Increase in accounts receivable  other           |                                        |        |                          |     |      |        | (95     | )  
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                                                                   | Decrease in fuel inventories                      |                                        |        | 603                       |     |      |        | 1,498   |    
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                                                                   | Decrease (increase) in spare parts inventories    |                                        |        | 14                        |     |      |        | (16     | )  
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                                                                   | Increase in other current assets                  |                                        |        | (252                      | )   |      |        | (7      | )  
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                                                                   | Increase (decrease) in accounts payable           |                                        |        | (2,907                    | )   |      |        | 706     |    
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                                                                   | Decrease in accrued expenses                      |                                        |        | (1,336                    | )   |      |        | (357    | )  
|                                                     |                                                                                   |                                                   |                                        |        |                           |     |      |       
|                                                     | Net cash flows provided by operating activities                                   |                                                   |                                        | 4,458  |                           |     |      | 6,220  |        
|                                                     |                                                                                   |                                                   |                                        |        |                           |     |      |       
|                                                     |                                                                                   |                                                   |                                        |        |                           |     |      |       
|                                                    
|                                                    
|                                                    
|                                                    
|CASH FLOWS FROM INVESTING ACTIVITIES:                |                                                                                   |                                                   |                                        |        |                           |     |      |       
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                                                                   |                                                   | (Increase) decrease in restricted cash |        |                           | 363 |      |        |         | (58 | )
|                                                     |                                                                                   |                                                   |                                        |        |                           |     |      |       
|                                                     | Net cash flows provided by (used in) investing activities                         |                                                   |                                        | 363    |                           |     |      | (58    | )      
|                                                     |                                                                                   |                                                   |                                        |        |                           |     |      |       
|                                                     |                                                                                   |                                                   |                                        |        |                           |     |      |       
|                                                    
|                                                    
|                                                    
|                                                    
|CASH FLOWS FROM FINANCING ACTIVITIES:                |                                                                                   |                                                   |                                        |        |                           |     |      |       
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                                                                   | Payment on First Mortgage Bonds                   |                                        |        | (774                      | )   |      |        | (542    | )  
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                                                                   | Partner distributions                             |                                        |        | (3,668                    | )   |      |        | (5,758  | )  
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                                                                   | Increase in note receivable from affiliate        |                                        |        | (211                      | )   |      |        | (192    | )  
|                                                     |                                                                                   |                                                   |                                        |        |                           |     |      |       
|                                                     | Net cash flows used in financing activities                                       |                                                   |                                        | (4,653 | )                         |     |      | (6,492 | )      
|                                                     |                                                                                   |                                                   |                                        |        |                           |     |      |       
|                                                     |                                                                                   |                                                   |                                        |        |                           |     |      |       
|                                                    
|                                                    
|                                                    
|                                                    
|NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS |                                                                                   |                                                   | 168                                    |        |                           |     | (330 | )     
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                                                                   |                                                   |                                        |        |                           |     |      |       
|                                                    
|                                                    
|                                                    
|                                                    
|CASH AND CASH EQUIVALENTS, beginning of period       |                                                                                   |                                                   | 1,212                                  |        |                           |     | 957  |       
|                                                     |                                                                                   |                                                   |                                        |        |                           |     |      |       
|                                                     |                                                                                   |                                                   |                                        |        |                           |     |      |       
|                                                    
|                                                    
|                                                    
|                                                    
|CASH AND CASH EQUIVALENTS, end of period             |                                                                                   | $                                                 | 1,380                                  |        |                           | $   | 627  |       
|                                                     |                                                                                   |                                                   |                                        |        |                           |     |      |       

F-8



---



LSP-COTTAGE GROVE, L.P.
NOTES TO CONDENSED FINANCIAL STATEMENTS
UNAUDITED

1.   FINANCIAL STATEMENTS

The balance sheet as of June 30, 2001 and the statements of income for the
three-month and six-month periods ended June 30, 2001 and 2000 and the
statements of cash flows for the six-month periods ended June 30, 2001 and 2000
have been prepared by LSP-Cottage Grove, L.P. (the Partnership), without
audit. In the opinion of management, these unaudited condensed financial
statements include all adjustments (consisting of normal recurring adjustments)
necessary to present fairly the Partnerships financial position as of June 30,
2001, and the results of its operations for the three-month and six-month
periods ended June 30, 2001 and 2000 and its cash flows for the six-month
periods ended June 30, 2001 and 2000.

The unaudited condensed financial statements have been prepared pursuant
to the rules and regulations of the United States Securities and Exchange
Commission. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with accounting principles
generally accepted in the United States have been condensed or omitted. While
management believes that the disclosures made are adequate to make the
information presented not misleading, these unaudited condensed financial
statements should be read in conjunction with the Partnerships audited
financial statements included in the Partnerships Annual Report on Form 10-K
for the fiscal year ended December 31, 2000.

2.   ORGANIZATION

The Partnership is a Delaware limited partnership that was formed on
December 14, 1993 to develop, finance, construct and own a gas-fired
cogeneration facility with a design capacity of approximately 245 megawatts
located in Cottage Grove, Minnesota (the Facility). Construction and
start-up of the Facility was substantially completed and commercial operation
commenced October 1, 1997 (the Commercial Operations Date). The 1% general
partner of the Partnership is LSP-Cottage Grove, Inc., (Cottage Grove), a
wholly-owned subsidiary of Cogentrix Cottage Grove, LLC, (Cogentrix Cottage
Grove). Cogentrix Cottage Grove and TPC Cottage Grove, Inc., are the sole
limited partners of the Partnership, owning approximately 72% and 27% limited
partnership interests, respectively. The ultimate parent of Cogentrix Cottage
Grove is Cogentrix Energy, Inc. (Cogentrix Energy), a North Carolina
corporation.

The Partnership holds a 50% equity ownership interest in LS Power Funding
Corporation (Funding), which was established on June 23, 1995 as a special
purpose funding corporation to issue debt securities (the Senior Secured
Bonds) in connection with financing construction of the Facility and a similar
gas-fired cogeneration facility located in Whitewater, Wisconsin. On June 30,
1995, a portion of the proceeds from the offering and sale of the Senior
Secured Bonds issued by Funding was used to purchase $155 million of First
Mortgage Bonds issued simultaneously by the Partnership.

All of the electric capacity and energy generated by the Facility is sold
to Northern States Power Company, (the Utility) under a 30-year power
purchase agreement (the Power Purchase Agreement). The thermal energy
generated by the Facility is sold in the form of steam to Minnesota Mining and
Manufacturing Company (the Steam Purchaser) under a 30-year thermal energy
sales agreement.

3.   SALES-TYPE CAPITAL LEASE

The components of the net investment in lease at June 30, 2001, are as
follows (dollars in thousands):

|                          |  |   |          |   | 
|------------------------- |  | - | -------- | - | 
|Gross Investment in Lease |  | $ | 495,961  |  
|                         
|                         
|                         
|                         
|Unearned Income on Lease  |  |   | (258,988 | )
|                          |  |   |          |  
|Net
Investment in Lease   |  | $ | 236,973  |  
|                          |  |   |          |  

Gross investment in lease represents total capacity payments receivable
over the term of the Power Purchase Agreement, net of executory costs, which
are considered minimum lease payments in accordance with Statement of Financial
Accounting Standards No. 13, Accounting for Leases.

F-9



---



LSP-WHITEWATER LIMITED PARTNERSHIP
BALANCE SHEETS
June 30, 2001 and December 31, 2000
(dollars in thousands)

|                                                                                                      |                                                 |                                         |              |                                   |         |             |         |              |         |         |  | 
|----------------------------------------------------------------------------------------------------- | ----------------------------------------------- | --------------------------------------- | ------------ | --------------------------------- | ------- | ----------- | ------- | ------------ | ------- | ------- |  | 
|                                                                                                      |                                                 |                                         |              |                                   |         | June 30,    |         | December 31,
|                                                                                                      |                                                 |                                         |              |                                   |         | 2001        |         | 2000        
|                                                                                                      |                                                 |                                         |              |                                   |         |             |         |             
|                                                                                                      |                                                 |                                         |              |                                   |         | (Unaudited) |         |              |         |        
|                                                                                                      |                                                 |                                         |              | ASSETS                            |         |             |         |              |         |         |  | 
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                      |                                                 |                                         |              |                                   |         |             |         |             
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|CURRENT ASSETS:                                                                                       |                                                 |                                         |              |                                   |         |             |         |             
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                      | Cash and cash equivalents                       |                                         | $            | 2,313                             |         |             | $       | 1,794        |        
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                      | Restricted cash                                 |                                         |              |                                  |         |             |         | 372          |        
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                      | Accounts receivable  trade                     |                                         |              | 4,290                             |         |             |         | 7,483        |        
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                      | Accounts receivable  other                     |                                         |              | 421                               |         |             |         | 1,066        |        
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                      | Fuel inventories                                |                                         |              | 756                               |         |             |         | 949          |        
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                      | Fuel held for resale                            |                                         |              |                                  |         |             |         | 607          |        
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                      | Spare parts inventories                         |                                         |              | 782                               |         |             |         | 740          |        
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                      | Other current assets                            |                                         |              | 1,408                             |         |             |         | 187          |        
|                                                                                                      |                                                 |                                         |              |                                   |         |             |         |             
|                                                                                                      |                                                 | Total current assets                    |              |                                   | 9,970   |             |         |              | 13,198  |        
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                      |                                                 |                                         |              |                                   |         |             |         |             
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|NET INVESTMENT IN LEASE                                                                               |                                                 |                                         | 262,466      |                                   |         |             | 262,940 |             
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                      |                                                 |                                         |              |                                   |         |             |         |             
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|GREENHOUSE FACILITY, net of accumulated
depreciation of $1,587 and $1,369, respectively               |                                                 |                                         | 7,209        |                                   |         |             | 7,427   |             
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                      |                                                 |                                         |              |                                   |         |             |         |             
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|DEBT ISSUANCE AND FINANCING COSTS, net of
accumulated amortization of $1,708 and $1,535, respectively |                                                 |                                         | 5,515        |                                   |         |             | 5,688   |             
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                      |                                                 |                                         |              |                                   |         |             |         |             
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|NOTE RECEIVABLE FROM AFFILIATE                                                                        |                                                 |                                         | 7,980        |                                   |         |             | 7,739   |             
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                      |                                                 |                                         |              |                                   |         |             |         |             
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|INVESTMENT IN UNCONSOLIDATED AFFILIATE                                                                |                                                 |                                         | 1            |                                   |         |             | 1       |             
|                                                                                                      |                                                 |                                         |              |                                   |         |             |         |             
|                                                                                                      |                                                 |                                         | Total assets |                                   | $       | 293,141     |         |              | $       | 296,993 | 
|                                                                                                      |                                                 |                                         |              |                                   |         |             |         |             
|                                                                                                      |                                                 |                                         |              |                                   |         |             |         |             
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                      |                                                 |                                         |              | LIABILITIES AND PARTNERS CAPITAL |         |             |         |              |         |         |  | 
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                      |                                                 |                                         |              |                                   |         |             |         |             
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|CURRENT LIABILTIES:                                                                                   |                                                 |                                         |              |                                   |         |             |         |             
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                      | Current portion of First Mortgage Bonds payable |                                         | $            | 2,071                             |         |             | $       | 1,767        |        
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                      | Accounts payable                                |                                         |              | 789                               |         |             |         | 878          |        
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                      | Other accrued expenses                          |                                         |              | 3,257                             |         |             |         | 5,996        |        
|                                                                                                      |                                                 |                                         |              |                                   |         |             |         |             
|                                                                                                      |                                                 | Total current liabilities               |              |                                   | 6,117   |             |         |              | 8,641   |        
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                      |                                                 |                                         |              |                                   |         |             |         |             
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|FIRST MORTGAGE BONDS PAYABLE                                                                          |                                                 |                                         | 172,808      |                                   |         |             | 173,995 |             
|                                                                                                      |                                                 |                                         |              |                                   |         |             |         |             
|                                                                                                      |                                                 | Total liabilities                       |              |                                   | 178,925 |             |         |              | 182,636 |        
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                      |                                                 |                                         |              |                                   |         |             |         |             
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|COMMITMENTS AND CONTINGENCIES                                                                         |                                                 |                                         |              |                                   |         |             |         |             
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                      |                                                 |                                         |              |                                   |         |             |         |             
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|PARTNERS CAPITAL                                                                                     |                                                 |                                         | 114,216      |                                   |         |             | 114,357 |             
|                                                                                                      |                                                 |                                         |              |                                   |         |             |         |             
|                                                                                                      |                                                 | Total liabilities and partners capital |              | $                                 | 293,141 |             |         | $            | 296,993 |        
|                                                                                                      |                                                 |                                         |              |                                   |         |             |         |             

F-10



---



LSP-WHITEWATER LIMITED PARTNERSHIP
STATEMENTS OF INCOME (UNAUDITED)
For the Three Months and Six Months Ended June 30, 2001 and 2000
(dollars in thousands)

|                                |                         |   |                             |        |                           |   |        |        |      |   |        |        |   |   |        |        |  
|------------------------------- | ----------------------- | - | --------------------------- | ------ | ------------------------- | - | ------ | ------ | ---- | - | ------ | ------ | - | - | ------ | ------ | -
|                                |                         |   | Three Months Ended June 30, |        | Six Months Ended June 30,
|                                |                         |   |                             |        |                          
|                                |                         |   | 2001                        |        | 2000                      |   | 2001   |        | 2000
|                                |                         |   |                             |        |                           |   |        |        |     
|OPERATING REVENUES:             |                         |   |                             |        |                           |   |        |        |      |   |        |        |   |   |        |       
|                               
|                               
|                               
|                               
|                                | Lease revenue           |   | $                           | 5,839  |                           |   | $      | 5,861  |      |   | $      | 11,593 |   |   | $      | 11,725 |  
|                               
|                               
|                               
|                               
|                                | Service revenue         |   |                             | 5,030  |                           |   |        | 7,306  |      |   |        | 14,867 |   |   |        | 15,055 |  
|                               
|                               
|                               
|                               
|                                | Commodity sales         |   |                             | 326    |                           |   |        | 224    |      |   |        | 1,509  |   |   |        | 1,000  |  
|                               
|                               
|                               
|                               
|                                | Greenhouse revenue      |   |                             | 1,557  |                           |   |        | 1,581  |      |   |        | 1,573  |   |   |        | 1,581  |  
|                               
|                               
|                               
|                               
|                                | Other                   |   |                             | 99     |                           |   |        | 195    |      |   |        | 403    |   |   |        | 420    |  
|                                |                         |   |                             |        |                           |   |        |        |      |   |        |        |   |   |        |       
|                                |                         |   | 12,851                      |        |                           |   | 15,167 |        |      |   | 29,945 |        |   |   | 29,781 |       
|                                |                         |   |                             |        |                           |   |        |        |      |   |        |        |   |   |        |       
|                                |                         |   |                             |        |                           |   |        |        |      |   |        |        |   |   |        |       
|                               
|                               
|                               
|                               
|OPERATING EXPENSES:             |                         |   |                             |        |                           |   |        |        |      |   |        |        |   |   |        |       
|                               
|                               
|                               
|                               
|                                | Cost of services        |   |                             | 6,032  |                           |   |        | 7,511  |      |   |        | 16,611 |   |   |        | 15,872 |  
|                               
|                               
|                               
|                               
|                                | Commodity cost of sales |   |                             | 326    |                           |   |        | 222    |      |   |        | 1,495  |   |   |        | 915    |  
|                               
|                               
|                               
|                               
|                                | Greenhouse              |   |                             | 606    |                           |   |        | 1,060  |      |   |        | 1,311  |   |   |        | 1,254  |  
|                                |                         |   |                             |        |                           |   |        |        |      |   |        |        |   |   |        |       
|                                |                         |   | 6,964                       |        |                           |   | 8,793  |        |      |   | 19,417 |        |   |   | 18,041 |       
|                                |                         |   |                             |        |                           |   |        |        |      |   |        |        |   |   |        |       
|                                |                         |   |                             |        |                           |   |        |        |      |   |        |        |   |   |        |       
|                               
|                               
|                               
|                               
|OPERATING INCOME                |                         |   | 5,887                       |        |                           |   | 6,374  |        |      |   | 10,528 |        |   |   | 11,740 |       
|                               
|                               
|                               
|                               
|                                |                         |   |                             |        |                           |   |        |        |      |   |        |        |   |   |        |       
|                               
|                               
|                               
|                               
|NON-OPERATING INCOME
(EXPENSE): |                         |   |                             |        |                           |   |        |        |      |   |        |        |   |   |        |       
|                               
|                               
|                               
|                               
|                                | Interest expense        |   |                             | (3,514 | )                         |   |        | (3,571 | )    |   |        | (7,041 | ) |   |        | (7,102 | )
|                               
|                               
|                               
|                               
|                                | Interest income         |   |                             | 200    |                           |   |        | 285    |      |   |        | 396    |   |   |        | 546    |  
|                                |                         |   |                             |        |                           |   |        |        |      |   |        |        |   |   |        |       
|                                |                         |   |                             |        |                           |   |        |        |      |   |        |        |   |   |        |       
|                               
|                               
|                               
|                               
|NET INCOME                      |                         | $ | 2,573                       |        |                           | $ | 3,088  |        |      | $ | 3,883  |        |   | $ | 5,184  |       
|                                |                         |   |                             |        |                           |   |        |        |      |   |        |        |   |   |        |       

F-11



---



LSP-WHITEWATER LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS (UNAUDITED)
For the Six Months Ended June 30, 2001 and 2000
(dollars in thousands)

|                                                                     |                                                                                   |                                                    |       |        |                           |   |       |        |         |  
|-------------------------------------------------------------------- | --------------------------------------------------------------------------------- | -------------------------------------------------- | ----- | ------ | ------------------------- | - | ----- | ------ | ------- | -
|                                                                     |                                                                                   |                                                    |       |        | Six Months Ended June 30,
|                                                                     |                                                                                   |                                                    |       |        |                          
|                                                                     |                                                                                   |                                                    |       |        | 2001                      |   | 2000 
|                                                                     |                                                                                   |                                                    |       |        |                           |   |      
|CASH FLOWS FROM OPERATING ACTIVITIES:                                |                                                                                   |                                                    |       |        |                           |   |       |       
|                                                                    
|                                                                    
|                                                                    
|                                                                    
|                                                                     | Net income                                                                        |                                                    | $     | 3,883  |                           |   | $     | 5,184  |        
|                                                                    
|                                                                    
|                                                                    
|                                                                    
|                                                                     | Adjustments to reconcile net income to net
cash provided by operating activities: |                                                    |       |        |                           |   |       |        |        
|                                                                    
|                                                                    
|                                                                    
|                                                                    
|                                                                     |                                                                                   | Amortization of debt issuance and financing costs  |       |        | 173                       |   |       |        | 162     |  
|                                                                    
|                                                                    
|                                                                    
|                                                                    
|                                                                     |                                                                                   | Depreciation                                       |       |        | 218                       |   |       |        | 191     |  
|                                                                    
|                                                                    
|                                                                    
|                                                                    
|                                                                     |                                                                                   | Amortization of unearned lease income              |       |        | (11,593                   | ) |       |        | (11,725 | )
|                                                                    
|                                                                    
|                                                                    
|                                                                    
|                                                                     |                                                                                   | Minimum lease payments received                    |       |        | 12,067                    |   |       |        | 12,018  |  
|                                                                    
|                                                                    
|                                                                    
|                                                                    
|                                                                     |                                                                                   | Decrease (increase) in accounts receivable  trade |       |        | 3,193                     |   |       |        | (672    | )
|                                                                    
|                                                                    
|                                                                    
|                                                                    
|                                                                     |                                                                                   | Decrease in accounts receivable  other            |       |        | 645                       |   |       |        | 3,905   |  
|                                                                    
|                                                                    
|                                                                    
|                                                                    
|                                                                     |                                                                                   | Decrease in fuel inventories                       |       |        | 800                       |   |       |        | 131     |  
|                                                                    
|                                                                    
|                                                                    
|                                                                    
|                                                                     |                                                                                   | Decrease (increase) in spare parts inventories     |       |        | (42                       | ) |       |        | 20      |  
|                                                                    
|                                                                    
|                                                                    
|                                                                    
|                                                                     |                                                                                   | Decrease (increase) in other current assets        |       |        | (1,221                    | ) |       |        | 33      |  
|                                                                    
|                                                                    
|                                                                    
|                                                                    
|                                                                     |                                                                                   | Decrease in accounts payable                       |       |        | (89                       | ) |       |        | (57     | )
|                                                                    
|                                                                    
|                                                                    
|                                                                    
|                                                                     |                                                                                   | Increase (decrease) in accrued expenses            |       |        | (2,739                    | ) |       |        | 1,093   |  
|                                                                     |                                                                                   |                                                    |       |        |                           |   |       |       
|                                                                     | Net cash flows provided by operating activities                                   |                                                    |       | 5,295  |                           |   |       | 10,283 |        
|                                                                     |                                                                                   |                                                    |       |        |                           |   |       |       
|                                                                     |                                                                                   |                                                    |       |        |                           |   |       |       
|                                                                    
|                                                                    
|                                                                    
|                                                                    
|CASH FLOWS FROM INVESTING ACTIVITIES:                                |                                                                                   |                                                    |       |        |                           |   |       |       
|                                                                    
|                                                                    
|                                                                    
|                                                                    
|                                                                     |                                                                                   | Decrease (increase) in restricted cash             |       |        | 372                       |   |       |        | (677    | )
|                                                                     |                                                                                   |                                                    |       |        |                           |   |       |       
|                                                                     | Net cash flows provided by (used in) investing activities                         |                                                    |       | 372    |                           |   |       | (677   | )      
|                                                                     |                                                                                   |                                                    |       |        |                           |   |       |       
|                                                                     |                                                                                   |                                                    |       |        |                           |   |       |       
|                                                                    
|                                                                    
|                                                                    
|                                                                    
|CASH FLOWS FROM FINANCING ACTIVITIES
Payment on First Mortgage Bonds |                                                                                   |                                                    | (883  | )      |                           |   | (619  | )     
|                                                                    
|                                                                    
|                                                                    
|                                                                    
|                                                                     |                                                                                   | Partner distributions                              |       |        | (4,024                    | ) |       |        | (4,664  | )
|                                                                    
|                                                                    
|                                                                    
|                                                                    
|                                                                     |                                                                                   | Increase in note receivable from affiliate         |       |        | (241                      | ) |       |        | (220    | )
|                                                                     |                                                                                   |                                                    |       |        |                           |   |       |       
|                                                                     | Net cash flows used in financing activities                                       |                                                    |       | (5,148 | )                         |   |       | (5,503 | )      
|                                                                     |                                                                                   |                                                    |       |        |                           |   |       |       
|                                                                     |                                                                                   |                                                    |       |        |                           |   |       |       
|                                                                    
|                                                                    
|                                                                    
|                                                                    
|NET INCREASE IN CASH AND CASH EQUIVALENTS                            |                                                                                   |                                                    | 519   |        |                           |   | 4,103 |       
|                                                                    
|                                                                    
|                                                                    
|                                                                    
|                                                                     |                                                                                   |                                                    |       |        |                           |   |       |       
|                                                                    
|                                                                    
|                                                                    
|                                                                    
|CASH AND CASH EQUIVALENTS, beginning of period                       |                                                                                   |                                                    | 1,794 |        |                           |   | 1,446 |       
|                                                                     |                                                                                   |                                                    |       |        |                           |   |       |       
|                                                                     |                                                                                   |                                                    |       |        |                           |   |       |       
|                                                                    
|                                                                    
|                                                                    
|                                                                    
|CASH AND CASH EQUIVALENTS, end of period                             |                                                                                   | $                                                  | 2,313 |        |                           | $ | 5,549 |       
|                                                                     |                                                                                   |                                                    |       |        |                           |   |       |       

F-12



---



LSP-WHITEWATER LIMITED PARTNERSHIP
NOTES TO CONDENSED FINANCIAL STATEMENTS
UNAUDITED

1.   FINANCIAL STATEMENTS

The balance sheet as of June 30, 2001 and the statements of income and
cash flows for the three-month periods ended June 30, 2001 and 2000 have been
prepared by LSP-Whitewater Limited Partnership (the Partnership), without
audit. In the opinion of management, these unaudited condensed financial
statements include all adjustments (consisting of normal recurring adjustments)
necessary to present fairly the Partnerships financial position as of June 30,
2001 and the results of its operations and its cash flows for the six-month
periods ended June 30, 2001 and 2000.

The unaudited condensed financial statements have been prepared pursuant
to the rules and regulations of the United States Securities and Exchange
Commission. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with accounting principles
generally accepted in the United States have been condensed or omitted. While
management believes that the disclosures made are adequate to make the
information presented not misleading, these unaudited condensed financial
statements should be read in conjunction with the Partnerships audited
financial statements included in the Partnerships Annual Report on Form 10-K
for the fiscal year ended December 31, 2000.

2.   ORGANIZATION

LSP-Whitewater Limited Partnership is a Delaware limited partnership that
was formed on December 14, 1993 to develop, finance, construct and own a
gas-fired cogeneration facility with a design capacity of approximately 245
megawatts located in Whitewater, Wisconsin (the Facility). Construction and
start-up of the Facility was substantially completed and commercial operation
commenced September 18, 1997 (the Commercial Operations Date). The 1%
general partner of the Partnership is LSP-Whitewater I, Inc., a wholly-owned
subsidiary of Cogentrix Whitewater, LLC (Cogentrix Whitewater). Cogentrix
Whitewater and TPC Whitewater, Inc. are the sole limited partners of the
Partnership, owning approximately 73% and 26% limited partnership interests,
respectively. The ultimate parent of Cogentrix Whitewater is Cogentrix Energy,
Inc. (Cogentrix Energy), a North Carolina Corporation.

The Partnership holds a 50% equity ownership interest in LS Power Funding
Corporation (Funding), which was established on June 23, 1995 as a special
purpose Delaware corporation to issue debt securities (the Senior Secured
Bonds) in connection with financing construction of the Facility and a similar
gas-fired cogeneration facility located in Cottage Grove, Minnesota. On June
30, 1995, a portion of the proceeds from the offering and sale of the Senior
Secured Bonds issued by Funding was used to purchase $177 million of First
Mortgage Bonds issued simultaneously by the Partnership.

The Partnership sells up to 236.5 megawatts of electric capacity and
associated energy generated by the Facility to Wisconsin Electric Power Company
(WEPCO or, as the context requires, the Utility) pursuant to a 25-year
power purchase agreement (the Power Purchase Agreement). The Partnership may
also sell to third parties up to 12 megawatts of electric capacity and any
energy that is not dispatched by WEPCO. The thermal energy generated by the
Facility is provided in the form of steam to the University of Wisconsin -
Whitewater under a steam supply agreement expiring on June 30, 2005 and in the
form of hot water to a greenhouse owned by the Partnership (collectively, the
Steam Purchasers).

3.   SALES-TYPE CAPITAL LEASE

The components of the net investment in lease at June 30, 2001 are as
follows (dollars in thousands):

|                          |  |   |          |   | 
|------------------------- |  | - | -------- | - | 
|Gross Investment in Lease |  | $ | 534,052  |  
|                         
|                         
|                         
|                         
|Unearned Income on Lease  |  |   | (271,586 | )
|                          |  |   |          |  
|Net
Investment in Lease   |  | $ | 262,466  |  
|                          |  |   |          |  

Gross investment in lease represents total capacity payments receivable
over the term of the Power Purchase Agreement, net of executory costs, which
are considered minimum lease payments in accordance with Statement of Financial
Accounting Standards No. 13, Accounting for Leases.

F-13