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

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

            For the quarterly period ended March 31, 2002 Commission
                                File No. 33-95538

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

                                   47-0790493
                        (IRS Employer Identification No.)

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

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

               Salton Sea Funding Corporation's telephone number,
                      including area code: (402) 341-4500

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

                              Yes X       No

All common stock of Salton Sea Funding Corporation is indirectly held by Magma
Power Company. 100 shares of Common Stock were outstanding on May [14], 2002.

<PAGE>

                         SALTON SEA FUNDING CORPORATION

                                    Form 10-Q

                                 March 31, 2002
                                  -------------

                                 C O N T E N T S


                          PART I: FINANCIAL INFORMATION


Item 1.          Financial Statements                                      Page

SALTON SEA FUNDING CORPORATION

Independent Accountants' Report                                                4

Balance Sheets, March 31, 2002 and December 31, 2001                           5

Statements of Operations for the Three Months Ended
    March 31, 2002 and 2001                                                    6

Statements of Cash Flows for the Three Months Ended
    March 31, 2002 and 2001                                                    7

Notes to Financial Statements                                                  8

SALTON SEA GUARANTORS

Independent Accountants' Report                                               10

Combined Balance Sheets, March 31, 2002 and December 31, 2001                 11

Combined Statements of Operations for the Three Months Ended
    March 31, 2002 and 2001                                                   12

Combined Statements of Cash Flows for the Three Months Ended
    March 31, 2002 and 2001                                                   13

Notes to Combined Financial Statements                                        14


<PAGE>


PARTNERSHIP GUARANTORS

Independent Accountants' Report                                               17

Combined Balance Sheets, March 31, 2002 and December 31, 2001                 18

Combined Statements of Operations for the Three Months Ended
    March 31, 2002 and 2001                                                   19

Combined Statements of Cash Flows for the Three Months Ended
    March 31, 2002 and 2001                                                   20

Notes to Combined Financial Statements                                        21

SALTON SEA ROYALTY LLC

Independent Accountants' Report                                               25

Balance Sheets, March 31, 2002 and December 31, 2001                          26

Statements of Operations for the Three Months Ended
    March 31, 2002 and 2001                                                   27

Statements of Cash Flows for the Three Months Ended
    March 31, 2002 and 2001                                                   28

Notes to Financial Statements                                                 29

Item 2.          Management's Discussion and Analysis of
                 Financial Condition and Results of Operations                31


                                             PART II:  OTHER INFORMATION

Item 1.          Legal Proceedings                                            39
Item 2.          Changes in Securities                                        39
Item 3.          Defaults on Senior Securities                                39
Item 4.          Submission of Matters to a Vote of
                 Security Holders                                             39
Item 5.          Other Information                                            39
Item 6.          Exhibits and Reports on Form 8-K                             39

Signatures                                                                    40


<PAGE>



INDEPENDENT ACCOUNTANTS' REPORT

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

We have reviewed the accompanying balance sheet of the Salton Sea Funding
Corporation (the "Company") as of March 31, 2002, and the related statements of
operations and cash flows for the three-month periods ended March 31, 2002 and
2001. These financial statements are the responsibility of the Company's
management.

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

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

We have previously audited, in accordance with auditing standards generally
accepted in the United States of America, the balance sheet of Salton Sea
Funding Corporation as of December 31, 2001, and the related statements of
operations, stockholder's equity, and cash flows for the year then ended (not
presented herein); and in our report dated January 17, 2002 (March 1, 2002 as to
Note 4), we expressed an unqualified opinion on those financial statements. In
our opinion, the information set forth in the accompanying balance sheet as of
December 31, 2001 is fairly stated, in all material respects, in relation to the
balance sheet from which it has been derived.


DELOITTE & TOUCHE LLP
Omaha, Nebraska
April 26, 2002


<PAGE>

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



                                                    March 31,       December 31,
                                                         2002             2001
                                                   (unaudited)
ASSETS
Cash                                            $       99,220    $        4,361
Restricted cash                                          2,956             2,949
Accrued interest receivable and other assets            13,296             3,351
Current portion of secured project notes
  from Guarantors                                       28,572            28,572
Total current assets                                   144,044            39,233

Secured project notes from Guarantors                  491,678           491,678
Investment in 1% of net assets of
    Guarantors                                           9,662             9,669
                                                $      645,384    $      540,580
                                                    ==========        ==========

LIABILITIES AND STOCKHOLDER'S EQUITY
Liabilities:
Accrued interest                                $       13,159    $        3,333
Due to affiliates                                       98,884             3,899
Current portion of long term debt                       28,572            28,572
Total current liabilities                              140,615            35,804

Senior secured notes and bonds                         491,678           491,678
    Total liabilities                                  632,293           527,482

Commitments and contingencies (Note 3)

Stockholder's equity:
Common stock--authorized 1,000
    shares, par value $.01 per share;
    issued and outstanding 100 shares                      ---               ---
Additional paid-in capital                               5,366             5,366
Retained earnings                                        7,725             7,732
                                                    ----------        ----------
    Total stockholder's equity                          13,091            13,098
                                                    ----------        ----------
                                                 $     645,384     $     540,580
                                                    ==========        ==========

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

<PAGE>

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


                               Three Months Ended
                                    March 31,
                                                        2002           2001
Revenues:

Interest income                                   $      10,047  $    10,329
Equity in earnings (loss) of Guarantors                      (7)         190

Total revenues                                           10,040       10,519
                                                      ---------     --------

Expenses:

General and administrative expenses                         227          289
Interest expense                                          9,825       10,263
                                                      ---------     --------
Total expenses                                           10,052       10,552
                                                      ---------     --------
Loss before income taxes                                    (12)         (33)

Income tax benefit                                           (5)         (14)

Loss before cumulative effect of accounting change           (7)         (19)

Cumulative effect of accounting change, net of tax          ---         (100)
                                                      ---------     --------
Net loss                                          $          (7) $      (119)
                                                      =========     =========

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

<PAGE>

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

                                                       Three Months Ended
                                                             March 31,
                                                      2002             2001

Cash flows from operating activities:
     Net loss                                    $         (7)    $       (119)
     Adjustments to reconcile net loss to net
         cash flow from operating activities:
     Equity in (earnings) loss of Guarantors                7              (20)
     Changes in assets and liabilities:
         Prepaid expenses and other assets             (9,945)         (10,328)
         Accrued liabilities                            9,826           10,263

     Net cash flows from operating activities            (119)            (204)

Cash flows from financing activities:
     Increase (decrease) in due to affiliates          94,985           (5,102)
     Restricted cash                                       (7)             ---
     Net cash flows from financing activities          94,978           (5,102)
                                                    ----------       ----------
Net change in cash                                     94,859           (5,306)

Cash at the beginning of period                         4,361            8,467

Cash at the end of period                        $     99,220     $      3,161
                                                    ==========       ==========
Supplemental disclosures:
     Interest paid                               $        ---     $        ---
                                                    ==========       ==========

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

<PAGE>

                         SALTON SEA FUNDING CORPORATION

                          NOTES TO FINANCIAL STATEMENTS
                              ---------------------

1.  General:

In the opinion of management of the Salton Sea Funding Corporation (the "Funding
Corporation"),  the  accompanying  unaudited  financial  statements  contain all
adjustments  (consisting only of normal recurring accruals) necessary to present
fairly the financial position as of March 31, 2002 and the results of operations
for the  three-months  ended  March  31,  2002 and 2001 and cash  flows  for the
three-months  ended March 31, 2002 and 2001.  The results of operations  for the
three-months ended March 31, 2002 and 2001 are not necessarily indicative of the
results to be expected for the full year.

The  unaudited  financial  statements  should  be read in  conjunction  with the
financial statements included in the Funding Corporation's annual report on Form
10-K for the year ended December 31, 2001.

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

2.  Accounting Pronouncements:

On January 1, 2002, the Funding  Corporation adopted SFAS No. 142, "Goodwill and
Other  Intangible  Assets," which dictates the accounting for acquired  goodwill
and other intangible assets. SFAS No. 142 requires that amortization of goodwill
and  indefinite-lived  intangible  assets  be  discontinued  and  that  entities
disclose net income for prior periods adjusted to exclude such  amortization and
related  income tax effects,  as well as a  reconciliation  from the  originally
reported  net income to the  adjusted  net  income.  The  Funding  Corporation's
related amortization  consists solely of its share of the goodwill  amortization
at the Guarantors, which has no income tax effect. Following is a reconciliation
of net loss as  originally  reported for the  quarters  ended March 31, 2002 and
2001, to adjusted net loss (in thousands):

                                                           Three months
                                                          ended March 31,
                                                      2002             2001

         Reported net loss..........................$   (7)       $    (119)
         Goodwill amortization......................   ---               14
         Adjusted net loss..........................$   (7)       $    (105)

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

3.  Contingency:

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


<PAGE>



On June 20, 2001, the Guarantors'  (excluding Salton Sea V and CE Turbo) entered
into  Agreements  Addressing  Renewable  Energy  Pricing and Payment Issues with
Edison ("Settlement Agreements").  On June 22, 2001 Edison made an initial $11.6
million  payment  to repay  the past  due  balances  under  the  Power  Purchase
Agreements  (the  "stipulated  amounts").  On November 30, 2001,  the Settlement
Agreements  were  amended to reflect  when Edison  would be required to make the
final  payment on past due amounts.  The final payment of  approximately  $104.6
million,  representing the remaining  stipulated amounts,  was received March 1,
2002. Following the receipt of Edison's final payment of past due balances,  the
Guarantors released the remaining allowance for doubtful accounts.

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

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

Edison has failed to pay  approximately  $2.8 million of capacity bonus payments
for the months  from  October  2001  through  March 2002.  On December  10, 2001
certain  Guarantors  filed a lawsuit  against  Edison in  California's  Imperial
County  Superior  Court  seeking  a court  order  requiring  Edison  to make the
required  capacity  bonus  payments  under the Power  Purchase  Agreements.  The
Project  entities  will  vigorously  pursue  collection  of the  capacity  bonus
payments.  However, due to Edison's failure to pay the contractual  obligations,
the Imperial Valley Projects have established an allowance for doubtful accounts
of approximately $.8 million.



<PAGE>






INDEPENDENT ACCOUNTANTS' REPORT

Board of Directors and Stockholder
Magma Power Company
Omaha, Nebraska

We have  reviewed  the  accompanying  combined  balance  sheet of the Salton Sea
Guarantors  as of  March  31,  2002,  and the  related  combined  statements  of
operations and cash flows for the  three-month  periods ended March 31, 2002 and
2001.  These  financial  statements  are the  responsibility  of the  Salton Sea
Guarantors' management.

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

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

We have  previously  audited,  in accordance with auditing  standards  generally
accepted in the United  States of America,  the  combined  balance  sheet of the
Salton  Sea  Guarantors  as of  December  31,  2001,  and the  related  combined
statements of operations,  Guarantors'  equity, and cash flows for the year then
ended (not presented herein); and in our report dated January 17, 2002 (March 1,
2002 as to Note 6),  we  expressed  an  unqualified  opinion  on those  combined
financial  statements.  In  our  opinion,  the  information  set  forth  in  the
accompanying combined balance sheet as of December 31, 2001 is fairly stated, in
all material  respects,  in relation to the combined balance sheet from which it
has been derived.


DELOITTE & TOUCHE LLP
Omaha, Nebraska
April 26, 2002


<PAGE>


                              SALTON SEA GUARANTORS
                             COMBINED BALANCE SHEETS
                             (Dollars in Thousands)


                                                       March 31,    December 31,
                                                           2002           2001
                                                      (unaudited)
ASSETS
Accounts receivable, net of allowance of $3,268 and
    $9,829, respectively                             $     11,205  $      36,647
Prepaid expenses and other assets                           5,989          5,314
Total current assets                                       17,194         41,961

Due from affiliates                                         2,465            ---
Property, plant, contracts and equipment, net             542,042        543,719
Excess of cost over fair value of net assets
   acquired, net                                           44,270         44,270
                                                        ---------     ----------
                                                     $    605,971  $     629,950
                                                         ========      =========


LIABILITIES AND GUARANTORS' EQUITY
Liabilities:
Accounts payable                                     $        980  $       2,862
Accrued liabilities                                         6,920          9,414
Accrued interest                                            6,719          1,721
Current portion of long term debt                          20,487         20,487
Total current liabilities                                  35,106         34,484

Due to affiliates                                             ---         27,109
Senior secured project note                               246,412        246,412
                                                        ---------     ----------
    Total liabilities                                     281,518        308,005

Commitment and contingencies (Note 3)

Total Guarantors' equity                                  324,453        321,945
                                                        ---------     ----------
                                                     $    605,971  $     629,950
                                                        =========     ==========
   The accompanying notes are an integral part of these financial statements.


<PAGE>


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




                                                    Three Months Ended
                                                         March 31,
                                                 2002               2001
Revenues:

Sales of electricity                      $       23,405    $      32,130
Interest and other income                            430              ---

     Total revenues                               23,835           32,130
                                          --------------    -------------
Expenses:

Operating, general and administration             11,890           13,357
Depreciation and amortization                      4,275            4,370
Interest expense                                   5,162            5,490
Less capitalized interest                            ---           (1,692)

     Total expenses                               21,327           21,525

Income before cumulative effect of
          accounting change                        2,508           10,605

Cumulative effect of accounting change               ---           (8,743)
                                          --------------    -------------
Net income                                $        2,508    $       1,862
                                          ==============    =============

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


<PAGE>


                              SALTON SEA GUARANTORS
                        COMBINED STATEMENTS OF CASH FLOWS
                             (Dollars in Thousands)
                                   (Unaudited)
                                                          Three Months Ended
                                                              March 31,
                                                          2002         2001
Cash flows from operating activities:
Net income                                             $  2,508    $    1,862
Adjustments to reconcile net income to net
  cash flows from operating activities:
    Cumulative effect of change in accounting principle     ---         8,743
    Depreciation and amortization                         4,275         4,370
Changes in assets and liabilities:
    Accounts receivable                                  25,442       (18,292)
    Prepaid expenses and other assets                      (675)          774
    Accounts payable and accrued
    liabilities                                             622         7,037
                                                       --------    ---------
Net cash flows from operating activities                 32,172         4,494
                                                       --------     ---------
Cash flows from investing activities:
Capital expenditures                                     (2,598)       (2,676)
Decrease in restricted cash                                 ---            17
                                                       --------    ----------
Net cash flows from investing activities                 (2,598)       (2,659)
                                                       --------    ----------
Cash flows from financing activities:
Decrease in due to affiliates                           (29,574)       (1,835)
                                                       --------
Net cash flows from financing activities                (29,574)       (1,835)
                                                       --------
Net change in cash                                          ---           ---
Cash at beginning of period                                 ---           ---

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


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


<PAGE>


                              SALTON SEA GUARANTORS

                     NOTES TO COMBINED FINANCIAL STATEMENTS
                              --------------------

1.  General:

In the opinion of management of the Salton Sea  Guarantors  (the  "Guarantors"),
the  accompanying   unaudited  financial   statements  contain  all  adjustments
(consisting only of normal recurring  accruals)  necessary to present fairly the
financial  position as of March 31, 2002 and the results of  operations  for the
three  months  ended March 31, 2002 and 2001 and cash flows for the three months
ended March 31, 2002 and 2001.  The results of  operations  for the three months
ended March 31, 2002 and 2001 are not  necessarily  indicative of the results to
be expected for the full year.

The  unaudited  financial  statements  shall  be read in  conjunction  with  the
financial statements included in the Funding Corporation's annual report on Form
10-K for the year ended December 31, 2001.

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

2.  Accounting Pronouncements:

On January 1, 2002,  the  Guarantors  adopted SFAS No. 142,  "Goodwill and Other
Intangible  Assets," which  dictates the  accounting  for acquired  goodwill and
other intangible assets. SFAS No. 142 requires that amortization of goodwill and
indefinite-lived  intangible  assets be discontinued and that entities  disclose
net income for prior periods  adjusted to exclude such  amortization and related
income tax effects, as well as a reconciliation from the originally reported net
income to the adjusted net income. The Guarantor's related amortization consists
solely of goodwill amortization.  Following is a reconciliation of net income as
originally  reported for the quarters ended March 31, 2002 and 2001, to adjusted
net income (in thousands):

                                                           Three months
                                                          ended March 31,
                                                    2002             2001

         Reported net income................$      2,508   $       1,862
         Goodwill amortization...............        ---             326
         Adjusted net income.................$     2,508   $       2,188

The Guarantors'  acquired intangible assets consists of power purchase contracts
(the  "contracts")  with a cost of $7.9 million and accumulated  amortization of
$2.9 million at March 31, 2002, and are included in property,  plant,  contracts
and equipment in the accompanying  combined balance sheet.  Amortization expense
on the contracts was $.08 million for the three months ended March 31, 2002. The
Guarantors  expect  amortization  expense on the contracts to be $.2 million for
the  remainder  of fiscal 2002 and $.3  million for each of the five  succeeding
fiscal years.

In accordance  with the new standard,  the Guarantors are continuing to evaluate
the other  provisions of the standard  including the  determination of reporting
units, the allocation of corporate assets and liabilities,  including  goodwill,
and the impairment testing of goodwill.

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

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

3.  Contingency:

A.  Southern California Edison

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

On June 20, 2001, the Guarantors'  (excluding the Salton Sea V Project)  entered
into  Agreements  Addressing  Renewable  Energy  Pricing and Payment Issues with
Edison ("Settlement  Agreements").  On June 22, 2001 Edison made an initial $4.1
million  payment  to repay  the past  due  balances  under  the  Power  Purchase
Agreements  (the  "stipulated  amounts").  On November 30, 2001,  the Settlement
Agreements  were  amended to reflect  when Edison  would be required to make the
final  payment on past due amounts.  The final  payment of  approximately  $36.9
million,  representing the remaining  stipulated amounts,  was received March 1,
2002. Following the receipt of Edison's final payment of past due balances,  the
Guarantors released the remaining allowance for doubtful accounts.

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

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

Edison has failed to pay  approximately  $.7 million of capacity  bonus payments
for the months  from  October  2001  through  March 2002.  On December  10, 2001
certain  Guarantors  (except the Salton Sea V Project)  filed a lawsuit  against
Edison in  California's  Imperial  County  Superior  Court seeking a court order
requiring  Edison to make the required  capacity  bonus payments under the Power
Purchase  Agreements.  The Guarantors will vigorously  pursue  collection of the
capacity  bonus  payments.  However,  due  to  Edison's  failure  to  pay  these
contractual  obligations,  the  Guarantors  have  established  an allowance  for
doubtful accounts of approximately $.2 million.

B.  Environmental Liabilities

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

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

4.  Change in Accounting Policy

Effective  January 1, 2001, the Guarantors  changed their accounting  policy for
overhaul and well workover costs.  These costs, had historically  been accounted
for using the deferral method, and are now expensed as incurred.  The Guarantors
have recorded a cumulative  effect of this change of approximately  $8.7 million
in the three months ended March 31, 2001.

5.  Related Party Transactions

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

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

On March 27, 2001 and May 1, 2001,  Salton Sea Power  entered into a Transaction
Agreement to sell available  power to EPME based on percentages of the Dow Jones
SP-15 Index.

Pursuant to these  agreements,  sales to EPME from the  Guarantors  totaled $2.0
million and $14.0  million for the three  months  ended March 31, 2002 and 2001,
respectively.  As of March 31, 2002 and December 31, 2001,  accounts  receivable
from EPME were $1.4 million and $11.8 million, respectively.



<PAGE>










INDEPENDENT ACCOUNTANTS' REPORT

Board of Directors and Stockholder
Magma Power Company
Omaha, Nebraska

We have reviewed the  accompanying  combined  balance  sheet of the  Partnership
Guarantors  as of  March  31,  2002,  and the  related  combined  statements  of
operations and cash flows for the  three-month  periods ended March 31, 2002 and
2001.  These  financial  statements are the  responsibility  of the  Partnership
Guarantors' management.

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

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

We have  previously  audited,  in accordance with auditing  standards  generally
accepted in the United  States of America,  the  combined  balance  sheet of the
Partnership  Guarantors  as of  December  31,  2001,  and the  related  combined
statements of  operations,  Guarantors'  equity and cash flows for the year then
ended (not presented herein); and in our report dated January 17, 2002 (March 1,
2002 as to Note 8A),  we  expressed  an  unqualified  opinion on those  combined
financial  statements.  In  our  opinion,  the  information  set  forth  in  the
accompanying combined balance sheet as of December 31, 2001 is fairly stated, in
all material  respects,  in relation to the combined balance sheet from which it
has been derived.


DELOITTE & TOUCHE LLP
Omaha, Nebraska
April 26, 2002

<PAGE>


                             PARTNERSHIP GUARANTORS
                             COMBINED BALANCE SHEETS
                             (Dollars in Thousands)

<TABLE>
<CAPTION>


                                                                              March 31,               December 31,
                                                                                 2002                      2001
(unaudited)
ASSETS
<S>                                                                       <C>                      <C>
Cash                                                                      $      2,676             $           -
Accounts receivable, net of allowance of $1,399 and
    $14,925, respectively                                                       11,776                    59,384
Prepaid expenses and other assets                                               18,735                    19,358
Total current liabilities                                                       33,187                    78,742

Restricted cash                                                                 14,269                    21,282
Property, plant, contracts and equipment, net                                  640,038                   633,574
Management fee                                                                  69,739                    70,806
Due from affiliates                                                             56,158                    13,072
Excess of cost over fair value of net assets
  acquired, net                                                                120,866                   120,866
                                                                          ------------             -------------
                                                                          $    934,257             $     938,342
                                                                          ============             =============

LIABILITIES AND GUARANTORS' EQUITY
Liabilities:
Accounts payable                                                          $      2,024             $       5,480
Accrued liabilities                                                             11,784                    12,853
Accrued interest                                                                 6,299                     1,605
Current portion of long term debt                                                4,625                     4,625
Total current liabilities                                                       24,732                    24,563

Senior secured project notes                                                   244,117                   244,117
Deferred income taxes                                                          100,743                   102,083
                                                                          ------------             -------------
Total liabilities                                                              369,592                   370,763

Commitments and contingencies (Note 3)

Guarantors' equity:
Common stock                                                                         3                         3
Additional paid-in capital                                                     387,663                   387,663
Retained earnings                                                              176,999                   179,913
                                                                          ------------             -------------
Total Guarantors' equity                                                       564,665                   567,579
                                                                          ------------             -------------
                                                                          $    934,257             $     938,342
                                                                          ============             =============


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

</TABLE>
<PAGE>


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

<TABLE>
<CAPTION>
                                                                       Three Months Ended
                                                                              March 31,
                                                                    2002                 2001
Revenues:

<S>                                                             <C>               <C>
Sales of electricity                                            $      22,199     $      23,494
Interest and other income                                                 536                35

Total revenues                                                         22,735            23,529
                                                                    ---------

Expenses:

Operating, general and
   administration                                                      18,286            14,394
Depreciation and amortization                                           6,787             5,081
Interest expense                                                        4,754             4,793
Less capitalized interest                                              (2,838)           (4,733)
                                                                                      ---------

Total expenses                                                         26,989            19,535
                                                                                      ---------

Income (loss) before income taxes                                      (4,254)            3,994

Provision for income tax expense (benefit)                             (1,340)            1,378

Income (loss) before cumulative effect of accounting
                change                                                 (2,914)            2,616

Cumulative effect of accounting change, net of tax                        ---            (8,254)
                                                                -------------     -------------

Net loss                                                        $      (2,914)    $      (5,638)
                                                                =============     ==============
</TABLE>

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


<PAGE>




                                               PARTNERSHIP GUARANTORS
                                         COMBINED STATEMENTS OF CASH FLOWS
                                               (Dollars in Thousands)
                                                    (Unaudited)
                                                          Three Months Ended
                                                               March 31,
                                                         2002            2001
Cash flows from operating activities:
Net loss                                            $   (2,914)     $   (5,638)
Adjustments to reconcile net loss to net
    cash flow from operating activities:
       Cumulative effect of change in accounting
          principle, net of tax                            ---           8,254
       Depreciation and amortization                     6,787           5,081
       Deferred income taxes                            (1,340)          1,378
Changes in assets and liabilities:
          Accounts receivable                           47,608         (21,111)
          Prepaid expenses and other assets                623          (4,016)
          Accounts payable and accrued
           liabilities                                     169          11,639
                                                    ----------      ----------
Net cash flows from operating activities                50,933          (4,413)
                                                    ----------      ----------
Cash flows from investing activities:
Capital expenditures                                   (12,542)         (6,299)
Decrease in restricted cash                              7,013             106
Management fee                                             358             819
                                                    ----------      ----------
Net cash flows from investing activities                (5,171)         (5,374)
                                                    ----------      ----------
Cash flows from financing activities:
Decrease (increase) in due from affiliates             (43,086)          9,787
                                                    ----------      ----------
Net cash flows from financing activities               (43,086)          9,787
                                                    ----------      ----------
Net change in cash                                       2,676             ---

Cash at beginning of period                                ---             ---
                                                    ----------      ----------
Cash at end of period                               $    2,676      $      ---
                                                    ==========      ==========

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


<PAGE>





                             PARTNERSHIP GUARANTORS

                     NOTES TO COMBINED FINANCIAL STATEMENTS
                              --------------------

1.  General:

In the opinion of management of the Partnership  Guarantors (the  "Guarantors"),
the accompanying unaudited combined financial statements contain all adjustments
(consisting only of normal recurring  accruals)  necessary to present fairly the
financial  position as of March 31, 2002 and the results of  operations  for the
three-months  ended March 31, 2002 and 2001 and cash flows for the  three-months
ended March 31, 2002 and 2001.  The results of operations  for the  three-months
ended March 31, 2002 and 2001 are not  necessarily  indicative of the results to
be expected for the full year.

The  unaudited  financial  statements  shall  be read in  conjunction  with  the
financial statements included in the Funding Corporation's annual report on Form
10-K for the year ended December 31, 2001.

2.  Accounting Pronouncements:

On January 1, 2002,  the  Guarantors  adopted SFAS No. 142,  "Goodwill and Other
Intangible  Assets," which  dictates the  accounting  for acquired  goodwill and
other intangible assets. SFAS No. 142 requires that amortization of goodwill and
indefinite-lived  intangible  assets be discontinued and that entities  disclose
net income for prior periods  adjusted to exclude such  amortization and related
income tax effects, as well as a reconciliation from the originally reported net
income to the adjusted net income. The Guarantors' related amortization consists
solely of goodwill amortization,  which has no income tax effect. Following is a
reconciliation  of net loss as originally  reported for the quarters ended March
31, 2002 and 2001, to adjusted net loss (in thousands):

                                                             Three months
                                                           ended March 31,
                                                        2002             2001

         Reported net loss...........................$(2,914)          $(5,638)
         Goodwill amortization.......................    ---               891
         Adjusted net loss...........................$(2,914)          $(4,747)

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

                                 Gross Carrying         Accumulated
                                     Amount            Amortization

Amortized Intangible Assets:
  Power Purchase Contracts       $     123,002         $      95,716
  Patented Technology                   46,290                13,938
                                 -------------         -------------
        Total                    $     169,292         $     109,654
                                 =============         =============

Amortization expense on acquired intangible assets was $.9 million for the three
months ended March 31,  2002.  The  Guarantors  expect  amortization  expense on
acquired  intangible  assets to be $2.6 million for the remainder of fiscal 2002
and $3.5 million for each of the five succeeding fiscal years.


<PAGE>


In accordance  with the new standard,  the Guarantors are continuing to evaluate
the other  provisions of the standard  including the  determination of reporting
units, the allocation of corporate assets and liabilities,  including  goodwill,
and the impairment testing of goodwill.

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

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

3.  Contingency:

A.  Southern California Edison

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

On June 20, 2001, the  Guarantors'  (excluding  the Turbo Project)  entered into
Agreements  Addressing  Renewable  Energy Pricing and Payment Issues with Edison
("Settlement Agreements").  On June 22, 2001 Edison made an initial $7.5 million
payment to repay the past due balances under the Power Purchase  Agreements (the
"stipulated  amounts").  On November 30, 2001,  the Settlement  Agreements  were
amended to reflect  when Edison  would be required to make the final  payment on
past due amounts. The final payment of approximately $67.7 million, representing
the remaining  stipulated  amounts,  was received  March 1, 2002.  Following the
receipt of Edison's final payment of past due balances,  the Guarantors released
the remaining allowance for doubtful accounts.

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

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

Edison has failed to pay  approximately  $2.0 million of capacity bonus payments
for the months  from  October  2001  through  March 2002.  On December  10, 2001
certain Guarantors  (excluding the Turbo Project) filed a lawsuit against Edison
in  California's  Imperial County Superior Court seeking a court order requiring
Edison to make the required  capacity  bonus  payments  under the Power Purchase
Agreements.


<PAGE>


The Guarantors will vigorously pursue collection of the capacity bonus payments.
However,  due to  Edison's  failure to pay these  contractual  obligations,  the
Guarantors have established an allowance for doubtful  accounts of approximately
$.6 million.

B.  Minerals

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

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

On August 7, 2001,  Minerals LLC filed an Answering  Statement and  Counterclaim
against  Kvaerner.  Minerals LLC denied all material  allegations  in Kvaerner's
Amended Demand for Arbitration, and asserted a counterclaim against Kvaerner for
breach of contract and specific performance. Minerals LLC alleged that its total
estimated   damage  for   Kvaerner's   breach  of  contract  are  in  excess  of
approximately $60 million;  however, Minerals LLC has offset approximately $42.5
million of these  damages by  exercising  its rights  under the EPC  Contract to
claim the retainage and by drawing on the letter of credit. Therefore,  Minerals
LLC asked for a judgment in excess of approximately $20 million. The arbitration
is scheduled for June 2002.

C.  Environmental Liabilities

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

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

4.  Change in Accounting Policy

Effective  January 1, 2001, the Guarantors  changed their accounting  policy for
overhaul and well workover costs.  These costs, had historically  been accounted
for using the deferral method, and are now expensed as incurred.  The Guarantors
have recorded a cumulative effect of this change of approximately  $8.3 million,
net of tax in the three months ended March 31, 2001.

5.  Related Party Transactions

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

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

On March 27, 2001 and May 1, 2001, CE Turbo entered into a Transaction Agreement
to sell  available  power to EPME based on  percentages  of the Dow Jones  SP-15
Index.

Pursuant to these agreements, sales to EPME from the Company totaled $.4 million
and  $2.9  million  for  the  three  months  ended  March  31,  2002  and  2001,
respectively.  As of March 31, 2002 and December 31, 2001,  accounts  receivable
from EPME were $.2 million and $2.4 million, respectively.




<PAGE>






INDEPENDENT ACCOUNTANTS' REPORT

Board of Directors and Stockholder
Magma Power Company
Omaha, Nebraska

We have reviewed the accompanying balance sheet of the Salton Sea Royalty LLC as
of March 31, 2002,  and the related  statements of operations and cash flows for
the  three-month  periods  ended  March  31,  2002  and  2001.  These  financial
statements are the responsibility of the Salton Sea Royalty LLC's management.

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

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

We have  previously  audited,  in accordance with auditing  standards  generally
accepted in the United  States of America,  the balance  sheet of the Salton Sea
Royalty LLC as of December 31, 2001,  and the related  statements of operations,
equity,  and cash flows for the year then ended (not presented  herein);  and in
our report dated  January 17, 2002 (March 1, 2002 as to Note 5), we expressed an
unqualified  opinion  on  those  financial  statements.   In  our  opinion,  the
information set forth in the accompanying  balance sheet as of December 31, 2001
is fairly  stated,  in all material  respects,  in relation to the balance sheet
from which it has been derived.

DELOITTE & TOUCHE LLP
Omaha, Nebraska
April 26, 2002


<PAGE>


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


                                                  March 31,         December 31,
                                                       2002             2001
                                                 (unaudited)
ASSETS
Prepaid expenses and other assets             $           26     $           31
Total current assets                                      26                 31

Royalty stream, net                                   14,651             14,865
Excess of cost over fair value of net assets
  acquired, net                                       30,464             30,464
Due from affiliates                                   36,530             33,940

                                              $       81,671     $       79,300
                                                  ==========         ==========


LIABILITIES AND EQUITY
Liabilities:
Accrued interest                              $          113     $           29
Current portion of long term debt                      3,460              3,460
Total current liabilities                              3,573              3,489

Senior secured project note                            1,147              1,147
                                                  ----------         ----------
    Total liabilities                                  4,720              4,636

Commitment and contingencies (Note 3)

Equity:
Common stock, par value $.01 per share; 100
  share authorized, issued and outstanding               ---                ---
Additional paid-in capital                             1,561              1,561
Retained earnings                                     75,390             73,103
                                                  ----------         ----------
Total equity                                          76,951             74,664
                                                  ----------         ----------
                                               $      81,671      $      79,300
                                                  ==========         ==========

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


<PAGE>


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

                                     Three Months Ended
                                          March 31,
                                   2002                2001
Revenues:
Royalty income                 $     3,682       $       3,463

Expenses:
Operating, general and
     administrative expenses         1,092                 879
Amortization                           214                 487
Interest expense                        89                 177
                                 ---------          ----------
Total expenses                       1,395               1,543
                                 ---------          ----------

Net income                     $     2,287       $       1,920
                                 =========          ==========

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


<PAGE>


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


                                                       Three Months Ended
                                                             March 31,
                                                        2002             2001
Cash flows from operating activities:
Net income                                         $    2,287      $     1,920
Adjustments to reconcile net income to net
    cash flow from operating activities:
       Amortization                                       214              487
       Changes in assets and liabilities:
       Prepaid expenses and other assets                    5               13
       Accrued liabilities and deferred income taxes       84              164
Net cash flows from operating activities                2,590            2,584


Net cash flows from financing activities:
Increase in due from affiliates                        (2,590)          (2,584)
                                                     ---------       ---------
Net cash flows from financing activities               (2,590)          (2,584)

Net change in cash                                        ---              ---

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

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


<PAGE>


                             SALTON SEA ROYALTY LLC

                          NOTES TO FINANCIAL STATEMENTS
                              --------------------

1.  General:

In the opinion of management of the Salton Sea Royalty LLC (the "Company"),  the
accompanying unaudited financial statements contain all adjustments  (consisting
only of normal  recurring  accruals)  necessary to present  fairly the financial
position as of March 31, 2001 and the results of operations for the three months
ended  March 31, 2002 and 2001 and cash flows for the three  months  ended March
31, 2002 and 2001.  The results of  operations  for the three months ended March
31, 2002 and 2001 are not  necessarily  indicative of the results to be expected
for the full year.

The  unaudited  financial  statements  shall  be read in  conjunction  with  the
financial statements included in the Funding Corporation's annual report on Form
10-K for the year ended December 31, 2001.

2.  Accounting Pronouncements:

On January 1, 2002,  the  Company  adopted  SFAS No.  142,  "Goodwill  and Other
Intangible  Assets," which  dictates the  accounting  for acquired  goodwill and
other intangible assets. SFAS No. 142 requires that amortization of goodwill and
indefinite-lived  intangible  assets be discontinued and that entities  disclose
net income for prior periods  adjusted to exclude such  amortization and related
income tax effects, as well as a reconciliation from the originally reported net
income to the adjusted net income. The Company's amortization consists solely of
goodwill amortization. Following is a reconciliation of net income as originally
reported for the quarters  ended March 31, 2002 and 2001, to adjusted net income
(in thousands):

                                                      Three months
                                                     ended March 31,
                                                    2002          2001

         Reported net income.....................$ 2,287       $  1,920
         Goodwill amortization...................    ---            227
         Adjusted net income.....................$ 2,287       $  2,147

The Company's  acquired  intangible  assets consist of the royalty stream with a
cost of $60.7 million and  accumulated  amortization of $46 million at March 31,
2002.  Amortization expense on the royalty stream was $0.2 million for the three
months ended March 31, 2002.  The Company  expects  amortization  expense on the
royalty  stream to be $0.6  million  for the  remainder  of fiscal 2002 and $0.9
million for each of the five succeeding fiscal years.

In accordance  with the new standard,  the Company is continuing to evaluate the
other provisions of the standard including the determination of reporting units,
the allocation of corporate assets and liabilities,  including goodwill, and the
impairment testing of goodwill.

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


<PAGE>


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

3.  Contingency:

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

On June  20,  2001,  the  Guarantors'  (excluding  the  Salton  Sea V and  Turbo
Projects)  entered  into  Agreements  Addressing  Renewable  Energy  Pricing and
Payment Issues with Edison  ("Settlement  Agreements").  On June 22, 2001 Edison
made an initial $11.6 million  payment to repay the past due balances  under the
Power Purchase Agreements (the "stipulated amounts").  On November 30, 2001, the
Settlement  Agreements  were amended to reflect when Edison would be required to
make the final payment on past due amounts.  The final payment of  approximately
$104.6 million,  representing  the remaining  stipulated  amounts,  was received
March 1, 2002.  Following  the  receipt of  Edison's  final  payment of past due
balances, the Guarantors released the remaining allowance for doubtful accounts.

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

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

Edison has failed to pay  approximately  $2.8 million of capacity bonus payments
for the months  from  October  2001  through  March 2002.  On December  10, 2001
certain  Guarantors  filed a lawsuit  against  Edison in  California's  Imperial
County  Superior  Court  seeking  a court  order  requiring  Edison  to make the
required  capacity  bonus  payments  under the Power  Purchase  Agreements.  The
Guarantors  will  vigorously  pursue  collection of the capacity bonus payments.
However,  due to  Edison's  failure to pay these  contractual  obligations,  the
Guarantors have established an allowance for doubtful accounts of $.8 million.



<PAGE>


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

Forward-Looking Statements

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

Critical Accounting Policies

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

Allowance for Doubtful Accounts

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

Impairment of Long-Lived Assets

The  Guarantors'  long-lived  assets  consist  primarily of property,  plant and
equipment,  goodwill  and  intangible  assets  that were  acquired  in  business
acquisitions.  The  Guarantors  believe  the useful  lives we  assigned to these
assets, which range from 3 to 40 years, are reasonable.  The Guarantors evaluate
the  long-lived  assets for impairment  when events or changes in  circumstances
indicate, in management's  judgment,  that the carrying value of such assets may
not be  recoverable.  These  computations  utilized  judgments  and  assumptions
inherent in management's estimate of undiscounted future cash flows to determine
recoverability  of an asset.  If the Guarantors  assumptions  about these assets
change as a result of events or  circumstances,  and the Guarantors  believe the
assets may have declined in value,  then the  Guarantors  may record  impairment
charges, resulting in lower profits.

 Contingent Liabilities

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

Results of Operations

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

Revenues:

The Salton Sea Guarantors'  sales of electricity  decreased to $23.4 million for
the three months ended March 31, 2002 from $32.1  million for the same period in
2001, a 27.2%  decrease.  Sales of electricity  for the three months ended March
31, 2002  included the impact of a $6.8 million  reduction in the  allowance for
doubtful  accounts.  Sales of  electricity  for the three months ended March 31,
2001  included  the impact of a $12.5  million  increase  in the  allowance  for
doubtful  accounts.  Excluding  the  impact of the  adjustments  related  to the
allowance for doubtful accounts,  sales of electricity  decreased $28 million or
62% to $16.6  million  for the three  months  ended  March 31,  2002 from  $44.6
million for the three months March 31, 2001.  This decrease was primarily due to
lower  rates in 2002,  partially  offset by  outages  in 2001,  which  were more
extensive compared to 2002.

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

                                            Three Months Ended
                                                   March 31,
                                            2002             2001
Overall capacity factor                    89.3%             84.1%
Capacity (NMW) (average)                   168.4             168.4
kWh produced (in thousands)              324,800           305,800

The overall  capacity  factor for the Salton Sea  Guarantors  increased  for the
three months ended March 31, 2002 compared to the same period in 2001  primarily
due to outage timing.

The Partnership  Guarantors' sales of electricity decreased to $22.2 million for
the three months ended March 31, 2002 from $23.5  million for the same period in
2001, a 5.5% decrease. Sales of electricity for the three months ended March 31,
2002  included  the  impact of $14.1  million  reduction  in the  allowance  for
doubtful  accounts.  Sales of  electricity  for the three months ended March 31,
2001  included  the impact of a $28.9  million  increase  in the  allowance  for
doubtful  accounts.  Excluding  the  impact of the  adjustments  related  to the
allowance for doubtful accounts, sales of electricity decreased $44.3 million or
85% to $8.1 million for the three months ended March 31, 2002 from $52.4 million
for the three months March 31,  2001.  This  decrease was due to lower rates and
decreased production from scheduled overhauls.


<PAGE>


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

                                                Three Months Ended
                                                      March 31,
                                              2002               2001
Overall capacity factor                       89.3%            101.3%
Capacity (NMW) (average)                        158               158
kWh produced (in thousands)                 306,000           345,700

The overall  capacity  factor for the Partnership  Guarantors  decreased for the
three  months  ended March 31,  2002  compared to the same period in 2001 due to
scheduled overhauls in 2002.

Edison's Average Avoided Cost of Energy was 2.9 cents per kilowatt-hour and 15.2
cents per  kilowatt-hour  for the three  months  ended  March 31, 2002 and 2001,
respectively.   Estimates  of  Edison's  future  Avoided  Cost  of  Energy  vary
substantially  from  year to year.  As a result  of the  Settlement  Agreements,
Edison has elected to pay the  Guarantors  (except  Salton Sea Projects IV and V
and the Turbo Project) a fixed energy price in lieu of Edison's  Average Avoided
Cost of Energy.  The fixed energy price was 3.25 cents/per  kilowatt-hour in the
first quarter 2002 and is scheduled to increase to 5.37 cents/per  kilowatt hour
effective May 1, 2002 through April 30, 2007.

The Royalty  Guarantor  revenue  increased  to $3.7 million for the three months
ended  March 31,  2002 from $3.5  million  for the same  period  last year.  The
increase  relates to  additional  royalties  recognized on the past due interest
payments from Edison.

Operating Expenses:

The Salton Sea Guarantors' operating expenses, which include royalty, operating,
and general and  administrative  expenses,  decreased  to $11.9  million for the
three  months  ended March 31, 2002 from $13.4 for the same period in 2001.  The
decrease was due to lower royalty  expenses  resulting  from lower  revenues and
lower brine disposal costs.

The  Partnership   Guarantors'   operating  expenses,   which  include  royalty,
operating, and general and administrative  expenses,  increased to $18.3 million
for the three months ended March 31, 2002 from $14.4 million for the same period
in 2001. The increase was due to overhaul costs in 2002.

The Royalty  Guarantors'  operating  expenses  increased to $1.1 million for the
three months ended March 31, 2002 from $0.9 million for the same period in 2001.
This increase was due to higher royalty costs resulting from higher revenue.

Depreciation and Amortization:

The Salton Sea  Guarantors'  depreciation  and  amortization  decreased  to $4.3
million for the three months ended March 31, 2002 from $4.4 million for the same
period of 2001, due to the discontinuation of goodwill amortization in 2002.

The Partnership  Guarantors'  depreciation  and  amortization  increased to $6.8
million for the three months ended March 31, 2002 from $5.1 million for the same
period in 2001.  The increase was due primarily to the upgraded  brine  handling
system, partially offset by the discontinuation of goodwill amortization in 2002
of $0.9 million.

The Royalty  Guarantors'  amortization  decreased  to $0.2 million for the three
months  ended  March 31, 2002  compared  to $0.5  million for the same period of
2001.  The  decrease  was  due  primarily  to the  discontinuation  of  goodwill
amortization in 2002 of $0.2 million.
<PAGE>

Interest Expense:

The  Salton  Sea  Guarantors'  interest  expense  net  of  capitalized  amounts,
increased  to $5.2  million for the three  months ended March 31, 2002 from $3.8
million for the same period in 2001.  The increase was due to lower  capitalized
interest  on  the  minerals  extraction  process  partially  offset  by  reduced
indebtedness.

The  Partnership  Guarantors'  interest  expense,  net of  capitalized  amounts,
increased  to $1.9  million for the three  months ended March 31, 2002 from $0.1
million for the same period in 2001. The increase was due to reduced capitalized
interest on the minerals extraction process.

The Royalty Guarantors' interest expense decreased to $0.1 million for the three
months ended March 31, 2002 from $0.2 million from the same period in 2001.  The
decrease was due to reduced indebtedness.

Income Tax Provision:

The Partnership  Guarantors income tax provision  decreased to a benefit of $1.3
million  for the three  months  ended  March 31,  2002 from an  expense  of $1.4
million for the same period in 2001.  This decrease was primarily due to a lower
pre-tax  income.  Income taxes will be paid by the parent of the Guarantors from
distributions  to the  parent  company  by the  Guarantors,  which  occur  after
operating expenses and debt service.

Cumulative Effect of Accounting Policy Change:

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

Net Income:

The Salton Sea Funding  Corporation's  net loss for the three months ended March
31, 2002 was not  significant  compared  to a loss of $0.1  million for the same
period in 2001. The net loss primarily  represents  interest income and expense,
net of  applicable  tax, and the Salton Sea Funding  Corporation's  1% equity in
earnings (losses) of the Guarantors.

The Salton Sea  Guarantors'  net income  increased to $2.5 million for the three
months  ended  March 31, 2002  compared  to $1.9  million for the same period of
2001.

The  Partnership  Guarantors'  net loss  decreased to $2.9 million for the three
months  ended  March 31, 2002  compared  to $5.6  million for the same period of
2001.

The  Royalty  Guarantors'  net income  increased  to $2.3  million for the three
months  ended  March 31, 2002  compared  to $1.9  million for the same period of
2001.

Related Party Transactions

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

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

On March 27, 2001 and May 1, 2001, the Imperial Valley  Projects  entered into a
Transaction  Agreement to sell  available  power to EPME based on percentages of
the Dow Jones SP-15  Index.  On June 28,  2001,  the  Imperial  Valley  Projects
(excluding the Salton Sea V Project and Turbo Project) ceased selling  available
power to EPME and resumed power sales to Edison.

Pursuant  to these  agreements,  sales to EPME  from the  Company  totaled  $2.4
million and $16.9  million for the three  months  ended March 31, 2002 and 2001,
respectively.  As of March 31, 2002 and December 31, 2001,  accounts  receivable
from EPME were $1.6 million and $14.2 million, respectively.

Liquidity and Capital Resources

The Salton Sea  Guarantors'  cash flows from operating  activities  increased to
$32.2  million for the three  months  ended March 31, 2002 from $4.5 million for
the same period in 2001.  The operating  Salton Sea  Guarantors'  only source of
revenue is payments  received  pursuant to long-term power sales agreements with
Edison,  other than Salton Sea V Project revenue and interest earned on funds on
deposit. The increase was primarily due to the receipt of past due balances from
Edison.

The Partnership  Guarantors' cash flows from operating  activities  increased to
$50.9 million for the three months ended March 31, 2002 from from a net cash use
of $4.4  million  for  the  same  period  in  2001.  The  operating  Partnership
Guarantors' primary source of revenue is payments received pursuant to long term
power sales  agreements with Edison,  other than Turbo Project and Zinc Recovery
Project  revenue and  interest  earned on funds on  deposit.  The  increase  was
primarily due to the receipt of past due balances from Edison.

The  Royalty  Guarantors'  cash flow from  operations  was $2.6  million for the
periods ended March 31, 2002 and 2001.  The Royalty  Guarantors'  only source of
revenue is royalties  received  pursuant to resource lease  agreements  with the
Partnership Projects.

If Edison pays the projects,  these payments,  for each of the  Guarantors,  are
expected to be sufficient to fund operating and maintenance  expenses,  payments
of interest and principal on the Securities,  projected capital expenditures and
debt service reserve fund requirements.

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

On June 20, 2001, the Guarantors'  (excluding Salton Sea V and CE Turbo) entered
into  Agreements  Addressing  Renewable  Energy  Pricing and Payment Issues with
Edison ("Settlement Agreements").  On June 22, 2001 Edison made an initial $11.6
million  payment  to repay  the past  due  balances  under  the  Power  Purchase
Agreements  (the  "stipulated  amounts").  On November 30, 2001,  the Settlement
Agreements  were  amended to reflect  when Edison  would be required to make the
final  payment on past due amounts.  The final payment of  approximately  $104.6
million,  representing the remaining  stipulated amounts,  was received March 1,
2002. Following the receipt of Edison's final payment of past due balances,  the
Guarantors released the remaining allowance for doubtful accounts.
<PAGE>

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

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

Edison has failed to pay  approximately  $2.8 million of capacity bonus payments
for the months  from  October  2001  through  March 2002.  On December  10, 2001
certain  Guarantors  filed a lawsuit  against  Edison in  California's  Imperial
County  Superior  Court  seeking  a court  order  requiring  Edison  to make the
required  capacity  bonus  payments  under the Power  Purchase  Agreements.  The
Guarantors  will  vigorously  pursue  collection of the capacity bonus payments.
However,  due to  Edison's  failure  to pay  the  contractual  obligations,  the
Imperial Valley Projects have established an allowance for doubtful  accounts of
approximately $.8 million.

The Salton Sea Guarantors' cash flow used in investing  activities  decreased to
$2.6 million for the three months ended March 31, 2002 from $2.7 million for the
same period in 2001. Capital expenditures are the primary component of investing
activities.

The Partnership  Guarantors' cash flow used in investing activities decreased to
$5.2 million for the three months ended March 31, 2002 from $5.4 million for the
same period in 2001. Capital expenditures are the primary component of investing
activities.

Minerals LLC is constructing the Zinc Recovery Project,  which will recover zinc
from the geothermal  brine (the "Zinc Recovery  Project").  Facilities are being
installed  near the sites of the  Imperial  Valley  Projects  to  extract a zinc
chloride  solution from the  geothermal  brine through an ion exchange  process.
This  solution  will be  transported  to a central  processing  plant where zinc
ingots will be produced through solvent  extraction,  electrowinning and casting
processes.  The  Zinc  Recovery  Project  is  designed  to  have a  capacity  of
approximately  30,000  metric  tonnes  per year  and is  scheduled  to  commence
commercial  operations in 2002. In September  1999,  Minerals LLC entered into a
sales  agreement  whereby all  high-grade  zinc  produced  by the Zinc  Recovery
Project will be sold to Cominco,  Ltd. The initial term of the agreement expires
in December 2005.

Total  project   costs  of  the  Zinc  Recovery   Project  are  expected  to  be
approximately $217.9 million,  net of payments for liquidated damages,  which is
being   funded  by  $140.5   million  of  debt  and  the  balance   from  equity
contributions.  The Zinc Recovery  Project has incurred $165.0  million,  net of
payments for liquidated damages received, of such costs through March 31, 2002.

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

Salton  Sea  Funding  Corporation's  net  cash  flows  provided  from  financing
activities  increased to $95.0 million for the three months ended March 31, 2002
from a net cash use of $5.1  million  for the same  period in 2001.  Salton  Sea
Guarantors'  net cash  flows used in  financing  activities  increased  to $29.6
million from $1.8 million for the same period in 2001.  Partnership  Guarantors'
net cash use in financing  activities  increased to $43.1  million for the three
months  ended  March 31, 2002 from a net cash  provided of $9.8  million for the
same period in 2001. The changes in net cash flows from financing activities are
primarily the result of the receipt of the past due balances from Edison.  These
receipts were deposited into cash accounts at Salton Sea Funding Corporation and
are recorded as amounts due to the Salton Sea and Partnership Guarantors.

Environmental Liabilities

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

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

Inflation

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

Quantitative and Qualitative Disclosure about Market Risk

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


<PAGE>



Contractual Obligations and Commercial Commitments

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


<PAGE>


                         SALTON SEA FUNDING CORPORATION

                           PART II - OTHER INFORMATION


Item 1 - Legal proceedings.

          Neither  the Salton Sea Funding  Corporation  nor the  Guarantors  are
          parties to any material legal matters except as noted in footnote 3 of
          the Salton Sea Funding Corporation financial statements.

Item 2 - Changes in Securities.

          Not applicable.

Item 3 - Default on Senior Securities.

          Not applicable.

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

          Not applicable.

Item 5 - Other Information.

          Not applicable.

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

(a)      Exhibits:

               Not applicable.

         (b)  Reports on Form 8-K:

               Current Report filed March 4, 2002,  reporting of receipt of past
               due payments from Southern California Edison.







<PAGE>


                                   SIGNATURES


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


                         SALTON SEA FUNDING CORPORATION


Date:  May 14, 2002                    /s/    Paul J. Leighton
                                       By:    Paul J. Leighton
                                              Secretary