UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K

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

                   For the fiscal year ended December 31, 2001
                          Commission File No. 33-95538

                         SALTON SEA FUNDING CORPORATION
             (Exact name of registrant as specified in its charter)
        Delaware                                       47-0790493
        --------                                       ----------
       (State of                                      (IRS Employer
     Incorporation)                                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

                 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
                                           --------------

         Securities registered pursuant to Section 12(b) of the Act: N/A
         Securities registered pursuant to Section 12(g) of the Act: N/A

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

                                Yes X      No
                              ---------- ----------

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best of Registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ X ]

All  common  stock of Salton  Sea  Funding  Corporation  is held by Magma  Power
Company. 100 shares of Common Stock were outstanding on March 28, 2002.

 Documents incorporated by reference:  N/A


<PAGE>


                                TABLE OF CONTENTS

Part I    ....................................................................1
         Item 1.  Business....................................................1
         The Projects.........................................................2
                  Salton Sea Projects.........................................3
                  Partnership Projects........................................4
                  Zinc Recovery Project.......................................5
                  Royalty Projects............................................5
         Securities        ...................................................5
                  Structure of and Collateral for the Securities..............6
                  Payment of Interest and Principal...........................7
                  Priority of Payments........................................8
                  Debt Service Reserve Fund...................................9
                  Optional Redemption.........................................9
                  Mandatory Redemption........................................9
                  Distributions     ..........................................9
                  Incurrence of Additional Debt..............................10
                  Principal Indenture Covenants..............................11
                  Principal Credit Agreement Covenants.......................11
                  Considerations Regarding Limitation on Remedies............11
         Power Price and Sales Uncertainty...................................11
         Reliance on Single Utility Customer.................................12
         Zinc Price and Sales Uncertainty....................................12
         Construction Uncertainty............................................12
         Uncertainties Relating to Exploration and Development of
                Geothermal Energy Resources..................................12
         Insurance...........................................................13
         Regulatory and Environmental Matters................................13
         Employees...........................................................13
         Item 2.  Properties.................................................14
         Item 3.  Legal Proceedings..........................................14
         Item 4.  Submission of Matters to a Vote of Security Holders........16

Part II  ....................................................................17
         Item 5.  Market for Registrant's Common Equity and Related
                Stockholder's Matters........................................17
         Item 6.  Selected Financial Data....................................17
         Item 7.  Management's Discussion and Analysis of Financial
                Condition and Results of Operations..........................18
                  Forward Looking Statements.................................18
                  Critical Accounting Policies...............................18
                  Factors Affecting Results of Operations....................19
                  Capacity Utilizations......................................19
                  Results of Operations for the Years Ended December 31,
                2001, 2000 and 1999..........................................20
         Item 7A.  Qualitative and Quantitative Disclosures About Market Risk26
                      Interest Rate Risk.....................................26
         Item 8.   Financial Statements and Supplementary Data...............27
         Item 9.   Changes in and Disagreements with Accountants on
                Accounting and Financial Disclosure..........................80

Part III ....................................................................81
         Item 10.    Directors and Executive Officers of the Registrant......81
         Item 11.   Executive Compensation...................................83
         Item 12.   Security Ownership of Certain Beneficial Owners and
                Management...................................................83
                  Item 13.   Certain Relationships and Related Transactions..83

Part IV  ....................................................................85
         Item 14.   Exhibits, Financial Statements Schedule and Reports
                on Form 8-K..................................................85

Signatures...................................................................86



<PAGE>



PART I

Item 1.  Business

Salton Sea Funding Corporation ("Funding  Corporation") an indirect wholly-owned
subsidiary of CE Generation,  LLC ("CE Generation"),  is a Delaware  corporation
formed for the sole purpose of issuing securities in its individual  capacity as
principal and as agent acting on behalf of the  Guarantors  (as defined  below).
The  principal  executive  office of the Funding  Corporation  is located at 302
South 36th Street, Suite 400, Omaha,  Nebraska 68131 and its telephone number is
(402) 341-4500.

CE Generation  owns all of the capital  stock of Magma Power Company  ("Magma"),
which owns all of the outstanding capital stock of Funding Corporation.  Through
its  subsidiaries,  CE  Generation  is  primarily  engaged  in the  development,
ownership  and  operation  of  environmentally   responsible  independent  power
production  facilities in the United States utilizing geothermal and natural gas
resources.  CE Generation  has an aggregate net ownership  interest of 756 MW of
electrical  generating  capacity  in power  plants in  operation  in the  United
States,  which have an aggregate net capacity of 816 MW (including its interests
in the Salton Sea Projects and the Partnership Projects as defined below).

All of the  outstanding  stock of Magma was  contributed by  MidAmerican  Energy
Holdings  Company  ("MidAmerican")  to CE Generation in February  1999. In March
1999,  MidAmerican sold a 50% interest in CE Generation to El Paso CE Generation
Holding  Company,  which was merged into El Paso Merchant  Energy North American
Company  ("EPME") on December  31, 2000,  an  affiliate  of El Paso  Corporation
("EPME").

Magma  directly or indirectly  owns all of the capital  stock of or  partnership
interests in the Funding  Corporation and the  Guarantors,  except for CalEnergy
Minerals LLC ("Minerals LLC") and Salton Sea Minerals Corp.,  which are owned by
MidAmerican.  The  Guarantors  are comprised of the Salton Sea  Guarantors,  the
Partnership Guarantors and the Royalty Guarantor.

The Salton Sea Guarantors  include Salton Sea Brine  Processing  L.P.  ("SSBP"),
Salton Sea Power Generation L.P. ("SSPG") Salton Sea Power L.L.C.  ("Power LLC")
and  Fish  Lake  Power  LLC  ("Fish  Lake")   (collectively,   the  "Salton  Sea
Guarantors"),  which own five  operating  geothermal  power  plants  located  in
Imperial  Valley,  California  known as Salton Sea I, Salton Sea II,  Salton Sea
III, Salton Sea IV and Salton Sea V (the "Salton Sea Projects").

The  Partnership  Guarantors  include the  Vulcan/BN  Geothermal  Power  Company
("Vulcan"),  Elmore, L.P. ("Elmore"),  Leathers,  L.P. ("Leathers"),  Del Ranch,
L.P. ("Del Ranch") and CE Turbo LLC  ("Turbo"),  each of which owns an operating
geothermal  power plant  located in  Imperial  Valley,  California  known as the
Vulcan Project,  the Elmore Project, the Leathers Project, the Del Ranch Project
and Turbo Project,  respectively (the "Partnership  Projects").  The Partnership
Guarantors  also include  Minerals LLC,  which is  constructing  a zinc recovery
project in the Imperial Valley, California.  Finally, the Partnership Guarantors
include CalEnergy Operating Corporation ("CEOC"),  Vulcan Power Company ("VPC"),
San Felipe Energy  Company ("San  Felipe"),  Conejo Energy  Company  ("Conejo"),
Niguel Energy  Company  ("Niguel"),  VPC  Geothermal  LLC  ("VPCG"),  Salton Sea
Minerals Corp. and CE Salton Sea Inc. VPC and VPCG, collectively own 100% of the
partnership  interests  in Vulcan.  CEOC and  Niguel,  San  Felipe  and  Conejo,
collectively own 90% partnership  interests in each of Elmore,  Leathers and Del
Ranch,  respectively.  Salton Sea Minerals  Corporation  owns  Minerals  LLC. CE
Salton Sea Inc. owns Power LLC and Turbo.

Magma owns all of the remaining  10%  interests in each of Elmore,  Leathers and
Del Ranch.  CEOC is entitled to receive from Magma,  as payment for certain data
and  services  provided  by CEOC,  all of the  partnership  distributions  Magma
receives  with  respect to its 10%  ownership  interests  in each of the Elmore,
Leathers and Del Ranch Projects and Magma's special  distributions equal to 4.5%
of total energy revenues from the Leathers Project.

Salton Sea  Royalty  LLC  ("SSRC" or the  "Royalty  Guarantor")  is the  Royalty
Guarantor.   SSRC   received  an   assignment  of  certain  fees  and  royalties
("Royalties")  paid by three  Partnership  Projects:  Elmore,  Leathers  and Del
Ranch.

CEOC  currently  operates  each of the Salton Sea Projects  and the  Partnership
Projects,  collectively  the  "Imperial  Valley  Projects".  Affiliates of Magma
control, through a variety of fee, leasehold,  and royalty interests,  rights to
geothermal  resources for power  production  in the Salton Sea Known  Geothermal
Resource Area ("SSKGRA").  The Funding Corporation  believes that such resources
will be  sufficient  to  operate  the Salton Sea  Projects  and the  Partnership

<PAGE>

Projects at contract  capacity under their respective power purchase  agreements
through the final maturity date of the Securities.

The principal  executive offices of the Salton Sea Guarantors are located at 302
South 36th Street,  Suites 400-B, 400-D, 400-E, 400-K and 400-N, Omaha, Nebraska
68131.  The principal  executive  offices of the  Partnership  Guarantors is 302
South 36th Street, Suite 400-F, 400-G, 400-I, 400-J, 400-L, 400-M, 400-N, 400-O,
400-P,  400-Q,  400-R,  400-S,  400-T,  and 400-U,  Omaha,  Nebraska 68131.  The
principal  executive  office of the Royalty  Guarantor is 302 South 36th Street,
Suite 400-H,  Omaha,  Nebraska  68131.  The Salton Sea  Guarantors,  Partnership
Guarantors  and the Royalty  Guarantor  are sometimes  referred to  collectively
herein as the "Guarantors".

The Projects

Set forth below is a table describing certain  characteristics of the Salton Sea
Projects and the Partnership Projects,  and the Guarantors' collective interests
therein. All the projects are located in the Imperial Valley, California.
<TABLE>
<CAPTION>
                                                 DATE OF                                        CONTRACT
PROJECT                    FACILITY             COMMERICAL        CONTRACT      CONTRACT         POWER
                           CAPACITY (1)(2)      OPERATION        EXPIRATION       TYPE         PURCHASERS

Salton Sea Projects
<S>                        <C>                  <C>                <C>          <C>            <C>
Salton Sea I                 10.0               7/1987              6/2017      Negotiated          Edison
Salton Sea II                20.0               4/1990              4/2020             SO4          Edison
Salton Sea III               49.8               2/1989              2/2019             SO4          Edison
Salton Sea IV                39.6               6/1996              5/2026             SO4          Edison
Salton Sea V                 49.0               6/2000                 N/A             N/A     Energy Markets/
                            -----                                                              Zinc Recovery Project
Subtotal                    168.4
                            -----

Partnership Projects

Vulcan                       34.0               2/1986              2/2016             SO4          Edison
Elmore                       38.0               1/1989             12/2018             SO4          Edison
Leathers                     38.0               1/1990             12/2019             SO4          Edison
Del Ranch                    38.0               1/1989             12/2018             SO4          Edison
CE Turbo                     10.0               8/2000                 N/A             N/A     Energy Markets/
Subtotal                    158.0                                                              Zinc Recovery Project
                           -----
Total Power
Projects                    326.4
                           ======

Zinc Recovery
Project                    30,000                 2002                 N/A             N/A             N/A
                           ======
</TABLE>

(1) Power capacity varies with operating and reservoir conditions.
(2) Facility Capacities are measured in MW; zinc recovery project capacity is
measured in estimated tons per year production.

Each of the  Imperial  Valley  Projects,  excluding  the Turbo and  Salton Sea V
Projects,  sells electricity to Southern  California  Edison Company  ("Edison")
pursuant to a separate  Standard  Offer No. 4 Agreement  ("SO4  Agreement") or a
negotiated  power  purchase   agreement.   Each  power  purchase   agreement  is
independent of the others, and the performance requirements specified within one
such agreement apply only to the Project, which is subject to the agreement. The
power purchase  agreements  provide for energy payments,  capacity  payments and
capacity  bonus  payments.  Edison  makes fixed  annual  capacity  payments  and
capacity bonus  payments to the applicable  projects to the extent that capacity
factors exceed certain benchmarks.  Except as described,  the price for capacity
is fixed for the life of the SO4 Agreements and is  significantly  higher in the
months of June through September.
<PAGE>

Energy  payments for the SO4 Agreements  were at increasing  fixed rates for the
first ten years after firm  operation and thereafter at a rate based on the cost
that Edison  avoids by purchasing  energy from the project  instead of obtaining
the energy from other sources  ("Avoided Cost of Energy").  In June and November
2001,  the Imperial  Valley  Projects,  which receive  Edison's  Avoided Cost of
Energy entered into  agreements  that provide for amended energy  payments under
the SO4 Agreements.  The amendments provide for fixed energy payments per kWh in
lieu of Edison's Avoided Cost of Energy.  The fixed energy payment is 3.25 cents
per kWh from  December  1, 2001  through  April 30,  2002 and 5.37 cents per kWh
commencing May 1, 2002 for a five-year  period.  Following the five-year period,
the energy payments revert back to Edison's Avoided Cost of Energy.

For the years ended  December 31, 2001,  2000 and 1999,  respectively,  Edison's
Average  Avoided Cost of Energy was 7.4 cents per  kilowatt-hour,  5.8 cents per
kilowatt-hour  and 3.1  cents  per  kilowatt-hour,  respectively.  Estimates  of
Edison's future Avoided Cost of Energy vary substantially from year to year.

The Imperial  Valley  Projects,  other than Salton Sea I,  receive  transmission
service from the Imperial  Irrigation  District to deliver electricity to Edison
near  Mirage,  California.  These  projects  pay a rate  based  on the  Imperial
Irrigation District's cost of service, which was $1.68 per month per kilowatt of
service provided for 2001 and recalculated  annually.  The transmission  service
and interconnection agreements expire in 2015 for the Partnership Projects, 2019
for  Salton Sea III,  2020 for Salton Sea II and 2026 for Salton Sea IV.  Salton
Sea V and the Turbo Projects have entered into 30-year  agreements  with similar
terms with the Imperial  Irrigation  District.  Salton Sea I delivers  energy to
Edison at the project site and has no  transmission  service  agreement with the
Imperial Irrigation District.

Salton Sea Projects

The Salton Sea I Project  contracts to sell  electricity to Edison pursuant to a
30-year  negotiated power purchase agreement that commenced on July 1, 1987 (the
"Salton Sea I PPA").  The contract  capacity and contract  nameplate are each 10
MW. The capacity  payment is based on the firm  capacity  price,  which  adjusts
quarterly  based on a basket of energy  indices for the term of the Salton Sea I
PPA and is currently $154.45 per kW-year.  The capacity payment is approximately
$1.1  million per annum.  The energy  payment is  calculated  using a Base Price
(defined as the initial  value of the energy  payment (4.7 cents per kWh for the
second quarter of 1992),  which is subject to quarterly  adjustments  based on a
basket of indices.  The time period  weighted  average energy payment for Salton
Sea was 5.9 cents per kWh  during  2001.  As the  Salton Sea I PPA is not an SO4
Agreement, the energy payments do not revert to Edison's Avoided Cost of Energy.

The Salton Sea II Project  contracts to sell electricity to Edison pursuant to a
30-year  modified SO4 Agreement  that  commenced on April 5, 1990.  The contract
capacity and contract  nameplate are 15 MW (16.5 MW during on-peak  periods) and
20 MW, respectively. The price for contract capacity and contract capacity bonus
payments  is fixed for the life of the  modified  SO4  Agreement.  The  combined
annual capacity and bonus payments are  approximately  $3.3 million.  The energy
payments for the first ten-year  period,  which period expired on April 4, 2000,
were  levelized  at a time  period  weighted  average  of 10.6  cents  per  kWh.
Thereafter,  the monthly  energy  payment was based on Edison's  Avoided Cost of
Energy. Edison is entitled to receive, at no cost, 5% of all energy delivered in
excess of 80% of contract capacity through September 30, 2004.

The Salton Sea III Project contracts to sell electricity to Edison pursuant to a
30-year modified SO4 Agreement that commenced on February 13, 1989. The contract
capacity and contract nameplate are 47.5 MW and 49.8 MW, respectively. The price
for contract  capacity  payments and capacity bonus payments is fixed at $175/kW
per year. The combined annual capacity and bonus payments are approximately $9.7
million. The energy payments for the first ten-year period, which period expired
on February 12, 1999,  were levelized at a time period  weighted  average of 9.8
cents per kWh. Thereafter, the energy payment was based on Edison's Avoided Cost
of Energy.

The Salton Sea IV Project  contracts to sell electricity to Edison pursuant to a
modified SO4 Agreement which provides for contract capacity payments on 34 MW of
capacity at two  different  rates based on the  respective  contract  capacities
deemed  attributable  to the original Salton Sea I PPA option (20 MW) and to the
original  Salton Sea IV SO4  Agreement  ("Fish Lake PPA") (14 MW).  The capacity
payment  price for the 20 MW portion  adjusts  quarterly  based  upon  specified
indices  and  the  capacity  payment  price  for  the 14 MW  portion  is a fixed
levelized  rate.  The  combined   capacity  and  bonus  payments  in  2001  were
approximately  $5.7 million.  The energy payment (for deliveries up to a rate of
39.6 MW) is at a fixed price for 55.6% of the total  energy  delivered by Salton
Sea IV and is based on an energy payment  schedule for 44.4% of the total energy
delivered  by Salton Sea IV. The  contract  has a 30-year term but Edison is not
required to purchase the 20 MW of capacity and energy originally attributable to
the Salton Sea I PPA option after  September 30, 2017, the original  termination
date of the Salton Sea I PPA.
<PAGE>

The Salton Sea V Project,  which  commenced  operations  in the third quarter of
2000,  will sell  approximately  one-third of its net output to a zinc facility,
which is owned by a  subsidiary  of  MidAmerican  and is  expected  to  commence
commercial  operations  in 2002.  The Salton Sea V Project  sells its  remaining
output through other market transactions.

On January 17, 2001,  Salton Sea Power entered into a  transaction  agreement to
sell available  power from Salton Sea V to El Paso Merchant Energy North America
Company ("EPME").  Under the terms of the agreement, at the option of Salton Sea
Power, EPME purchased all available power from the Salton Sea V and based on day
ahead price quotes received from EPME.

On March 27, 2001 and May 1, 2001 Salton Sea Power entered into new  transaction
agreements  to  sell  available  power  from  Salton  Sea  V to  EPME  based  on
percentages of the Dow Jones SP-15 Index.

Partnership Projects

The Vulcan Project  contracts to sell  electricity to Edison under a 30-year SO4
Agreement that commenced on February 10, 1986. The Vulcan Project has a contract
capacity and contract nameplate of 29.5 MW and 34 MW, respectively. The combined
annual capacity and bonus payments are approximately $5.5 million.

The Hoch (Del Ranch)  Project  contracts to sell  electricity  to Edison under a
30-year SO4 Agreement that  commenced on January 2, 1989. The combined  contract
capacity and contract nameplate are 34 MW and 38 MW, respectively.  The combined
annual capacity and bonus payments are approximately $7.9 million.

The Elmore Project  contracts to sell  electricity to Edison under a 30-year SO4
Agreement that commenced on January 1, 1989. The contract  capacity and contract
nameplate  are 34 MW and 38 MW,  respectively.  The  annual  capacity  and bonus
payments are approximately $7.9 million.

The Leathers Project  combined  contracts to sell electricity to Edison pursuant
to a 30-year SO4  Agreement  that  commenced  on January 1, 1990.  The  contract
capacity and contract nameplate are 34 MW and 38 MW, respectively.  The combined
annual  capacity and bonus payments are  approximately  $7.5 million.  The fixed
price period for energy payments expired on December 31, 1999.  Thereafter,  the
energy payment was based on Edison's Avoided Cost of Energy.

The Turbo Project,  which commenced commercial operation in the third quarter of
2000, sells its output through market  transactions.  The Turbo Project may sell
its output pursuant to a power purchase  agreements with a zinc facility,  which
is owned by a subsidiary of MidAmerican  and is expected to commence  commercial
operations in 2002.

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

On  March  27,  2001  and May 1,  2001 CE Turbo  entered  into  new  transaction
agreements  to sell  available  power  from the Turbo  Project  to EPME based on
percentages of the Dow Jones SP-15 Index.

Minerals LLC  developed  and owns the rights to  proprietary  processes  for the
extraction of zinc from elements in solution in the geothermal  brine and fluids
utilized  at  the  company's  Imperial  Valley  Projects.   A  pilot  plant  has
successfully  produced  commercial quality zinc at the Imperial Valley Projects.
The affiliates of Minerals LLC intend to sequentially develop facilities for the
extraction of manganese,  silver,  gold, lead, boron, lithium and other products
as it further develops the extraction technology.
<PAGE>

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 Salton  Sea &  Partnership  Project  sites 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  tons 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.

Royalty Projects

The Royalty  Guarantor has received an assignment from Magma of certain payments
("Royalties")  received  from the  Leathers,  Del Ranch and Elmore  Projects  in
exchange  for the  provision  to those  projects  of the  rights to use  certain
geothermal resources. Substantially all of the assigned Royalties are based on a
percentage of energy and capacity revenues of the respective projects.  Pursuant
to the  assignment,  the Royalty  Guarantor is entitled to receive the aggregate
percentages of such project's energy and capacity revenues as illustrated in the
chart below. The Partnership  Guarantors are also entitled to receive  Royalties
from the Partnership  Projects as illustrated in the chart below.  Royalties are
subject to netting and reduction from time to time to reflect various  operating
costs,  as reflected in the  financial  statements  herein.  All such  Royalties
(other  than  the  various  operating  costs,  as  reflected  in  the  financial
statements)  are  payable  from  revenues  which  will  constitute   Partnership
Guarantors collateral.

                 ROYALTIES TO BE PAID TO              ROYALTIES TO BE PAID TO
                   ROYALTY GUARANTOR                   PARTNERSHIP GUARANTORS
PROJECT        % ENERGY           % CAPACITY      % ENERGY        % CAPACITY
               REVENUES            REVENUES         REVENUES        REVENUES

Del Ranch      23.33                 1.00            5.67              3.00
Elmore         23.33                 1.00            5.67              3.00
Leathers       21.50                 0.00            7.50              3.00
Vulcan          0.00                 0.00            4.17              0.00


The Securities

The Funding Corporation is a Delaware corporation formed for the sole purpose of
issuing  securities in our individual  capacity as principal and as agent acting
on behalf of our affiliates, which guarantee the Securities.

The Funding  Corporation has completed the following  issuances and exchanges of
securities (together, the "Securities"):

     * On July 21, 1995, the Funding  Corporation  issued (1) $232.75 million of
     6.69% Senior Secured  Series A Notes Due 2000 (the "Series A  Securities"),
     (2) $133  million  of 7.37%  Senior  Secured  Series B Bonds  Due 2005 (the
     "Series B  Securities")  and (3) $109.25  million of 7.84%  Senior  Secured
     Series  C Bonds  Due  2010  (the  "Series  C  Securities").  The  Series  A
     Securities were repaid in full on May 30, 2000.

     * On June 20, 1996, the Funding Corporation issued (1) $70 million of 7.02%
     Senior Secured Series D Bonds Due 2000 (the "Series D Securities")  and (2)
     $65 million of 8.30% Senior  Secured Series E Bonds Due 2011 (the "Series E
     Securities"). The Series D Securities were repaid in full on May 30, 2000.

     * On October 13,  1998,  the  Funding  Corporation  issued $285  million of
     7.475% Senior Secured Series F Bonds Due 2018 (the "Series F Securities").

The Securities have received ratings of Ba3 by Moody's Investors  Service,  Inc.
("Moody's")  and  "BBB-"  by  Standard  &  Poor's  Ratings  Group  ("S&P").  The
Securities  will be  equivalent in right of payment and in the right to share in
the  collateral.  On December 31, 2001,  the aggregate  principal  amount of all
Securities outstanding was $520 million.
<PAGE>

Structure of and Collateral for the Securities

The Funding  Corporation will make payments on the Securities with the principal
of and interest paid on promissory notes issued by the Guarantors to the Funding
Corporation (the "Project Notes"). The Securities are secured by a pledge of our
capital stock and are guaranteed by the Guarantors. These guarantees are secured
by:

     * in the case of the guarantee  issued by the Salton Sea  Guarantors,  by a
     lien on substantially  all of the assets of the Salton Sea Guarantors and a
     pledge of the equity interests in the Salton Sea Guarantors;

     * in the case of the guarantee issued by the Partnership  Guarantors,  by a
     lien  on  substantially  all  of the  assets  of  the  Partnership  Project
     Companies,  a lien on the equity  cash flows and  royalties  of the Initial
     Partnership  Guarantors  and a  pledge  of the  stock of and  other  equity
     interests in the Partnership Guarantors; and

     * in the case of the guarantee issued by the Royalty  Guarantor,  by a lien
     on all royalties paid to the Royalty  Guarantor and a pledge of the capital
     stock of the Royalty Guarantor.

The guarantees issued by the Salton Sea Guarantors are unlimited.  However,  the
guarantees  issued by the Partnership  Guarantors and the Royalty  Guarantor are
limited to the following amounts:

     * for any Initial Partnership Guarantor or the Royalty Guarantor, the total
     equity cash flows and royalties received by the Guarantor,  minus,  without
     duplication,  (1) any royalties  paid,  (2) all  operating and  maintenance
     costs, (3) all capital expenditures and (4) debt service;

     * for any Additional Partnership Guarantor,  the total revenues received by
     the Guarantor,  minus,  without duplication (1) any royalties paid, (2) all
     operating and maintenance costs, (3) all capital  expenditures and (4) debt
     service.

The  structure  has been  designed to  cross-collateralize  cash flows from each
Guarantor  without   cross-collateralizing   all  of  the  Guarantors'   assets.
Therefore,  if a Guarantor  defaults under its guarantee or its promissory  note
issued to the  Funding  Corporation,  without  causing a payment  default on the
Securities,  then the  trustee  may  direct  the  collateral  agent to  exercise
remedies  only  with  respect  to  the  collateral   securing  that  Guarantor's
obligations.   If,  however,  the  default  causes  a  payment  default  on  the
Securities,  then the  trustee  may  accelerate  the  Securities  and direct the
collateral  agent to exercise  remedies  against all of the  collateral  and, if
different, the collateral pledged by the Salton Sea Guarantors.

The Funding  Corporation is a special purpose finance  subsidiary of Magma.  Its
ability to make  payments on the  Securities  will be entirely  dependent on the
Guarantors'  performance  of their  obligations  under the Project Notes and the
Guarantees. As is common in non-recourse, project finance structures, the assets
and cash flows of the Guarantors are the sole source of repayment of the Project
Notes and the  Guarantees.  The Salton Sea Guarantors  conduct no other business
and own no other  significant  assets  except those  related to the ownership or
operation of the Salton Sea  Projects.  The  Partnership  Guarantors  conduct no
business  other  than  owning  their  respective   ownership  interests  in  the
Partnership  Projects and providing operation,  maintenance,  administrative and
technical  services  for  Magma,  the Salton Sea  Projects  and the  Partnership
Projects.  The Royalty  Guarantor has been organized  solely to receive  royalty
payments  owed by the  Partnership  Projects and conducts no other  business and
owns no other assets. In the event of a default by any Guarantor under a Project
Note, Credit Agreement or Guarantee,  there is no assurance that the exercise of
remedies  under such Project  Note,  Credit  Agreement or  Guarantee,  including
foreclosure on the assets of such Guarantor,  would provide  sufficient funds to
pay such  Guarantor's  obligation  under the Project  Notes and the  Guarantees.
Moreover,  unless such default causes a payment  default under the Indenture (in
which case remedies may be exercised against the defaulting  Guarantor's and the
Salton Sea  Guarantors'  assets),  remedies  may be  exercised  only against the
assets of the defaulting Guarantors. No shareholders,  partners or affiliates of
the Funding  Corporation (other than the Guarantors) and no directors,  officers
or employees of the Funding  Corporation or the Guarantors  will guarantee or be
in any way liable for the payment of the  Securities,  the Project  Notes or the
Guarantees  except the  guarantee  by  MidAmerican  for the direct and  indirect
owners of the Zinc Recovery Project of a specified portion of the scheduled debt
service on the Series F Securities  including  the current  principal  amount of
approximately  $139.9  million  and  associated  interest.   In  addition,   the
obligations of the  Partnership  Guarantors and the Royalty  Guarantor under the
Guarantees  are limited to the  available  cash flows of such  Guarantors.  As a
result,  payment of amounts owed pursuant to the Project  Notes,  the Guarantees
and the Securities is dependent upon the availability of sufficient revenues and
royalty payments from the Guarantors' businesses or holdings,  after the payment
of operating expenses and the satisfaction of certain other obligations.
<PAGE>

Payment of Interest and Principal

    The interest payment dates for the Securities are May 30 and November 30.

The remaining  balance of the $133 million initial principal amount of the 7.37%
Series B Securities  due May 30, 2005 is payable in semiannual  installments  as
follows:

    PAYMENT DATE                                     PERCENTAGE OF INITIAL
                                                       PRINCIPAL AMOUNT
                                                            PAYABLE

    May 30, 2002                                        8.5330827068%
    November 30, 2002                                   8.5330827068%
    May 30, 2003                                        5.6390977444%
    November 30, 2003                                   5.6390977444%
    May 30, 2004                                        7.5781954887%
    November 30, 2004                                   7.5781954887%
    May 30, 2005                                       16.1684210526%

The $109.25  million initial  principal  amount of the 7.84% Series C Securities
due May 30, 2010 is payable in semiannual installments, commencing May 30, 2003,
as follows:

    PAYMENT DATE                                        PERCENTAGE OF
                                                      PRINCIPAL AMOUNT
                                                          PAYABLE

    May 30, 2003                                        3.3116704805%
    November 30, 2003                                   3.3116704805%
    May 30, 2004                                        1.6558352403%
    November 30, 2004                                   1.6558352403%
    May 30, 2005                                        0.8283752860%
    November 30, 2005                                   0.8283752860%
    May 30, 2006                                        9.8572082380%
    November 30, 2006                                   9.8572082380%
    May 30, 2007                                        9.8425629291%
    November 30, 2007                                   9.8425629291%
    May 30, 2008                                       10.0851258581%
    November 30, 2008                                  10.0851258581%
    May 30, 2009                                       10.0118993135%
    November 30, 2009                                  10.0118993135%
    May 30, 2010                                        8.8146453090%

The remaining  balance of the $65 million initial  principal amount of the 8.30%
Series E Securities  due May 30, 2011 is payable in semiannual  installments  as
follows:

    PAYMENT DATE                                       PERCENTAGE OF INITIAL
                                                          PRINCIPAL AMOUNT
                                                             PAYABLE

    May 30, 2002                                        1.2307692308%
    November 30, 2002                                   1.2307692308%
    May 30, 2003                                        2.3076923077%
    November 30, 2003                                   2.3076923077%
    May 30, 2004                                        2.5000000000%
    November 30, 2004                                   2.5000000000%
    May 30, 2005                                        2.6923076923%
    November 30, 2005                                   2.6923076923%
    May 30, 2006                                        1.9230769231%

<PAGE>

    November 30, 2006                                   1.9230769231%
    May 30, 2007                                        1.9230769231%
    November 30, 2007                                   1.9230769231%
    May 30, 2008                                        2.6923076923%
    November 30, 2008                                   2.6923076923%
    May 30, 2009                                        2.5000000000%
    November 30, 2009                                   2.5000000000%
    May 30, 2010                                       10.3846153846%
    November 30, 2010                                  10.3846153846%
    May 30, 2011                                       17.4184615384%

The remaining balance of the $285 million initial principal amount of the 7.475%
Series F Securities due November 30, 2018 is payable in semiannual  installments
as follows:

    PAYMENT DATE                                       PERCENTAGE OF INITIAL
                                                          PRINCIPAL AMOUNT
                                                              PAYABLE

    May 30, 2002                                               0.750%
    November 30, 2002                                          0.750%
    May 30, 2003                                               0.500%
    November 30, 2003                                          0.500%
    May 30, 2004                                               0.625%
    November 30, 2004                                          0.625%
    May 30, 2005                                               0.625%
    November 30, 2005                                          0.625%
    May 30, 2006                                               0.650%
    November 30, 2006                                          0.650%
    May 30, 2007                                               0.375%
    November 30, 2007                                          0.375%
    May 30, 2008                                               0.875%
    November 30, 2008                                          0.875%
    May 30, 2009                                               0.375%
    November 30, 2009                                          0.375%
    May 30, 2010                                               1.250%
    November 30, 2010                                          1.250%
    May 30, 2011                                               3.000%
    November 30, 2011                                          3.000%
    May 30, 2012                                               5.750%
    November 30, 2012                                          5.750%
    May 30, 2013                                               5.075%
    November 30, 2013                                          5.075%
    May 30, 2014                                               6.000%
    November 30, 2014                                          6.000%
    May 30, 2015                                               6.550%
    November 30, 2015                                          6.550%
    May 30, 2016                                               7.050%
    November 30, 2016                                          7.050%
    May 30, 2017                                               6.875%
    November 30, 2017                                          6.875%
    May 30, 2018                                               3.450%
    November 30, 2018                                          3.450%

Priority of Payments

All revenues received by the Salton Sea Guarantors from the Salton Sea Projects,
all revenues received by the Partnership  Guarantors and all Royalties  received
by the Royalty  Guarantor  shall be paid into a Revenue Fund  maintained  by the
depository agent. Amounts paid into the Revenue Fund shall be distributed in the
following order of priority:  (a) to pay operating and maintenance  costs of the
Guarantors;  (b) to pay  certain  administrative  costs  of the  agents  for the
secured parties under the Financing Documents;  (c) to pay principal of, premium

<PAGE>

(if any) and interest on the Securities and the debt service  reserve bonds,  if
any, and interest and certain fees payable to the debt service reserve letter of
credit  provider;  (d) to pay principal of debt service reserve letter of credit
loans and certain  related fees and charges;  (e) to replenish  any shortfall in
the Debt Service  Reserve Fund; (f) to pay certain  breakage costs in respect of
debt service  reserve  letter of credit  loans,  and  indemnification  and other
expenses  to  the  secured  parties,   and  (g)  to  the  Distribution  Fund  or
Distribution Suspense Fund, as applicable.

Debt Service Reserve Fund

The Funding  Corporation  is  obligated  at all times to maintain a Debt Service
Reserve Fund and/or an  acceptable  letter of credit.  The Debt Service  Reserve
Fund is funded from available  funds in accordance with the priority of payments
until the aggregate amount of the fund and letter of credit are equal to:

     * through December 31, 1999, the maximum semiannual  principal and interest
     payments on the Securities for the remaining term of the Securities;

     * after December 31, 1999 through payment in full of the Initial Securities
     and the Supplemental Securities,  the maximum annual principal and interest
     payments on the Securities for the remaining term of the Securities; and

     * after  payment in full of the  Initial  Securities  and the  Supplemental
     Securities,  (a) the maximum annual principal and interest  payments on the
     Series  F  Securities  for  the  remaining  term  or  (b)  if we  obtain  a
     confirmation  of  the  current  ratings  of  the  Securities,  the  maximum
     semiannual principal and interest payments on the Series F Securities.

The Debt Service  Reserve  Letter of Credit,  which was being provided by Credit
Suisse First Boston,  must be issued by a financial  institution  rated at least
"A" by S&P and "A2" by  Moody's.  As a result of the  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 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 and has
been extended beyond its current 2004 expiration date or replaced.

Optional Redemption

The Series B Securities,  Series C Securities,  Series E Securities and Series F
Securities are subject to optional redemption,  in whole or in part, pro rata at
par plus accrued  interest to the redemption  date plus a premium  calculated to
"make whole" to comparable U.S. Treasury securities plus 50 basis points.

Mandatory Redemption

The  Securities  are  subject to  mandatory  redemption,  pro rata  within  each
maturity,  at par  plus  accrued  interest  to  the  redemption  date,  (a) if a
permitted power contract  buy-out occurs unless the rating agencies  confirm the
then current rating of the  Securities;  (b) upon the  acceleration of a Project
Note in an amount  equal to the  principal  amount  of such  note  plus  accrued
interest; (c) upon the occurrence of certain events of loss, condemnation, title
defects or similar events related to the Salton Sea Projects or the  Partnership
Projects;  or (d) in certain  circumstances  if any New Project fails to achieve
substantial  completion by the applicable guaranteed substantial completion date
or receives  certain net performance  liquidated  damages under the construction
contract for such Project or (e) upon the foreclosure by the Collateral Agent of
collateral securing the Guarantor's  obligations under the Salton Sea Guarantee,
the Partnership Guarantee or Royalty Guarantee.

Distributions

Distributions  may be made only from and to the  extent of monies on  deposit in
the Distribution  Fund. Such distributions are subject to the prior satisfaction
of the following conditions:

     (a)  the amounts  contained in the  Principal  Fund and the  Interest  Fund
          shall be equal to or greater than the  aggregate  scheduled  principal
          and interest  payments next due on the  Securities;
     (b)  no default or event of default under the Indenture shall have occurred
          and be  continuing;
     (c)  the  debt  service  coverage  ratio  for  the  preceding  four  fiscal
          quarters,  measured as one annual period,  is equal to or greater than
          1.4 to 1, if such  distribution  date  occurs  prior to the year 2000,
          and, if in or subsequent to the year 2000, is equal to or greater than
          1.5 to 1, as certified by an officer of the Funding  Corporation;
     (d)  the projected  debt service  coverage  ratio of the Securities for the
          succeeding four fiscal quarters measured as one annual period is equal
          to or greater than 1.4 to 1, if such distribution date occurs prior to
          the year 2000, and, if such  distribution date occurs in or subsequent
          to the year 2000,  is equal to or greater  than 1.5 to 1, as certified
          by an officer of the Funding Corporation;

<PAGE>

     (e)  the debt service reserve fund shall have a balance equal to or greater
          than the debt  service  reserve fund  required  balance or one or more
          Debt Service  Reserve  Letter (or Letters) of Credit at least equal to
          (collectively  with the balance,  if any, in the Debt Service  Reserve
          Fund) the debt service reserve fund required  balance;
     (f)  an officer of the Funding Corporation provides a certificate (based on
          customary  assumptions) that there are sufficient geothermal resources
          to operate the Salton Sea  Projects  and the  Partnership  Projects at
          contract  capacity  through the final maturity date of the Securities;
          and
     (g)  substantial  completion  of each New Project shall have occurred on or
          prior to such New Project's  guaranteed  substantial  completion  date
          unless the required  amount of Securities  shall have been redeemed as
          described  above  under  "Mandatory  Redemption"  or (ii)  the  rating
          agencies shall have confirmed  that no rating  downgrade  would result
          from such  delay;  provided  that such  condition  will apply to a New
          Project  only (x)  after  such New  Project's  guaranteed  substantial
          completion date or (y) if such New Project has been abandoned.

Incurrence of Additional Debt

The Funding  Corporation  shall not incur any debt other than "Permitted  Debt".
"Permitted Debt" means:

     (a)  The Securities;
     (b)  Debt  incurred to acquire  the East Mesa  Project in whole or in part;
          provided that no such Debt may be incurred  unless at the time of such
          incurrence  (i) no  default or event of default  has  occurred  and is
          continuing and (ii) the rating agencies confirm that the incurrence of
          such debt will not result in a rating downgrade;
     (c)  Debt  incurred  to  develop,   construct,   own,  operate  or  acquire
          additional  permitted  facilities in the Imperial Valley  ("Additional
          Projects");  provided that no such debt may be incurred  unless at the
          time of such  incurrence  (i) no  default  or  event  of  default  has
          occurred and is continuing and (ii) the rating  agencies  confirm that
          the Securities  will maintain an investment  grade rating after giving
          effect to such debt;
     (d)  Debt  incurred  to finance the making of capital  improvements  to the
          Salton Sea Projects,  the Partnership  Projects or Additional Projects
          required to maintain  compliance  with  applicable  law or anticipated
          changes therein;  provided that no such debt may be incurred unless at
          the time of such  incurrence  the  independent  engineer  confirms  as
          reasonable (i) a certification by the Funding Corporation  (containing
          customary  qualifications)  that the proposed capital improvements are
          reasonably  expected to enable such Project to comply with  applicable
          or anticipated  legal  requirements  and (ii) the  calculations of the
          Funding  Corporation  that  demonstrate,  after  giving  effect to the
          incurrence of such debt, the minimum  projected debt service  coverage
          ratio (x) for the next four consecutive  fiscal  quarters,  commencing
          with the quarter in which such debt is  incurred,  taken as one annual
          period,  and (y) for each  subsequent  fiscal  year  through the final
          maturity date, will not be less than 1.2 to 1;

     (e) Debt incurred to finance the making of capital improvements to the
         Salton Sea Projects, the Partnership Projects or Additional Projects
         not required by applicable law so long as after giving effect to the
         incurrence of such debt (i) no default or event of default has occurred
         and is continuing, and (ii) (A) the independent engineer confirms as
         reasonable (x) the calculations of the Funding Corporation that
         demonstrate that the minimum projected debt service coverage ratio for
         the next four consecutive quarters, taken as one annual period, and
         each subsequent fiscal year, will not be less than 1.4 to 1, and (y)
         the calculations of the Funding Corporation that demonstrate the
         average projected debt service coverage ratio for all succeeding fiscal
         years until the final maturity date will not be less than 1.7 to 1 or
         (B) the Rating Agencies confirm that the incurrence of such debt will
         not result in a rating downgrade;
     (f)  Working capital debt in an aggregate amount not to exceed $15,000,000;
     (g)  Debt  incurred  under  the  Debt  Service  Reserve  LOC  Reimbursement
          Agreement;
     (h)  Debt incurred in connection with certain permitted  interest rate swap
          arrangements;
     (i)  Debt incurred by the Funding Corporation in an aggregate amount not to
          exceed $30,000,000, in connection with the development,  construction,
          ownership,   operation,   maintenance   or  acquisition  of  Permitted
          Facilities; and
     (j)  Subordinated debt from affiliates in an aggregate amount not to exceed
          $200,000,000  which  shall be used to finance  capital,  operating  or
          other costs with respect to the Projects or Additional Projects.

All Permitted  Debt incurred by the Funding  Corporation  shall be loaned to the
Guarantors and guaranteed by the Guarantors.
<PAGE>

Principal Indenture Covenants

Principal  covenants  under the  Indenture  require the Funding  Corporation  to
agree, except as permitted under the Indenture, (a) not to exercise any remedies
or waive any defaults under the Credit Agreements and the Project Notes,  except
as otherwise permitted under the Indenture; (b) not to incur (i) any Debt except
Permitted  Debt or (ii) any Lien  upon any of its  properties  except  Permitted
Liens and (c) not to enter into any  transaction of merger or  consolidation  or
change its form of organization or its business.

Principal Credit Agreement Covenants

Principal covenants under the Credit Agreements require each Guarantor to agree,
subject  to certain  exceptions  and  qualifications,  (a) not to enter into any
transaction  of  merger  or  consolidation,  change  its  form of  organization,
liquidate,  wind-up or dissolve  itself;  (b) not to enter into non-arm's length
transactions or agreements with Affiliates; (c) not to incur (i) any debt except
Permitted  Guarantor Debt and (ii) any liens except for permitted liens; (d) not
to engage in any business other than as  contemplated  by the respective  Credit
Agreement;  and (e) not to amend,  terminate  or  otherwise  modify the  Project
Documents  to which they are a party except as  permitted  under the  respective
Credit Agreements.  In addition to these principal covenants,  in the Salton Sea
Credit Agreement and the Partnership Credit Agreement, the Salton Sea Guarantors
and the Partnership  Guarantors  have agreed (a) not to sell,  lease or transfer
any property or assets  material to the Salton Sea  Projects or the  Partnership
Projects, as applicable,  except in the ordinary course of business;  and (b) to
maintain  insurance  as is  generally  carried by  companies  engaged in similar
businesses and owning similar properties.

Considerations Regarding Limitation on Remedies

A significant  portion of the proceeds of the Initial  Offering were distributed
to  MidAmerican  to  repay  certain   non-recourse   indebtedness   incurred  by
MidAmerican  in  connection  with  the  acquisition  of  Magma   (including  the
Guarantors).  The Royalty Guarantor has purchased an assignment of the royalties
from Magma pursuant to the Magma Assignment Agreement.  Magma has also agreed to
make certain  payments to CEOC pursuant to the Magma  Services  Agreement and to
secure such  payment  obligation  with a collateral  assignment  of certain cash
flows. The Guarantors have executed Guarantees with respect to the entire amount
of Securities.  Under certain circumstances  (including a proceeding under Title
11 of the United States Code or any similar  proceeding),  it is possible that a
creditor of a  Guarantor  or Magma  could make a claim,  under  federal or state
fraudulent  conveyance  laws,  that the Funding  Corporation's  claims under the
Credit  Agreements,  the  Security  Holders'  claims under the  Guarantees,  the
Royalty  Guarantor's  interest  pursuant to the Magma  Assignment  Agreement  or
CEOC's rights under the Magma Services  Agreement  should be subordinated or not
enforced in accordance with such instruments' terms or that payments  thereunder
(including  payments to the Holders of the Securities)  should be recovered.  In
order to prevail on such a claim, a claimant would have to demonstrate  that the
obligations  incurred under any Guarantor's Credit Agreement or Guarantee or the
transfers  made  under  the Magma  Assignment  Agreement  or the Magma  Services
Agreement were not incurred in good faith or that any Guarantor or Magma did not
receive fair  consideration  in connection with such  obligations and transfers,
and that any  Guarantor  or Magma is and was  insolvent  at the time of entering
into the Credit Agreement,  Guarantee, the Magma Assignment Agreement and/or the
Magma  Services  Agreement or that it did not have and will not have  sufficient
capital for  carrying on its business or was not and will not be able to pay its
debts as they mature.

Power Price and Sales Uncertainty

The Power Purchase  Agreements  pursuant to which each of the Vulcan, Del Ranch,
Elmore, Leathers,  Salton Sea II and Salton Sea III Projects sell electricity to
Edison are SO4 Agreements.  These agreements  provide for both capacity payments
and energy  payments  for a term of 30 years.  While the basis for the  capacity
payment is fixed for the entire  30-year term,  the price of energy  payments is
fixed only for the first ten years of the term. Thereafter,  the required energy
payment  converted  to  Edison's  Avoided  Cost of Energy,  as  determined  by a
methodology approved by, and subject to change by, the California Public Utility
Commission.  In June and November  2001,  the  Imperial  Valley  Projects, which
receive Edison's Avoided Cost of Energy entered into agreements that provide for
amended energy  payments under the SO4  Agreements.  The amendments  provide for
fixed energy rate in lieu of Edison's  Avoided Cost of Energy.  The fixed energy
payment is 3.25  cents/kWh from December 1, 2001 through April 30, 2002 and 5.37
cents/kWh commencing May 1, 2002 for a five-year period. Following the five-year
period, the energy payments revert back to Edison's Avoided Cost of Energy.
<PAGE>

For the year ended December 2001, 2000 and 1999,  Edison's  average avoided cost
of  energy  was 7.4  cents,  5.8  cents  and 3.1  cents  per kWh,  respectively.
Estimates of Edison's future avoided cost of energy vary substantially from year
to year. The Funding  Corporation  and the Guarantors  cannot predict the likely
level of avoided cost of energy prices under these agreements.

Although  approximately  one-third of the net electrical  output of Salton Sea V
will be sold for use by the Zinc Recovery  Project  pursuant to a power purchase
agreement and power from the Turbo Project may also be used by the Zinc Recovery
Project  pursuant to a separate power purchase  agreement,  neither Salton Sea V
nor the Turbo Project  currently has any power sales  agreements for any portion
of the  capacity of such  Projects.  The strategy for Salton Sea V and the Turbo
Project is to sell output not needed by the Zinc Recovery  Project in short term
transactions  through  established  energy markets or in such other transactions
from time to time as may be found to be more  advantageous  than those conducted
through  established  energy  markets.  Energy  prices are  expected to have the
characteristics  of short-term spot prices and to fluctuate from time to time in
a manner that cannot be predicted with accuracy and is not within the control of
the Funding Corporation, the Guarantors or any other person.

Reliance on Single Utility Customer

Each of the Vulcan,  Del Ranch,  Elmore,  Leathers and Salton Sea I-IV  Projects
relies on an agreement  with Edison to generate 100% of its operating  revenues.
The  payments  (excluding  those for power sales from March 22 through  June 22,
2001) under these agreements have constituted 100% of the operating  revenues of
each Project since its inception,  and may do so for the life of the Securities.
Any material failure of Edison to fulfill its contractual  obligations under the
Power Purchase Agreements could have a material adverse effect on the ability of
the Funding Corporation to pay principal of and interest on the Securities.

Zinc Price and Sales Uncertainty

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.

Because most of the Zinc  Recovery  Project's  revenues will be derived from the
sale of zinc,  earnings  will be  directly  related  to the price of zinc in the
domestic and world markets.  However,  zinc prices fluctuate and are affected by
numerous factors,  including expectations of inflation,  speculative activities,
currency  exchange  rates,  interest  rates,  global  and  regional  demand  and
production,  political and economic conditions,  discovery of new deposits,  and
production  costs in major  producing  regions.  The  aggregate  effect of these
factors,  all of which are beyond the control of the Funding  Corporation or the
Guarantors, is impossible for the Funding Corporation to predict.

Construction Uncertainty

Although  several  of the power  projects  have been  operating  for a number of
years,  the Zinc Recovery Project is currently in construction and is subject to
customary risks  associated with the  construction of metals  processing  plants
including  risks of delays in completion,  cost overruns and failures to perform
in accordance  with contract  terms.  In addition,  while each of the individual
process  steps  to be  utilized  in the Zinc  Recovery  Project  (including  ion
exchange,  solvent extraction and electrowinning) has been in operation for more
than twenty  years and the  demonstration  plant at the SSKGRA has  successfully
recovered zinc through this integrated  process,  the integrated process for the
production of zinc from geothermal brine has not been attempted in a large scale
commercial  facility.   Any  material  unremedied  delay  in  or  unsatisfactory
completion  of the Zinc  Recovery  Project  could have an adverse  effect on the
applicable Guarantors' results of operations.

Uncertainties  Relating to  Exploration  and  Development  of Geothermal  Energy
Resources

Geothermal exploration, development and operations are subject to uncertainties,
which  vary  among  different  geothermal  reservoirs  and are  similar to those
typically associated with oil and gas exploration and development, including dry
holes and  uncontrolled  releases.  Because of the  geological  complexities  of
geothermal reservoirs,  the geographic area and sustainable output of geothermal
reservoirs can only be estimated and cannot be definitively  established.  There
is,  accordingly,  a risk of an unexpected decline in the capacity of geothermal
wells and a risk of geothermal  reservoirs  not being  sufficient  for sustained
generation of the electrical power capacity desired.
<PAGE>

In  addition,  both the cost of  operations  and the  operating  performance  of
geothermal  power  plants may be  adversely  affected by a variety of  operating
factors.  Production  and injection  wells can require  frequent  maintenance or
replacement.  Corrosion caused by high-temperature and high-salinity  geothermal
fluids may require the  replacement or repair of certain  equipment,  vessels or
pipelines.   New  production  and  injection  wells  may  be  required  for  the
maintenance of current operating levels,  thereby requiring  substantial capital
expenditures.

Insurance

The Salton Sea Projects and the Partnership Projects currently possess property,
business interruption, catastrophic and general liability insurance. Proceeds of
insurance received in connection with the Salton Sea Projects will be payable to
the  Depositary for the account of the Salton Sea Guarantors and will be applied
as required under the financing  documents.  There can be no assurance that such
comprehensive insurance coverage will be available in the future at commercially
reasonable  costs  or terms  or that  the  amounts  for  which  the  Salton  Sea
Guarantors and the Partnership  Guarantors are or will be insured will cover all
potential losses.

Because  geothermally  active  areas such as the area in which the  Projects are
located are  subject to frequent  low-level  seismic  disturbances,  and serious
seismic  disturbances  are  possible,  the  power  generating  plants  and other
facilities  at the  Projects  are  designed  and built to  withstand  relatively
significant levels of seismic disturbance.  However,  there is no assurance that
seismic disturbances of a nature and magnitude so as to cause material damage to
the  Projects  or  gathering  systems or a material  change in the nature of the
geothermal  resource  will not occur,  that  insurance  with  respect to seismic
disturbances  will be maintained  by or on behalf of all of the  Projects,  that
insurance proceeds will be adequate to cover all potential losses sustained,  or
that insurance  will continue to be available in the future in amounts  adequate
to insure against such seismic disturbances.

Regulatory and Environmental Matters

The Guarantors  are subject to a number of  environmental  laws and  regulations
affecting  many aspects of their  present and future  operations,  including the
disposal of various  forms of  materials  resulting  from  geothermal  reservoir
production  and  the  drilling  and  operation  of  new  wells.  Such  laws  and
regulations  generally  require the  Guarantors to obtain and comply with a wide
variety of  licenses,  permits  and other  approvals.  In  addition,  regulatory
compliance for the construction of new facilities is a costly and time-consuming
process,  and  intricate  and rapidly  changing  environmental  regulations  may
require  major  expenditures  for  permitting  and create the risk of  expensive
delays or material  impairment of project value if projects  cannot  function as
planned  due to  changing  regulatory  requirements  or  local  opposition.  The
Guarantors  and the Projects also remain subject to a varied and complex body of
environmental  and energy  regulations  that both public  officials  and private
individuals  may  seek to  enforce.  There  can be no  assurance  that  existing
regulations  will not be revised or that new regulations  will not be adopted or
become applicable to the Guarantors and the Projects which could have an adverse
impact on their operations.  In particular,  the independent power market in the
United  States  is  dependent  on  the  existing  energy  regulatory  structure,
including the Public Utility  Regulatory  Policies Act and its implementation by
utility  commissions  in the various  states.  The structure of such federal and
state energy  regulations has in the past, and may in the future, be the subject
of  various  challenges  and  restructuring  proposals  by  utilities  and other
industry  participants.  The implementation of regulatory changes in response to
such  challenges  or  restructuring   proposals,   or  otherwise  imposing  more
comprehensive  or stringent  requirements on the Guarantors and Projects,  which
would result in increased  compliance costs could have a material adverse effect
on the Guarantors' and the Projects' results of operations.

Employees

Employees  necessary  for the  operation  of the  Salton  Sea  Projects  and the
Partnership  Projects  are  provided by CEOC.  As of  December  31,  2001,  CEOC
employed  232 people at the Salton Sea Projects  and the  Partnership  Projects,
collectively.  CEOC maintains a qualified technical staff covering a broad range
of  disciplines   including  geology,   geophysics,   geochemistry,   hydrology,
volcanology,  drilling  technology,  reservoir  engineering,  plant engineering,
construction  management,   maintenance  services,   production  management  and
electric  power  operation.  CEOC  employees  are not covered by any  collective
bargaining  agreement.  The Funding  Corporation  believes that CEOC's  employee
relations are good.
<PAGE>

Item 2.  Properties

See page 4 for a schedule of the Guarantors' facilities.

Item 3.  Legal Proceedings

In  addition  to the  proceedings  described  below,  some of the  projects  are
currently  parties to various  minor items of litigation in the normal course of
business none of which, if determined  adversely,  would have a material adverse
effect on those  projects  financial  position,  results of  operations  or cash
flows.

Southern California Edison/California Power Exchange- Past Due Amounts

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. The Funding
Corporation  is aware that there have been public  announcements  that  Edison's
financial condition has deteriorated as a result of reduced liquidity. Following
Edison's  recent  financing  Edison's  senior  unsecured debt  obligations  were
upgraded to Ba3 by Moody's and BB by S&P.

Edison  failed to pay  approximately  $119 million due under the power  purchase
agreements with certain  Guarantors  (Imperial  Valley  Projects,  excluding the
Salton Sea V and Turbo  Projects)  for power  delivered in November and December
2000  and  January,  February  and  March  2001,  although  the  Power  Purchase
Agreements  provide for billing and payment on a schedule  where  payments would
have normally been received in early  January,  February,  March,  April and May
2001.

On February 21,  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  payments under the Power Purchase  Agreements.  The
lawsuit also  requested,  among other things,  that the court order permit these
Guarantors to suspend deliveries of power to Edison and to permit the Guarantors
to sell such power to other purchasers in California.

On March 22, 2001,  the Superior  Court granted  Guarantors'  Motion for Summary
Adjudication  and a  Declaratory  Judgment  ordering  that:  1) under  the Power
Purchase Agreements, Guarantors have the right to temporarily suspend deliveries
of  capacity  and energy to Edison,  2)  Guarantors  are  entitled to resell the
energy  and  capacity  to other  purchasers  and 3) the  interim  suspension  of
deliveries  to Edison shall not in any respect  result in the  modifications  or
termination of the Power Purchase  Agreements and the Power Purchase  Agreements
shall in all respects continue in full force and effect other than the temporary
suspension of deliveries to Edison.

As a  result  of the  March  22,  2001  Declaratory  Judgment,  the  Guarantors'
suspended  deliveries  of  energy  to  Edison  and  entered  into a  transaction
agreement with EPME, in which the  Guarantors'  available power was sold to EPME
based on  percentages  of the Dow  Jones  SP-15  Index.  On June 18,  2001,  the
Superior Court  prospectively  vacated its order  authorizing the Guarantors' to
resell power.

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") and, as a result, resumed power sales to Edison
on June 22, 2001. The Settlement Agreements required that Edison make an initial
payment to repay the past due balances under the Power Purchase  Agreements (the
"stipulated amounts"). The initial payment of approximately $11.6 million, which
represented  10% of the  stipulated  amounts,  was received  June 22,  2001.  On
October 2, 2001, the California Public Utilities  Commission  ("CPUC") announced
an agreement with Edison that allowed Edison to recover in retail electric rates
its past due obligations.  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.  On March 1, 2002,  Edison  obtained  $1.8 billion in secured
financing that,  when combined with cash on hand,  enabled Edison to pay off its
past due debts. The final payment of approximately $104.6 million,  representing
the remaining  stipulated  amounts,  was received  March 1, 2002. In addition to
these payments, Edison was required to make monthly interest payments calculated
at a rate of 7% per annum on the  outstanding  stipulated  amounts.  The amended
Settlement Agreements provide a revised energy pricing structure, whereby Edison
elects  to  pay  the   Guarantors'   a  fixed   energy  price  in  lieu  of  the
Commission-approved  Avoided Cost of Energy Methodology under the Power Purchase
Agreements.  The fixed energy price is 3.25 cents/kWh from December 2001 through
April 30, 2002 and 5.37 cents/kWh commencing May 1, 2002 for a five-year period.
Following  the  five-year  period,  the  energy  payments  revert  back  to  the
Commission-approved  Avoided Cost of Energy Methodology under the Power Purchase
Agreements.   Estimates  of  Edison's   future   avoided  cost  of  energy  vary
substantially from year to year.
<PAGE>

As a result of the  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  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 and has been  extended  beyond its  current  2004
expiration date or replaced.

In January 2001, the California Power Exchange ("PX") declared bankruptcy.  As a
result,  the Salton Sea Unit V and Turbo Projects have not received  payment for
power sold under the  Transaction  Agreements  during  December 2000 and January
2001 of approximately $3.0 million.

The Guarantors are  contractually  entitled to receive  payments under the Power
Purchase Agreements, Settlement Agreements and Transactions Agreements. However,
due to the  uncertainties  associated  with  Edison's  financial  condition  and
failure to pay  contractual  obligations  at December 31,  2001,  along with the
California  Power  Exchange  bankruptcy,  the  Guarantors  have  established  an
allowance for doubtful  accounts of  approximately  $9.8 million on December 31,
2001.  The allowance  for doubtful  accounts has been recorded as a reduction of
net sales in the statement of operations.

Southern California Edison - Capacity Bonus Payments

Edison has failed to pay  approximately  $1.3 million of capacity bonus payments
for the months of October,  November  and December  2001.  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.

Kvaerner Arbitration

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  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 a letter of credit,  Therefore,  Minerals
LLC asked for a judgment in excess of approximately $20 million. The arbitration
is scheduled for June 2002.

Stone and Webster

The Salton Sea V and Turbo Projects were constructed by Stone and Webster,  Inc.
(formerly Stone & Webster Engineering Corporation), a wholly-owned subsidiary of
the Shaw Group  ("Stone &  Webster"),  pursuant  to date  certain,  fixed-price,
turnkey engineering,  procure, construct and manage contracts (collectively, the
"Salton Sea V and Turbo Projects EPC Contracts").  On March 7, 2002,  Salton Sea
Power L.L.C.,  Vulcan/BN Geothermal Power Company, Del Ranch, L.P., and CE Turbo
L.L.C.,  the owners of the Salton Sea V and Turbo  Projects,  filed a Demand for
Arbitration  against  Stone & Webster  for  breach  of  contract  and  breach of
warranty  arising from  deficiencies in Stone & Webster's  design,  engineering,
construction  and  procurement  of  equipment  for the  Salton  Sea V and  Turbo
Projects  pursuant to the Salton Sea V and Turbo  Projects  EPC  Contracts.  The
Demand for Arbitration did not include a stated claim amount. The arbitration is
scheduled for June 2002.
<PAGE>

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

    Not applicable.



<PAGE>


                                     Part II


 Item 5. Market for Registrant's Common Equity and Related Stockholder's Matters

    Not applicable.

Item 6.  Selected Financial Data

Salton Sea Funding Corporation

The following tables set forth selected historical  financial and operating data
of the  Funding  Corporation.  The data should be read in  conjunction  with the
financial statements and related notes and other financial information appearing
elsewhere in this Form 10-K (in thousands).
<TABLE>
<CAPTION>
                                                            Year Ended December 31,
---------------------------------------------------------------------------------------------------------------
                                          2001           2000         1999           1998(1)           1997
---------------------------------------------------------------------------------------------------------------

<S>                                 <C>                <C>          <C>              <C>             <C>
Total revenues                      $     41,791         43,718      $48,538          $39,329         $40,674
Income (loss) before cumulative effect of
   change in accounting principle            (37)           174        1,123            1,783           1,461
Net income (loss)                           (137)           174        1,123            1,783           1,461

Total assets                        $    540,580       $565,375     $585,648         $659,337        $474,289
Senior secured notes and bonds           520,250        543,908      568,980          626,816         448,754
Total liabilities                        527,482        552,140      572,587          647,399         464,134
Total stockholder's equity                13,098         13,235       13,061           11,938          10,155
</TABLE>

(1) On October 13, 1998 Funding Corporation issued additional securities of $285
million of Salton Sea Notes and Bonds Series F.

Salton Sea Guarantors

The  following  tables set forth  selected  historical  combined  financial  and
operating  data  of the  Salton  Sea  Guarantors.  The  data  should  be read in
conjunction with the financial  statements and related notes and other financial
information appearing elsewhere in this Form 10-K (in thousands).

<TABLE>
<CAPTION>
                                                               Year Ended December 31,
----------------------------------------------------------------------------------------------------------------
                                         2001          2000(1)         1999(2)         1998         1997
----------------------------------------------------------------------------------------------------------------
<S>                                  <C>             <C>           <C>             <C>           <C>
Sales of electricity                 $  110,941      $  98,057     $   81,850      $  106,274    $ 106,252
Total revenues                          113,228         98,410         83,718         107,091      106,425
Income (loss) before cumulative effect of
  change in accounting principle          (807)         28,323         23,045          45,939       42,816
Net income (loss)                       (9,550)         28,323         23,045          45,939       42,816

Total assets                            599,378        626,543        633,014         628,515      556,353
Senior secured project note             266,899        284,217        293,954         310,030      266,208
Total liabilities                       277,793        295,048        329,842         348,388      322,165
</TABLE>

     (1)  Salton Sea V commenced operations in the third quarter of 2000.
     (2)  The  decrease in revenue and net income in 1999 was  primarily  due to
          the  expiration  of the fixed  price  period  for the  Salton  Sea III
          Project.
<PAGE>


Partnership Guarantors

The  following  tables set forth  selected  historical  combined  financial  and
operating  data  of the  Partnership  Guarantors.  The  data  should  be read in
conjunction with the financial statements and related notes, and other financial
information appearing elsewhere in this Form 10-K (in thousands).
<TABLE>
<CAPTION>
                                                           Year Ended December 31,
-----------------------------------------------------------------------------------------------------
                                        2001         2000(1)      1999(2)       1998         1997
-----------------------------------------------------------------------------------------------------
<S>                                    <C>          <C>          <C>          <C>          <C>
Sales of electricity                   $119,738     $103,250     $105,921     $165,779     $158,125
Total revenues                          126,318      108,184      114,988      172,565      162,315
Income before cumulative effect of
  change in accounting principles        22,975       27,180       25,481       37,134       33,637
Net income                               16,085       27,180       25,481       37,134       33,637

Total assets                            938,342      921,701      901,892      907,819      736,783
Senior secured project note             248,742      250,650      261,212      293,576      143,610
Total liabilities                       370,763      370,207      377,578      408,986      275,084
</TABLE>

     (1)  Turbo commenced operations in the third quarter of 2000.
     (2)  The  decrease in revenue and net income in 1999 was  primarily  due to
          the expiration of the fixed price periods for the Elmore and Del Ranch
          Projects.

Royalty Guarantor

The following tables set forth selected historical  financial and operating data
of the  Royalty  Guarantor.  The data  should  be read in  conjunction  with the
financial statements and related notes and other financial information appearing
elsewhere in this Form 10-K (in thousands).
<TABLE>
<CAPTION>
                                                                    Year Ended December 31,
------------------------------------------------------------------------------------------------------
                                          2001       2000           1999       1998(1)        1997
------------------------------------------------------------------------------------------------------
<S>                                     <C>          <C>           <C>         <C>          <C>
Total revenues                          $16,882      $14,130       $26,274     $51,703      $32,231
Net income                               10,092        7,352        19,222      19,497        8,661

Total assets                             79,300       73,670        71,116      77,432       86,009
Senior secured project note               4,607        9,041        13,814      23,210       38,934
Total liabilities                         4,636        9,098        13,896      39,434       67,508
</TABLE>

     (1)  In 1998,  the Royalty  Guarantor  received $25 million in a settlement
          related to the Geo East Mesa payments.

Item 7. 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 this 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.
<PAGE>

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.

Factors Affecting Results of Operations

The periodic  results of operations for the Guarantors are influenced to varying
degrees by a number of factors, principally the level of revenues received under
the  power  purchase  agreements,  project  capacity  utilization,  the level of
operating expenses and capital expenditures.

Capacity Utilizations

For purposes of consistency in financial  presentation,  plant capacity  factors
for Vulcan, Del Ranch,  Turbo,  Elmore and Leathers plants are based on capacity
amounts of 34, 38,  10,  38, and 38 net MW  respectively,  and for Salton Sea I,
Salton Sea II, Salton Sea III, Salton Sea IV, and Salton Sea V plants, are based
on nominal capacity  amounts of 10, 20, 49.8, 39.6 and 49 net MW,  respectively.
Each plant possesses an operating margin,  which allows for production in excess
of the amounts listed above.  Utilization of this operating margin is based upon
a variety of  factors  and can be  expected  to vary  throughout  the year under
normal operating conditions.

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

                                           Years Ended December 31,
--------------------------------------------------------------------------------
                                       2001            2000           1999
--------------------------------------------------------------------------------
  Overall capacity factor              80.1%           76.1%         91.9%
  Capacity NMW (weighted average)     168.4           146.1         119.4
  Kwh produced (in thousands)     1,180,900         976,500       960,800
--------------------------------------------------------------------------------
<PAGE>

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

                                       Years Ended December 31,
--------------------------------------------------------------------------------
                                   2001            2000                1999
--------------------------------------------------------------------------------
  Overall capacity factor           100.0%            98.8%            103.4%
  Capacity NMW (weighted average)   158.0            152.1             148.0
  Kwh produced (in thousands)   1,384,700        1,320,300         1,339,900
--------------------------------------------------------------------------------

Results of Operations for the Years Ended December 31, 2001, 2000 and 1999

Revenues

The Salton Sea Guarantors' sales of electricity  increased to $110.9 million for
the year ended December 31, 2001 from $98.1 million for the same period in 2000.
The increase was primarily  due to higher energy rates in 2001,  the start up of
Salton Sea V in the third quarter of 2000 and scheduled overhauls in 2000, which
were more  extensive  compared to 2001.  Due to  uncertainties  associated  with
Edison's financial  condition and failure to pay, the Salton Sea Guarantors have
established an allowance for doubtful  accounts of  approximately  $9.8 million,
which  reduced  revenues in 2001  compared to 2000.  The Salton Sea  Guarantors'
sales of electricity  increased to $98.1 million for the year ended December 31,
2000 from $81.9 million for the same period in 1999. The increase was due to the
addition of Salton Sea V and higher avoided cost rates.

The Salton Sea Guarantors interest and other income increased to $2.3 million in
2001 from $.4 million in 2000. The increase was due to interest income earned on
past due  balances  from  Edison.  Interest  and other  income  decreased to $.4
million in 2000 from $1.9  million in 1999.  The  decrease was due to lower cash
balances.

The Partnership Guarantors' sales of electricity increased to $119.7 million for
the year ended  December  31,  2001 from  $103.3  million for the same period in
2000.  The increase was due to higher energy rates,  the start up of CE Turbo in
the third quarter of 2000 and more  production due to fewer outages  compared to
2000. Due to  uncertainties  associated with Edison's  financial  conditions and
failure to pay, the  Partnership  Guarantors  have  established an allowance for
doubtful accounts of approximately  $14.9 million,  which reduced income in 2001
compared to 2000. The Partnership  Guarantors' sales of electricity decreased to
$103.3  million for the year ended December 31, 2000 from $105.9 million for the
same period in 1999. The decrease is due to the end of the fixed price period at
Leathers  partially  offset by the  addition  of Turbo and higher  avoided  cost
rates.

Interest  and other  income for the  Partnership  Guarantors  increased  to $6.6
million  for the year ended  December  31,  2001 from $4.9  million for the same
period in 2000.  The  increase  was due to  interest  income  earned on past due
balances from Edison.  Interest and other income for the Partnership  Guarantors
decreased to $4.9 million for the year ended December 31, 2000 from $9.1 million
for 1999.  The decrease was due to lower interest  income on reduced  restricted
cash balances, which were depleted by construction expenditures.

The Royalty  Guarantor  revenue  increased  to $16.9  million for the year ended
December 31, 2001 from $14.1  million for the same period in 2000.  The increase
was the result of higher energy sales at the Partnership  Projects  resulting in
higher revenues.  The Royalty  Guarantor  revenue decreased to $14.1 million for
the year ended December 31, 2000 from $26.3 million for the same period in 1999.
The  decrease  was the  result  of the  lower  energy  sales at the  Partnership
Projects resulting in lower royalties and the realization of deferred revenue of
$9.3 million related to the East Mesa settlement in 1999.

Operating Expenses

The Salton Sea Guarantors' operating expenses, which include royalty, operating,
and general and administrative expenses, increased to $61.6 million for the year
ended  December  31,  2001,  from $40.8  million for the same period in 2000 and
$28.8 million for the same period in 1999. The increase in expenses from 2000 to
2001 was primarily due to higher  operating  costs  resulting  from Salton Sea V
costs for an entire year,  higher brine  disposal costs and higher royalty costs
due to  higher  revenue.  The  increase  from  expenses  from  1999 to 2000  was
primarily due to higher  operating  costs  resulting  from Salton Sea V start up
activities and higher brine disposal costs.
<PAGE>

The  Partnership   Guarantors'   operating  expenses,   which  include  royalty,
operating, and general and administrative  expenses,  increased to $62.7 million
for the year ended December 31, 2001,  from $53.0 million for the same period in
2000 and $48.0  million for the same period in 1999.  The increase in costs from
2000 to 2001 was due primarily to higher royalty  expense due to higher revenue,
start up of the Turbo  Project in the third  quarter  of 2000 and  higher  brine
disposal costs. The increase in costs from 1999 to 2000 was associated with zinc
plant commissioning costs.

The Royalty  Guarantor's  operating  expenses  increased to $4.4 million for the
year ended  December 31, 2001 from $3.9 million for the same period of 2000. The
increase  was due to  higher  royalties  from  higher  energy  revenue  from the
Partnership  projects.  The Royalty Guarantor's  operating expenses decreased to
$3.9 million for the year ended December 31, 2000 from $4.6 million for the same
period of 1999.  The  decrease  was due to  scheduled  decreases  in third party
lessor royalties related to the decreases in the Partnership  Projects' sales of
electricity.

Depreciation and Amortization

The Salton Sea  Guarantors'  depreciation  and  amortization  increased to $17.3
million for the year ended  December  31,  2001 from $16.0  million for the year
ended December 31, 2000. The increase was due to a full year of  depreciation at
Salton Sea V. The Salton Sea Guarantors' depreciation and amortization decreased
to $16.0 million for the year ended December 31, 2000 from $16.9 million for the
same  period  in 1999.  The  decrease  was due to an  adjustment  in the step up
depreciation  charges after the end of the fixed price period,  partially offset
by depreciation on Salton Sea V.

The Partnership  Guarantors'  depreciation and  amortization  increased to $22.8
million for the year ended  December  31,  2001 from $19.7  million for the same
period in 2000.  The increase was primarily due to the upgraded  brine  handling
system and the start up of the Turbo Project in the third  quarter of 2000.  The
Partnership Guarantors' depreciation and amortization decreased to $19.7 million
for the year  ended  December  31,  2000 from $22.6  million  for the year ended
December  31,  1999.   The  decrease  was  primarily  due  to  reduced  step  up
depreciation  after the end of the fixed price periods for the Leathers  project
as a result of greater value being  assigned to the scheduled  price periods for
the contracts relating to these projects at the time of acquisition.

The  Royalty  Guarantor's  amortization  was $1.8  million  for the  year  ended
December  31,  2001  compared to $2.0  million for the same period in 2000.  The
charges are consistent with the Company's scheduled  amortization of the royalty
stream and the excess of cost over fair value related to the Magma  acquisition.
The Royalty Guarantors'  depreciation and amortization decreased to $2.0 million
for the year  ended  December  31,  2000 from $7.1  million  for the year  ended
December 31, 1999. The decrease was due to the end of the fixed price periods at
the Partnership Plants.

Interest Expense

The  Salton  Sea  Guarantors'  interest  expense,  net of  capitalized  amounts,
increased  to $20.1  million  for the year ended  December  31,  2001 from $13.3
million for the same  period in 2000.  The  increase  was due  primarily  to the
discontinuance of capitalizing  interest on the minerals  extraction process and
Salton  Sea  V  partially  offset  by  reduced  indebtedness.   The  Salton  Sea
Guarantors'  interest expense,  net of capitalized  amounts,  decreased to $13.3
million for the year ended  December  31,  2000 from $15.0  million for the same
period in 1999. The decrease was due to discontinuance of capitalizing  interest
charges on Salton Sea V construction costs and repayment of debt.

The  Partnership  Guarantors'  interest  expense,  net of  capitalized  amounts,
increased to $6.1 million for the year ended  December 31, 2001 from $.6 million
for the same period in 2000. The increase is a result of the  discontinuance  of
capitalizing  interest on the minerals  extraction  process  partially offset by
reduced  indebtedness.  The Partnership  Guarantors'  interest  expense,  net of
capitalized  amounts,  decreased to $.6 million for the year ended  December 31,
2000 from $6.4  million for the same period in 1999.  The decrease is the result
of the  repayment  of  debt  and  capitalization  of  interest  on  the  mineral
extraction project.

The Royalty  Guarantors'  interest expense decreased to $.6 million for the year
ended  December  31, 2001 from $1.0 million for the same period in 2000 and $1.7
million for the same period in 1999. These decreases are due to the repayment of
debt.
<PAGE>

Asset Impairment

The asset impairment at the Salton Sea Guarantors in 2001 reflects the write off
of the book value of a steam turbine.  The Salton Sea Guarantors have determined
that the cost of the  turbine,  which  had been held in  storage  for use in new
development projects, no longer had any significant value.

Income Tax Provision

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

The Partnership  Guarantors' income tax provision increased to $11.7 million for
the year ended  December 31, 2001 from $7.7 million for the same period in 2000.
The income tax  provision  decreased to $7.7 million in 2000 from $12.5  million
for the same period in 1999.  The  effective  tax rate was 34%,  22%, and 33% in
2001,  2000  and  1999,  respectively.  The  changes  from  year  to year in the
effective rate are due primarily to the generation and utilization of energy tax
credits and depletion deductions. Income taxes will be paid by the parent of the
Guarantors from  distributions  to the parent company by the  Guarantors,  which
occur after payment of operating expenses and debt service.

The Royalty  Guarantor had no income tax provision in 2000 and 2001. The Royalty
Guarantor's  income tax  provision  was a benefit of $6.3  million  for the year
ended  December 31, 1999.  The decrease in the provision is due to the change in
the Royalty Guarantor from a corporation to a limited liability  company,  which
is not  taxed.  Income  taxes are the  responsibility  of the  partners  and the
Royalty Guarantor has no obligation to provide funds to the partners for payment
or  any  tax  liabilities.   Accordingly,  the  Royalty  Guarantor  has  no  tax
obligations.

Cumulative Effect of Accounting Policy Change

The  Guarantors  have changed their policy of  accounting  for overhaul and well
workover costs.  These costs,  which have  historically been accounted for using
deferral methods, are now expensed as incurred.  The new policy went into effect
January 1, 2001 and the Salton Sea Guarantors have recorded a cumulative  effect
of this change of $8.7  million.  The  Partnership  Guarantors  have  recorded a
cumulative  effect of this  change of $6.9  million,  net of tax.  If Salton Sea
Guarantors  and  Partnership  Guarantors had adopted the policy as of January 1,
2000,  net income  would have been $1.1 million  lower and $4.9 million  higher,
respectively, in 2000 on a proforma basis.

Net Income (Loss)

The Funding  Corporation's  net loss was $.1 million for the year ended December
31, 2001  compared to net income of $.2 million for the year ended  December 31,
2000 and $1.1 million for the year ended  December 31, 1999,  which  represented
interest   income  and  expense,   net  of  applicable   tax,  and  the  Funding
Corporation's 1% equity in earnings of the Guarantors.

Related Party Transactions

Pursuant to power sales  agreements with EPME, sales to EPME from the Salton Sea
Guarantors   totaled   $53.4  million  and  $16.1  million  in  2001  and  2000,
respectively.  Pursuant to power sales  agreements with EPME, sales to EPME from
the  Partnership  Guarantors  totaled $49.4 million and $3.4 million in 2001 and
2000,  respectively.  As of December 31, 2001 and 2000, accounts receivable from
EPME were $9.4  million  and $5.6  million,  respectively,  for the  Salton  Sea
Guarantors and $2.5 million and $1.5 million,  respectively, for the Partnership
Guarantors.

On October 13,  1998,  Funding  Corporation  completed  a sale to  institutional
investors of $285 million  aggregate  amount of 7.475% Senior  Secured  Series F
bonds due  November  30,  2018. A portion of the proceeds are being used to fund
the cost of  construction  of, and was advanced to, the Zinc  Recovery  Project,

<PAGE>

which is indirectly  100% owned by Salton Sea Minerals  Corp.,  a MEHC affiliate
not owned by CE Generation.  The direct and indirect owners of the Zinc Facility
(the "Zinc  Guarantors",  which include  Salton Sea Minerals  Corp. and Minerals
LLC) are among the  guarantors  of the Funding  Corporation  debt. In connection
with the  divestiture,  MEHC  guaranteed the payment by the Zinc Guarantors of a
specified  portion of the scheduled debt service on the Imperial  Valley Project
Loans including the current  principal amount of  approximately  $139.9 million,
which is  included  in note  receivable  to  related  party  in the  accompanied
consolidated balance sheet and associated interest.

Capital Resources and Liquidity

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  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
Royalty  Guarantor's  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.

Contractual Obligations and Commercial Commitments

The Funding Corporation has contractual  obligations and commercial  commitments
that may affect its financial condition. Based on management's assessment of the
underlying provisions and circumstances of the material contractual  obligations
and  commercial  commitments  of the  Funding  Corporation,  including  material
off-balance sheet and structured finance arrangements,  there is no known trend,
demand,  commitment,  event or  uncertainty  that is reasonably  likely to occur
which  would  have a  material  effect on the  Funding  Corporations'  financial
condition or results of  operations.  The  following  tables  identify  material
obligations and commitments as of December 31, 2001:
<TABLE>
<CAPTION>
                                                                     Payments Due by Period
                                    -------------------------------------------------------------------------------
                                                        Less Than             2-3          4-5           After 5
Contractual Cash Obligations             Total            1 Year             Years        Years           Years
----------------------------             -----            ------             -----        -----           -----
(in thousands)

<S>                                  <C>                <C>               <C>          <C>            <C>
Long-Term Debt                       $  520,250         $  28,572         $  58,674    $  58,118      $  374,886
Other Long-Term Obligations                   -                 -                 -            -               -
                                     ----------         ---------         ---------    ---------      ----------

Total Contractual Cash Obligations   $  520,250         $  28,527         $  58,674    $  58,118      $  374,886
                                     ==========         =========         =========    =========      ==========
</TABLE>


<TABLE>
<CAPTION>
                                                                  Commitment Expiration per Period
                                    -----------------------------------------------------------------------------
                                                        Less Than            2-3        4-5            After 5
Other Commercial Commitments             Total            1 Year            Years      Years            Years
----------------------------             -----            ------            -----      -----            -----
(in thousands)

<S>                                  <C>                <C>               <C>          <C>            <C>
Lines of Credit (a)                  $   15,000         $  15,000         $       -    $       -      $        -
Standby Letters of Credit (b)            67,600                 -            67,600            -               -
                                     ----------         ---------         ---------    ---------      ----------

Total Commercial Commitments         $   82,600         $  15,000         $  67,600    $       -      $        -
                                     ==========         =========         =========    =========      ==========
</TABLE>

     (a)  The line of credit represent the unused borrowing  capacity  available
          to the company, as of December 31, 2001.
     (b)  The Standby Letter of Credit matures in July 2004.
<PAGE>

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 $158.8  million,  net of
payments for liquidated  damages  received,  of such costs through  December 31,
2001.

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  Guarantors  drew $29.6
million under the EPC Contract Letter of Credit on July 20, 2001. 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.

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. The Funding
Corporation  is aware that there have been public  announcements  that  Edison's
financial condition has deteriorated as a result of reduced liquidity. Following
Edison's  recent  financing  Edison's  senior  unsecured debt  obligations  were
upgraded to Ba3 by Moody's and BB by S&P.

Edison  failed to pay  approximately  $119 million due under the power  purchase
agreements with certain  Guarantors  (Imperial  Valley  Projects,  excluding the
Salton Sea V and Turbo  Projects)  for power  delivered in November and December
2000  and  January,  February  and  March  2001,  although  the  Power  Purchase
Agreements  provide for billing and payment on a schedule  where  payments would
have normally been received in early  January,  February,  March,  April and May
2001.

On February 21,  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  payments under the Power Purchase  Agreements.  The
lawsuit also  requested,  among other things,  that the court order permit these
Guarantors to suspend deliveries of power to Edison and to permit the Guarantors
to sell such power to other purchasers in California.

On March 22, 2001,  the Superior  Court granted  Guarantors'  Motion for Summary
Adjudication  and a  Declaratory  Judgment  ordering  that:  1) under  the Power
Purchase Agreements, Guarantors have the right to temporarily suspend deliveries
of  capacity  and energy to Edison,  2)  Guarantors  are  entitled to resell the
energy  and  capacity  to other  purchasers  and 3) the  interim  suspension  of
deliveries  to Edison shall not in any respect  result in the  modifications  or
termination of the Power Purchase  Agreements and the Power Purchase  Agreements
shall in all respects continue in full force and effect other than the temporary
suspension of deliveries to Edison.

As a  result  of the  March  22,  2001  Declaratory  Judgment,  the  Guarantors'
suspended  deliveries  of  energy  to  Edison  and  entered  into a  transaction
agreement with EPME in which the  Guarantors'  available  power was sold to EPME
based on  percentages  of the Dow  Jones  SP-15  Index.  On June 18,  2001,  the
Superior Court  prospectively  vacated its order  authorizing the Guarantors' to
resell power.

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") and, as a result, resumed power sales to Edison
on June 22, 2001. The Settlement Agreements required that Edison make an initial
payment to repay the past due balances under the Power Purchase  Agreements (the
"stipulated amounts"). The initial payment of approximately $11.6 million, which
represented  10% of the  stipulated  amounts,  was received  June 22,  2001.  On
October 2, 2001, the California Public Utilities  Commission  ("CPUC") announced

<PAGE>

an agreement with Edison that allowed Edison to recover in retail electric rates
its past due obligations.  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.  On March 1, 2002,  Edison  obtained  $1.8 billion in secured
financing that,  when combined with cash on hand,  enabled Edison to pay off its
past due debts. The final payment of approximately $104.6 million,  representing
the remaining  stipulated  amounts,  was received  March 1, 2002. In addition to
these payments, Edison was required to make monthly interest payments calculated
at a rate of 7% per annum on the  outstanding  stipulated  amounts.  The amended
Settlement Agreements provide a revised energy pricing structure, whereby Edison
elects  to  pay  the   Guarantors'   a  fixed   energy  price  in  lieu  of  the
Commission-approved  Avoided Cost of Energy Methodology under the Power Purchase
Agreements.  The fixed energy price is 3.25 cents/kWh from December 2001 through
April 30, 2002 and 5.37 cents/kWh commencing May 1, 2002 for a five-year period.
Following  the  five-year  period,  the  energy  payments  revert  back  to  the
Commission-approved  Avoided Cost of Energy Methodology under the Power Purchase
Agreements.   Estimates  of  Edison's   future   avoided  cost  of  energy  vary
substantially from year to year.

As a result of the  uncertainties  related to Edison,  the letter of credit that
supports the debt service reserve fund at Salton Sea Funding Corporation has not
been  not  renewed,  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
renewed or replaced.

In January 2001, the California Power Exchange ("PX") declared bankruptcy.  As a
result,  the Salton Sea Unit 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 are  contractually  entitled to receive  payments under the Power
Purchase Agreements, Settlement Agreements and Transactions Agreements. However,
due to the  uncertainties  associated  with  Edison's  financial  condition  and
failure to pay  contractual  obligations  at December 31,  2001,  along with the
California  Power  Exchange  bankruptcy,  the  Guarantors  have  established  an
allowance for doubtful  accounts of approximately  $24.8 million on December 31,
2001.

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 December 31, 2001 and December 31, 2000,
the Guarantors environmental  liabilities recorded on the balance sheet were not
material.

Accounting Pronouncements

In July 2001, the Financial  Accounting  Standards Board (FASB) issued Statement
of Financial  Accounting Standard (SFAS) No. 141, "Business  Combinations",  and
SFAS No. 142, "Goodwill and Other Intangible Assets", which establish accounting
and  reporting  for  business  combinations.  SFAS No. 141 requires all business
combinations  entered into subsequent to June 30, 2001 to be accounted for using

<PAGE>

the purchase method of accounting. SFAS No. 142 provides that goodwill and other
intangible  assets  with  indefinite  lives will not be  amortized,  but will be
tested for impairment on an annual basis.  SFAS 142 is effective for the Funding
Corporation  beginning  January 1, 2002.  Under the current  method of assessing
goodwill for  impairment,  which uses an  undiscounted  cash flow  approach,  no
material  impairment  existed at December 31, 2001.  For 2002,  the Company will
begin  to  test  goodwill  for  impairment  under  the  new  rules,  applying  a
fair-value-based  approach.  The  Funding  Corporation  is  in  the  process  of
quantifying  the  anticipated  impact on its financial  condition and results of
operations  of  adopting  the  provisions  of  SFAS  No.  142,  which  could  be
significant.

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  143  is  effective  for  the  Funding
Corporation's fiscal year beginning January 1, 2003. The Funding Corporation has
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 and is effective
for the Funding Corporations' fiscal year beginning January 1, 2002. The Funding
Corporation  has not quantified  the impact  resulting from the adoption of this
standard.

Item 7A.  Qualitative and Quantitative Disclosures About Market Risk

The following  discussion of the  Guarantors'  exposure to various  market risks
contains  "forward-looking  statements"  that involve  risks and  uncertainties.
These  projected  results  have  been  prepared  utilizing  certain  assumptions
considered reasonable in the circumstances and in light of information currently
available to the Guarantors.  Actual results could differ  materially from those
projected in the forward-looking information.

Interest Rate Risk

At  December  31,  2001 and  2000  respectively,  the  Funding  Corporation  had
fixed-rate  long-term  debt of $520.3  million and $543.9  million in  principal
amount and  having a fair value of $478.8  million  and  $468.8  million.  These
instruments  are fixed-rate and therefore do not expose the Funding  Corporation
to the risk of earnings loss due to changes in market interest  rates.  However,
the fair  value of these  instruments  would  decrease  by  approximately  $28.1
million and $14.6  million if interest  rates were to increase by 10% from their
levels at December 31, 2001 and 2000, respectively.  In general, such a decrease
in fair  value  would  impact  earnings  and  cash  flows  only  if the  Funding
Corporation  were to reacquire  all or a portion of these  instruments  prior to
their maturity.


<PAGE>



Item 8.     Financial Statements and Supplementary Data.


<PAGE>



                         SALTON SEA FUNDING CORPORATION
                          INDEX TO FINANCIAL STATEMENTS


SALTON SEA FUNDING CORPORATION

Independent Auditors' Report--Deloitte & Touche LLP                           30

Balance Sheets as of December 31, 2001 and 2000                               31

Statements of Operations for the three years ended December 31, 2001          32

Statements of Stockholder's Equity for the three years ended
        December 31, 2001                                                     33

Statements of Cash Flows for the three years ended December 31, 2001          34

Notes to Financial Statements                                                 35


SALTON SEA GUARANTORS

Independent Auditors' Report--Deloitte & Touche LLP                           39

Combined Balance Sheets as of December 31, 2001 and 2000                      40

Combined Statements of Operations for the three years ended December 31, 2001 41

Combined Statements of Guarantors' Equity for the three years ended
        December 31, 2001                                                     42

Combined Statements of Cash Flows for the three years ended December 31, 2001 43

Notes to Combined Financial Statements                                        44


<PAGE>


PARTNERSHIP GUARANTORS

Independent Auditors' Report--Deloitte & Touche LLP                           52

Combined Balance Sheets as of December 31, 2001 and 2000                      53

Combined Statements of Operations for the three years ended December 31, 2001 54

Combined Statements of Guarantors' equity for the three years ended
        December 31, 2001                                                     55

Combined Statements of Cash Flows for the three years ended December 31, 2001 56

Notes to Combined Financial Statements                                        57


SALTON SEA ROYALTY LLC

Independent Auditors' Report--Deloitte & Touche LLP                           70

Balance Sheets as of December 31, 2001 and 2000                               71

Statements of Operations for the three years ended December 31, 2001          72

Statements of Equity for the three years ended December 31, 2001              73

Statements of Cash Flows for the three years ended December 31, 2001          74

Notes to Financial Statements                                                 75



<PAGE>


                          INDEPENDENT AUDITORS' REPORT


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

We  have  audited  the  accompanying   balance  sheets  of  Salton  Sea  Funding
Corporation  as of December  31, 2001 and 2000,  and the related  statements  of
operations,  stockholder's  equity and cash flows for each of the three years in
the  period  ended  December  31,  2001.  These  financial  statements  are  the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audit to obtain  reasonable  assurance  about  whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

In our  opinion,  such  financial  statements  present  fairly,  in all material
respects,  the  financial  position  of Salton  Sea  Funding  Corporation  as of
December 31, 2001 and 2000, and the results of its operations and its cash flows
for each of the three years in the period ended  December 31, 2001 in conformity
with accounting principles generally accepted in the United States of America.

As discussed in Note 2 to the  financial  statements,  in 2001 the equity method
investees of Salton Sea Funding  Corporation changed their accounting policy for
overhaul and well workover costs.


DELOITTE & TOUCHE LLP
Omaha, Nebraska
January 17, 2002 (March 1, 2002 as to Note 4)

<PAGE>


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


                                                              December 31,
--------------------------------------------------------------------------------
                                                            2001        2000
--------------------------------------------------------------------------------

ASSETS
Cash                                                 $     4,361   $     8,467
Restricted cash                                            2,949             -
Accrued interest receivable and other assets               3,351         3,563
Current portion secured project notes from Guarantors     28,572        23,658
                                                      ----------      --------
Total current assets                                      39,233        35,688

Secured project notes from Guarantors                    491,678       520,250
Investment in 1% of net assets of Guarantors               9,669         9,437
                                                      ----------   -----------
                                                     $   540,580   $   565,375
                                                     ===========   ===========
LIABILITIES AND STOCKHOLDER'S EQUITY
Liabilities:
Accrued liabilities                                  $     3,333   $     3,479
Due to affiliates                                          3,899         4,753
Current portion of long term debt (Note 3)                28,572        23,658
                                                      ----------   -----------
Total current liabilities                                 35,804        31,890

Senior secured notes and bonds                           491,678       520,250
                                                      ----------   -----------
    Total liabilities                                    527,482       552,140

Commitments and contingencies (Note 3 and 4)

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                                          7,732         7,869
                                                     -----------    ----------

    Total stockholder's equity                            13,098        13,235
                                                     -----------    ----------

                                                     $   540,580    $  565,375
                                                     ===========    ==========


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


<PAGE>


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


                                         For the Year Ended December 31,
                                         2001         2000           1999
-------------------------------------------------------------------------------

Revenues:

Interest income                       $  41,389    $  43,128      $  47,815
Equity in earnings of Guarantors            402          590            723
                                      ---------     --------      ---------

                                         41,791       43,718         48,538
Expenses:

General and administrative expenses       1,089          971            775
Interest expense                         40,765       42,452         45,859
                                         ------       ------         ------
Total expenses                           41,854       43,423         46,634
                                         ------       ------         ------

Income (loss) before income taxes           (63)         295          1,904
Provision for income taxes                  (26)         121            781
                                       ---------    --------       --------

Income (loss) before cumulative effect
    of accounting change                    (37)         174          1,123

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

Net income (loss)                     $    (137)   $     174      $   1,123
                                      ==========   =========      =========


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




<PAGE>


                         SALTON SEA FUNDING CORPORATION
                       STATEMENTS OF STOCKHOLDER'S EQUITY
                   FOR THE THREE YEARS ENDED DECEMBER 31, 2001
                             (Dollars in Thousands)
<TABLE>
<CAPTION>
                                                    Additional
                                   Common Stock       Paid-in     Retained     Total
                                 Shares    Amount     Capital     Earnings     Equity
                                 ------    ------     --------    --------     ------

<S>                              <C>       <C>        <C>         <C>        <C>
Balance, January 1, 1999            100    $    -     $   5,366   $  6,572   $ 11,938

Net income                            -         -             -      1,123      1,123
                                 ------    ------      --------    -------   --------

Balance, December 31, 1999          100         -         5,366      7,695     13,061

Net income                            -         -             -        174        174
                                 ------    ------      --------    -------   --------

Balance, December 31, 2000          100         -         5,366      7,869     13,235

Net loss                              -         -                     (137)      (137)
                                 ------    ------      --------    --------  ---------

Balance, December 31, 2001          100    $    -     $   5,366   $  7,732   $ 13,098
                                 ======    ======     =========   =========  =========
</TABLE>

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



<PAGE>

<TABLE>
                         SALTON SEA FUNDING CORPORATION
                            STATEMENTS OF CASH FLOWS
                             (Dollars in Thousands)

<CAPTION>
                                                                For the Years Ended December 31,
                                                            2001              2000             1999
-------------------------------------------------------------------------------------------------------------------------------
Cash flows from operating activities:
<S>                                                     <C>               <C>              <C>
    Net income (loss)                                   $    (137)        $     174        $   1,123
    Adjustments to reconcile net income (loss) to net
       cash flows from operating activities:
    Equity in earnings of Guarantors                         (232)             (590)            (723)
    Changes in assets and liabilities:
       Prepaid expenses and other assets                      212                54            3,151
       Accrued liabilities                                   (146)             (128)            (364)
                                                        ----------        ----------       ----------

    Net cash flows from operating activities                 (303)             (490)           3,187
                                                        ----------        ----------       ----------
Cash flows from investing activities:
    Principal repayments of secured project
       notes from Guarantors                               23,658          25,072             57,836
                                                                          ----------       ----------
    Net cash flows from investing activities               23,658            25,072           57,836
                                                        ---------         ----------       ----------
Cash flows from financing activities:
    Repayment of senior secured
       notes and bonds                                    (23,658)          (25,072)         (57,836)
    Increase in restricted cash                            (2,949)                -                -
    Due to affiliates                                        (854)            6,871          (18,730)
                                                        ----------        ----------       ----------

    Net cash flows from financing activities              (27,461)          (18,201)         (76,566)
                                                        ----------        ----------       ----------

Net change in cash                                         (4,106)            6,381          (15,543)
Cash at the beginning of period                             8,467             2,086           17,629
                                                        ---------         ----------       ----------

Cash at the end of period                               $   4,361         $   8,467        $   2,086
                                                        =========         ==========       ==========

Supplemental disclosure:
    Interest paid                                         $40,911         $  42,580        $  46,210
                                                        =========         ==========       ==========

    Income taxes paid (received)                        $     (95)        $     121        $     781
                                                        =========         ==========       ==========

</TABLE>

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


<PAGE>


                         SALTON SEA FUNDING CORPORATION
                          NOTES TO FINANCIAL STATEMENTS

1. ORGANIZATION AND OPERATIONS

Salton Sea Funding Corporation (the "Funding Corporation"),  which was formed on
June 20, 1995, is a special purpose  Delaware  corporation and was organized for
the sole purpose of acting as issuer of senior secured notes and bonds.  On July
21, 1995,  June 20, 1996 and October 31, 1998,  the Funding  Corporation  issued
$475 million,  $135 million and $285 million,  respectively,  of Senior  Secured
Notes and Bonds (collectively, the "Securities").

The Funding  Corporation  is a  wholly-owned  subsidiary of Magma Power Company,
which  in  turn  was   wholly-owned  by  MidAmerican   Energy  Holdings  Company
("MidAmerican").  On February 8, 1999, MidAmerican created a new subsidiary,  CE
Generation  and  subsequently  transferred  its  interest in the Company and its
power  generation  assets in the Imperial Valley to CE Generation,  with certain
assets being retained by MidAmerican.  On March 3, 1999,  MidAmerican closed the
sale of 50% of its ownership interests in CE Generation to El Paso CE Generation
Holding Company,  which was ultimately merged into EPME, an indirect  subsidiary
of El Paso Corporation.

The  Securities  are payable from the proceeds of payments made of principal and
interest  on the  Secured  Project  Notes  from the  Guarantors  to the  Funding
Corporation.  The Securities are also guaranteed on a joint and several basis by
the Salton Sea Guarantors,  the  Partnership  Guarantors and Salton Sea Royalty,
LLC  (collectively  the  "Guarantors").  The  Guarantors are affiliates of Magma
Power Company and the Salton Sea Funding  Corporation who  collectively  own ten
operating  geothermal  power plants and a related zinc recovery plant located in
Imperial Valley,  California.  The guarantees of the Partnership  Guarantors and
the  Royalty   Guarantor  are  limited  to  available  cash  flow.  The  Funding
Corporation does not conduct any operations apart from issuing the Securities.

2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Restricted Cash

The  restricted  cash balance is composed of a debt service fund that is legally
restricted  as to its use and requires  the  maintenance  of a specific  minimum
balance.

Investment in Guarantors

Since the Funding  Corporation has the ability to assert  significant  influence
over  the  operations  of the  Guarantors,  it  accounts  for  its  one  percent
investment in the Guarantors using the equity method of accounting.

Income Taxes

The Funding  Corporation is included in the consolidated income tax returns with
its parent and affiliates. Income taxes are provided on a separate return basis;
however,  tax  obligations  of the Funding  Corporation  will be remitted to the
parent only to the extent of cash flows available  after operating  expenses and
debt service.

Overhaul and Well Rework Costs

The  Guarantors  have  changed  their  accounting  policy for  overhaul and well
workover costs.  These costs,  which have  historically been accounted for using
the deferral  method,  are now  expensed as  incurred.  The new policy went into
effect January 1, 2001 and the Funding Corporation has recorded its share of the
Guarantors' cumulative effect of this change of approximately $0.1 million,  net
of tax.

Fair Values of Financial Instruments

Fair values have been  estimated  based on quoted  market prices for debt issues
listed on exchanges.  Fair values of financial instruments that are not actively
traded  are  based on market  prices of  similar  instruments  and/or  valuation
techniques using market assumptions.  Unless otherwise noted, the estimated fair
value amounts do not differ significantly from recorded values.
<PAGE>

Use of Estimates

The preparation of financial statements in conformity with accounting principles
generally  accepted in the United States of America requires  management to make
estimates  and  assumptions  that  affect  the  reported  amounts  of assets and
liabilities  and disclosure of contingent  assets and liabilities at the date of
the  financial  statements  and the  reported  amounts of revenues  and expenses
during the reporting period. Actual results could differ from those estimates.

Accounting Pronouncements

In June 1998, the Financial  Accounting  Standards Board (FASB) issued Statement
of  Financial   Accounting  Standard  (SFAS)  133,  "Accounting  for  Derivative
Instruments and Hedging  Activities",  which was delayed by SFAS 137 "Accounting
for Derivative  Instruments and Hedging  Activities - Deferral of Effective Date
of FASB No. 133" and  amended by SFAS 138  "Accounting  for  Certain  Derivative
Instruments  and Certain  Hedging  Activities".  SFAS 133  requires an entity to
recognize  all of  its  derivatives  as  either  assets  or  liabilities  in its
statement of financial position and measure those instruments at fair value. The
Funding  Corporation  adopted the new standards on January 1, 2001.  The initial
adoption  of SFAS 133 did not  have any  impact  on the  Funding  Corporation's'
financial position, results of operations or cash flows.

In July 2001, the Financial  Accounting  Standards Board (FASB) issued Statement
of Financial  Accounting Standard (SFAS) No. 141, "Business  Combinations",  and
SFAS No. 142, "Goodwill and Other Intangible Assets", which establish accounting
and  reporting  for  business  combinations.  SFAS No. 141 requires all business
combinations  entered into subsequent to June 30, 2001 to be accounted for using
the purchase method of accounting. SFAS No. 142 provides that goodwill and other
intangible  assets  with  indefinite  lives will not be  amortized,  but will be
tested for impairment on an annual basis.  SFAS 142 is effective for the Funding
Corporation  beginning  January 1, 2002.  Under the current  method of assessing
goodwill for  impairment,  which uses an  undiscounted  cash flow  approach,  no
material  impairment  existed at December 31, 2001.  For 2002,  the Company will
begin  to  test  goodwill  for  impairment  under  the  new  rules,  applying  a
fair-value-based  approach.  The  Funding  Corporation  is  in  the  process  of
quantifying  the  anticipated  impact on its financial  condition and results of
operations  of  adopting  the  provisions  of  SFAS  No.  142,  which  could  be
significant.

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  143  is  effective  for  the  Funding
Corporation's fiscal year beginning January 1, 2003. The Funding Corporation has
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 and is effective
for the Funding Corporation's fiscal year beginning January 1, 2002. The Funding
Corporation  has not quantified  the impact  resulting from the adoption of this
standard.

3.  SENIOR SECURED NOTES AND BONDS

The Funding Corporation's debt securities (the "Notes and Bonds") are as follows
(in thousands):

           Senior          Final Maturity                     December 31,
      Secured Series            Date          Rate        2001           2000
July 21, 1995     B Bonds   May 30, 2005      7.37%    $  79,360      $ 100,736
July 21, 1995     C Bonds   May 30, 2010      7.84%      109,250        109,250
June 20, 1996     E Bonds   May 30, 2011      8.30%       47,922         48,922
October 13, 1998  F Bonds   November 30, 2018 7.475%     283,718        285,000
                                                         -------       ---------
                                                       $ 520,250      $ 543,908

Principal and interest payments are made in semi-annual installments.  Principal
maturities of the Senior Secured Notes and Bonds are as follows (in thousands):

                  2002                              $  28,572
                  2003                                 28,086
                  2004                                 30,588
                  2005                                 30,374
                  2006                                 27,744
                  Thereafter                          374,886
                                                      -------
                                                   $  520,250
<PAGE>

Pursuant to a  depository  agreement,  Funding  Corporation  established  a debt
service  reserve  fund in the form of a letter of credit in the  amount of $67.6
million from which  scheduled  interest and principal  payments  could have been
made.  The letter of credit has not been  renewed.  The Funding  Corporation  is
restricted  from making  distributions  until it has reserved $67.6 million as a
debt service reserve fund.

The estimated  fair values of the Senior Secured Notes and Bonds at December 31,
2001 and 2000 were $478.8 million and $468.8 million, respectively.

4.  CONTINGENCY

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. The Salton
Sea Funding Corporation is aware that there have been public  announcements that
Edison's financial  condition has deteriorated as a result of reduced liquidity.
Following  Edison's recent financing  Edison's senior unsecured debt obligations
were upgraded to Ba3 by Moody's and BB by S&P.

Edison  failed to pay  approximately  $119 million due under the power  purchase
agreements with certain  Guarantors  (Imperial  Valley  Projects,  excluding the
Salton Sea V and Turbo  Projects)  for power  delivered in November and December
2000  and  January,  February  and  March  2001,  although  the  Power  Purchase
Agreements  provide for billing and payment on a schedule  where  payments would
have normally been received in early  January,  February,  March,  April and May
2001.

On February 21,  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  payments under the Power Purchase  Agreements.  The
lawsuit also  requested,  among other things,  that the court order permit these
Guarantors to suspend deliveries of power to Edison and to permit the Guarantors
to sell such power to other purchasers in California.

On March 22, 2001,  the Superior  Court granted  Guarantors'  Motion for Summary
Adjudication  and a  Declaratory  Judgment  ordering  that:  1) under  the Power
Purchase Agreements, Guarantors have the right to temporarily suspend deliveries
of  capacity  and energy to Edison,  2)  Guarantors  are  entitled to resell the
energy  and  capacity  to other  purchasers  and 3) the  interim  suspension  of
deliveries  to Edison shall not in any respect  result in the  modifications  or
termination of the Power Purchase  Agreements and the Power Purchase  Agreements
shall in all respects continue in full force and effect other than the temporary
suspension of deliveries to Edison.

As a  result  of the  March  22,  2001  Declaratory  Judgment,  the  Guarantors'
suspended  deliveries  of  energy  to  Edison  and  entered  into a  transaction
agreement with EPME in which the  Guarantors'  available  power was sold to EPME
based on  percentages  of the Dow  Jones  SP-15  Index.  On June 18,  2001,  the
Superior Court  prospectively  vacated its order  authorizing the Guarantors' to
resell power.

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") and, as a result, resumed power sales to Edison
on June 22, 2001. The Settlement Agreements required that Edison make an initial
payment to repay the past due balances under the Power Purchase  Agreements (the
"stipulated amounts"). The initial payment of approximately $11.6 million, which
represented  10% of the  stipulated  amounts,  was received  June 22,  2001.  On
October 2, 2001, the California Public Utilities  Commission  ("CPUC") announced
an agreement with Edison that allowed Edison to recover in retail electric rates
its past due obligations.  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.  On March 1, 2002,  Edison  obtained  $1.8 billion in secured
financing that,  when combined with cash on hand,  enabled Edison to pay off its
past due debts. The final payment of approximately $104.6 million,  representing
the remaining  stipulated  amounts,  was received  March 1, 2002. In addition to
these payments, Edison was required to make monthly interest payments calculated
at a rate of 7% per annum on the  outstanding  stipulated  amounts.  The amended
Settlement Agreements provide a revised energy pricing structure, whereby Edison
elects  to  pay  the   Guarantors'   a  fixed   energy  price  in  lieu  of  the
Commission-approved  Avoided Cost of Energy Methodology under the Power Purchase
Agreements.  The fixed energy price is 3.25 cents/kWh from December 2001 through

<PAGE>

April 30, 2002 and 5.37 cents/kWh commencing May 1, 2002 for a five-year period.
Following  the  five-year  period,  the  energy  payments  revert  back  to  the
Commission-approved  Avoided Cost of Energy Methodology under the Power Purchase
Agreements.   Estimates  of  Edison's   future   avoided  cost  of  energy  vary
substantially from year to year.

As a result of the  uncertainties  related to Edison,  the letter of credit that
supports the debt service reserve fund at Salton Sea Funding Corporation has not
been  not  renewed,  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
renewed or replaced.

In January 2001, the California Power Exchange ("PX") declared bankruptcy.  As a
result,  the Salton Sea Unit 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 are  contractually  entitled to receive  payments under the Power
Purchase Agreements, Settlement Agreements and Transactions Agreements. However,
due to the  uncertainties  associated  with  Edison's  financial  condition  and
failure to pay  contractual  obligations  at December 31,  2001,  along with the
California  Power  Exchange  bankruptcy,  the  Guarantors  have  established  an
allowance for doubtful  accounts of approximately  $24.8 million on December 31,
2001.

The Funding  Corporation  Securities are currently rated Ba3 by Moody's and BBB-
by S&P. CE Generation  Securities are currently rated Ba2 by Moody's and BBB- by
S&P

5.   REVOLVING CREDIT AGREEMENT

In connection with the issuance of the Notes and Bonds, the Funding  Corporation
also obtained a $15 million seven-year revolving credit agreement between Credit
Suisse as bank and agent and other lenders. The interest rate is at the Adjusted
Base Rate plus .375% or at the LIBOR rate plus 100 basis points.



<PAGE>




                          INDEPENDENT AUDITORS' REPORT


Board of Directors and Stockholder
Magma Power Company
Omaha, Nebraska

We have  audited  the  accompanying  combined  balance  sheets of the Salton Sea
Guarantors as of December 31, 2001 and 2000, and the related combined statements
of operations,  Guarantors' equity and cash flows for each of the three years in
the period  ended  December  31, 2001.  Our audits also  included the  financial
statement  schedule listed in item 14. These financial  statements and financial
statement  schedule  are  the  responsibility  of  the  Salton  Sea  Guarantors'
management.  Our  responsibility  is to express  an  opinion on these  financial
statements and financial statement schedule based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audit to obtain  reasonable  assurance  about  whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

In our opinion,  such  combined  financial  statements  present  fairly,  in all
material  respects,  the financial  position of the Salton Sea  Guarantors as of
December  31, 2001 and 2000 and the results of their  operations  and their cash
flows for each of the three  years in the  period  ended  December  31,  2001 in
conformity with accounting principles generally accepted in the United States of
America. Also in our opinion, such financial statement schedule, when considered
in  relation  to the  basic  combined  financial  statements  taken  as a whole,
presents fairly in all material respects the information set forth therein.

As discussed in Note 2 to the combined financial statements,  in 2001 the Salton
Sea Guarantors  changed their  accounting  policy for overhaul and well workover
costs.

DELOITTE & TOUCHE LLP
Omaha, Nebraska
January 17, 2002 (March 1, 2002 as to Note 6)


<PAGE>


                              SALTON SEA GUARANTORS
                             COMBINED BALANCE SHEETS
                             (Dollars in Thousands)

                                                             December 31,
-------------------------------------------------------------------------------
                                                       2001            2000
-------------------------------------------------------------------------------

ASSETS
Accounts receivable, net of allowance of $9,829
    and $0, respectively (Note 6)               $      36,647      $     24,396
Prepaid expenses and other assets                       5,314             8,699
                                                  -----------       -----------
Total current assets                                   41,961            33,095

Due from affiliates                                     9,186            22,976
Restricted cash                                           ---                17
Property, plant, contracts and equipment, net         504,321           524,881
Excess of cost over fair value of net assets
        acquired, net                                  44,270            45,574
                                                  -----------       -----------

                                                 $    599,738      $    626,543
                                                 ============      ============



LIABILITIES AND GUARANTORS' EQUITY
Liabilities:
Accounts payable                                 $      1,292       $         5
Accrued liabilities                                     9,602            10,826
Current portion of long term debt                      20,487            17,319
                                                       ------            ------
Total current liabilities                              31,381            28,150

Senior secured project note (Note 4)                  246,412           266,898
                                                      -------           -------

Total liabilities                                     277,793           295,048

Commitments and contingencies (Notes 4, 5 and 6)

Total Guarantors' equity                              321,945           331,495
                                                 ------------      ------------

                                                 $    599,738      $    626,543
                                                 ============      ============


The accompanying notes are an integral part of the combined financial statements


<PAGE>


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

                                                    Year Ended  December 31,
--------------------------------------------------------------------------------
                                                 2001         2000      1999
--------------------------------------------------------------------------------

Revenues:
Sales of electricity                            $110,941     $98,057    $81,850
Interest and other income                          2,287         353      1,868
                                                --------   ---------  ---------
Total Revenues                                   113,228      98,410     83,718
                                                 -------   ---------     ------

Expenses:
Operating, general and
    administrative expenses                       61,568      40,804     28,772
Depreciation and amortization                     17,332      16,016     16,891
Interest expense                                  21,827      23,075     24,251
Less capitalized interest                         (1,692)     (9,808)    (9,241)
Asset impairment (Note 4)                         15,000         ---        ---
                                                --------    --------  ---------
Total expenses                                   114,035    70,087       60,673
                                                --------    --------  ---------

Income (loss) before cumulative
    effect of accounting change                     (807)     28,323     23,045
Cumulative effect of accounting change (Note 2)   (8,743)        ---        ---
                                                ---------  ---------  ---------
Net income (loss)                                $(9,550)    $28,323    $23,045
                                                 ========    =======    =======

The accompanying notes are an integral part of the combined financial statements

<PAGE>


                              SALTON SEA GUARANTORS
                    COMBINED STATEMENTS OF GUARANTORS' EQUITY
                   FOR THE THREE YEARS ENDED DECEMBER 31, 2001
                             (Dollars in Thousands)


Balance, January 1, 1999                                        $   280,127

Net income                                                           23,045
                                                                 ----------

Balance, December 31, 1999                                          303,172

Net income                                                           28,323
                                                                 ----------

Balance, December 31, 2000                                          331,495

Net  loss                                                            (9,550)
                                                                 -----------

Balance, December 31, 2001                                      $   321,945
                                                                 ==========


The accompanying notes are an integral part of the combined financial statements


<PAGE>


                              SALTON SEA GUARANTORS
                        COMBINED STATEMENTS OF CASH FLOWS
                             (Dollars in Thousands)
<TABLE>
<CAPTION>
                                                               Years Ended December 31,
-------------------------------------------------------------------------------------------------
                                                        2001              2000            1999
-------------------------------------------------------------------------------------------------

Cash flows from operating activities:
<S>                                                <C>               <C>               <C>
Net income (loss)                                  $   (9,550)       $   28,323        $  23,045
Adjustments to reconcile net income (loss) to net
   cash provided by operating activities:
     Depreciation and amortization                     17,332            16,016           16,891
     Cumulative effect of change in
       accounting principle                             8,743               ---              ---
     Asset Impairment                                  15,000               ---              ---
     Changes in assets and liabilities:
       Accounts receivable                            (12,251)          (12,859)           4,420
       Prepaid expenses and other assets               (5,358)            2,996              715
       Accounts payable and accrued liabilities            63             2,936              225
                                                   ----------        ----------        ---------

Net cash flows from operating activities               13,979            37,412           45,296
                                                   ----------        ----------        ---------

Cash flows from investing activities:
Capital expenditures                                  (10,468)          (10,148)         (11,830)
Construction in progress                                  ---           (18,238)         (76,367)
Decrease in restricted cash                                17             9,984           61,672
                                                   ----------        ----------        ---------

Net cash flows from investing activities              (10,451)          (18,402)         (26,525)
                                                   ----------        ----------        ---------

Cash flows from financing activities:
Repayments of senior secured project note             (17,318)           (9,737)         (16,076)
Due from affiliates                                    13,790            (9,273)          (2,695)
                                                   ----------        ----------        ---------

Net cash flows from financing activities               (3,528)          (19,010)          (18,771)
                                                   ----------        ----------        ----------

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

Supplemental disclosure:
Cash paid for interest,
        net of capitalized interest                $   19,536        $   12,063        $  15,153
                                                   ==========        ===========       =========

</TABLE>

The accompanying notes are an integral part of the combined financial statements


<PAGE>


                              SALTON SEA GUARANTORS
                     NOTES TO COMBINED FINANCIAL STATEMENTS

1. ORGANIZATION AND OPERATIONS

Salton Sea Guarantors (the "Guarantors") (not a legal entity) own 100% interests
in five operating geothermal electric power generating plants (Salton Sea I, II,
III, IV and V)  (collectively,  the "Salton Sea Projects").  All five plants are
located  in the  Imperial  Valley  of  California.  The  Salton  Sea  Guarantors
guarantee loans from Salton Sea Funding Corporation ("Funding Corporation"),  an
indirect wholly-owned subsidiary of Magma Power Company ("Magma"), which in turn
was wholly-owned by MidAmerican Energy Holdings Company ("MidAmerican").

On February 8, 1999,  MidAmerican  created a new  subsidiary,  CE Generation LLC
("CE  Generation") and subsequently  transferred its interest in the Company and
its power  generation  assets in the  Imperial  Valley  to CE  Generation,  with
certain  assets being  retained by  MidAmerican.  On March 3, 1999,  MidAmerican
closed the sale of 50% of its ownership interests in CE Generation to El Paso CE
Generation  Holding Company,  which was ultimately merged into EPME, an indirect
subsidiary of El Paso Corporation.

The  financial  statements  consist of the  combination  of (1) Salton Sea Brine
Processing,  L.P.,  a  California  limited  partnership  between  Magma as a 99%
limited partner and Salton Sea Power Company ("SSPC"), a wholly-owned subsidiary
of Magma,  as a 1% general  partner,  (2) Salton Sea Power  Generation,  L.P., a
California limited partnership  between Salton Sea Brine Processing,  L.P., as a
99% limited partner,  and Salton Sea Power Company, as a 1% general partner, (3)
assets  and  liabilities  attributable  to  Salton  Sea IV which are held 99% by
Salton Sea Power Generation, L.P. and 1% by Fish Lake Power LLC ("FLPC") and (4)
Salton  Sea  Power  L.L.C.,  a  Delaware  limited  liability  company.   Funding
Corporation  owns 1%  interests  in SSPC and FLPC.  All of the  entities  in the
combination are affiliates of Magma and indirect subsidiaries of CE Generation.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The  accompanying  financial  statements  present the  combined  accounts of the
Salton Sea Projects described above. All significant  intercompany  transactions
and accounts have been eliminated.  Certain 2000 amounts have been  reclassified
to conform with the 2001 presentation.

The financial statements reflect the acquisition of Magma and the resulting push
down to the Guarantors of the accounting as a purchase business combination.

Revenue Recognition

The Guarantors  recognize revenues and related accounts receivable from sales of
electricity on an accrual basis.  All of the  Guarantors'  sales of electricity,
except for Salton Sea V, are to Southern  California  Edison Company  ("Edison")
under long-term power purchase contracts.

For the years ended  December 31, 2001,  2000 and 1999,  respectively,  Edison's
Average  Avoided Cost of Energy was 7.4 cents per  kilowatt-hour,  5.8 cents per
kilowatt-hour  and 3.1  cents  per  kilowatt-hour,  respectively.  Estimates  of
Edison's future Avoided Cost of Energy vary substantially from year to year.

The Salton Sea I Project  contracts to sell  electricity to Edison pursuant to a
30-year  negotiated  power purchase  agreement,  which commenced on July 1, 1987
(the "Salton Sea I PPA"). The contract capacity and contract  nameplate are each
10 MW. The capacity  payment is based on the firm capacity price,  which adjusts
quarterly  based on a basket of energy  indices for the term of the Salton Sea I
PPA and is currently $154.45 per kW-year.  The capacity payment is approximately
$1.1  million per annum.  The energy  payment is  calculated  using a Base Price
(defined as the initial  value of the energy  payment (4.7 cents per kWh for the
second quarter of 1992)),  which is subject to quarterly  adjustments based on a
basket of indices.  The time period  weighted  average energy payment for Salton
Sea I was 5.9 cents per kWh during  2001.  As the Salton Sea I PPA is not an SO4
Agreement, the energy payments do not revert to Edison's Avoided Cost of Energy.

The Salton Sea II Project  contracts to sell electricity to Edison pursuant to a
30-year  modified SO4 Agreement  that  commenced on April 5, 1990.  The contract
capacity and contract  nameplate are 15 MW (16.5 MW during on-peak  periods) and

<PAGE>

20 MW, respectively. The price for contract capacity and contract capacity bonus
payments  is fixed for the life of the  modified  SO4  Agreement.  The  combined
annual capacity and bonus payments are  approximately  $3.3 million.  The energy
payments for the first ten-year  period,  which period expired on April 4, 2000,
were  levelized  at a time  period  weighted  average  of 10.6  cents  per  kWh.
Thereafter,  the monthly  energy  payment was based on Edison's  Avoided Cost of
Energy. Edison is entitled to receive, at no cost, 5% of all energy delivered in
excess of 80% of contract capacity through September 30, 2004.

The Salton Sea III Project contracts to sell electricity to Edison pursuant to a
30-year modified SO4 Agreement that commenced on February 13, 1989. The contract
capacity and contract nameplate are 47.5 MW and 49.8 MW, respectively. The price
for contract  capacity  payments and capacity bonus payments is fixed at $175/kW
per year. The combined annual capacity and bonus payments are approximately $9.7
million. The energy payments for the first ten-year period, which period expired
on February 12, 1999,  were levelized at a time period  weighted  average of 9.8
cents per kWh. Thereafter, the energy payment was based on Edison's Avoided Cost
of Energy.

The Salton Sea IV Project  contracts to sell electricity to Edison pursuant to a
modified SO4 Agreement which provides for contract capacity payments on 34 MW of
capacity at two  different  rates based on the  respective  contract  capacities
deemed  attributable  to the original Salton Sea I PPA option (20 MW) and to the
original  Salton Sea IV SO4  Agreement  ("Fish Lake PPA") (14 MW).  The capacity
payment  price for the 20 MW portion  adjusts  quarterly  based  upon  specified
indices  and  the  capacity  payment  price  for  the 14 MW  portion  is a fixed
levelized  rate.  The  capacity  included  bonus  payments  in  2001  that  were
approximately  $5.7 million.  The energy payment (for deliveries up to a rate of
39.6 MW) is at a fixed price for 55.6% of the total  energy  delivered by Salton
Sea IV and is based on an energy payment  schedule for 44.4% of the total energy
delivered  by Salton Sea IV. The  contract  has a 30-year term but Edison is not
required to purchase the 20 MW of capacity and energy originally attributable to
the Salton Sea I PPA option after  September 30, 2017, the original  termination
date of the Salton Sea I PPA.

The Salton Sea V Project,  which  commenced  operations  in the third quarter of
2000,  will sell  approximately  one-third of its net output to a zinc facility,
which is owned by a  subsidiary  of  MidAmerican  and is  expected  to  commence
commercial  operations  in 2002.  The Salton Sea V Project  sells its  remaining
output through other market transactions.

On January 17, 2001,  Salton Sea Power entered into a  transaction  agreement to
sell  available  power  from  Salton  Sea V 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 based on day ahead price quotes received from EPME.

On March 27, 2001 and May 1, 2001 Salton Sea Power entered into new  transaction
agreements  to  sell  available  power  from  Salton  Sea  V to  EPME  based  on
percentages of the Dow Jones SP-15 Index.

The Imperial  Valley  Projects,  other than Salton Sea I,  receive  transmission
service from the Imperial  Irrigation  District to deliver electricity to Edison
near  Mirage,  California.  These  projects  pay a rate  based  on the  Imperial
Irrigation District's cost of service, which was $1.68 per month per kilowatt of
service provided for 2001 and recalculated  annually.  The transmission  service
and interconnection agreements expire in 2015 for the Partnership Projects, 2019
for  Salton  Sea III,  2020 for  Salton  Sea II and 2026 for  Salton Sea IV. The
Salton Sea V and Turbo  projects  have  entered  into  30-year  agreements  with
similar terms with the Imperial Irrigation District.  Salton Sea Unit I delivers
energy to Edison at the project site and has no transmission  service  agreement
with the Imperial Irrigation District.

 Overhaul and Well Rework Costs

The Guarantors  have changed their  accounting  policy for the overhaul and well
workover costs.  These costs,  which have  historically been accounted for using
the deferral  method,  are now  expensed as  incurred.  The new policy went into
effect January 1, 2001 and the Guarantors  have recorded a cumulative  effect of
this change of  approximately  $8.7 million.  If the  Guarantors had adopted the
policy as of January 1, 2000,  net income would have been $1.1 million  lower in
2000 on a proforma basis.
<PAGE>

Restricted Cash

The restricted cash balance primarily  included  commercial paper,  money market
securities and mortgage backed  securities and was composed of amounts deposited
in restricted accounts, which the Guarantors used to fund capital expenditures.

Property, Plant, Contracts and Equipment

Property,  plant,  contracts and equipment are carried at cost less  accumulated
depreciation.  The Guarantors provide depreciation and amortization of property,
plants, contracts and equipment upon the commencement of revenue production over
the estimated useful life of the assets.

Depreciation  of the  operating  power plant  costs,  net of salvage  value,  is
computed on the straight-line method over the estimated useful lives, between 10
and 30 years.  Depreciation of furniture,  fixtures and equipment is computed on
the straight-line  method over the estimated useful lives of the related assets,
which range from three to ten years.

Power sale agreements  have been assigned values  separately for each of (1) the
remaining  portion of the fixed price periods of the power sales  agreements and
(2) the 20-year avoided cost periods of the power sales agreements and are being
amortized separately over such periods using the straight-line method.

The Salton Sea reservoir contains commercial quantities of extractable minerals.
The carrying value of the mineral  reserves will be amortized upon  commencement
of commercial production.

Excess of Cost over Fair Value

Total  acquisition costs in excess of the fair values assigned to the net assets
acquired are amortized over a 40-year period using the straight-line  method. At
December 31, 2001 and 2000, accumulated  amortization of the excess of cost over
fair value was $9.0 million and $7.7 million, respectively.

Capitalization of Interest and Deferred Financing Costs

Prior to the commencement of operations, interest is capitalized on the costs of
the  plants  and  geothermal  resource   development  to  the  extent  incurred.
Capitalized  interest and other deferred charges are amortized over the lives of
the related assets.

Deferred  financing  costs are amortized over the term of the related  financing
using the effective interest method.

Income Taxes

The Guarantors are comprised substantially of partnership interests.  The income
or loss of each  partnership for income tax purposes,  along with any associated
tax credits, is the responsibility of the individual partners.  Accordingly,  no
recognition has been given to federal or state income taxes in the  accompanying
combined financial statements.

Statements of Cash Flows

For purposes of the  statements  of cash flows,  the  Guarantors  consider  only
demand deposits at banks to be cash.

Fair Values of Financial Instruments

Fair values of financial  instruments  that are not actively traded are based on
market prices of similar  instruments  and/or valuation  techniques using market
assumptions.  Unless  otherwise  noted,  the estimated fair value amounts do not
differ significantly from recorded values.
<PAGE>

Impairment of Long-Lived Assets

The Guarantors review long-lived assets and certain identifiable intangibles for
impairments  whenever  events or  changes  in  circumstances  indicate  that the
carrying amount of an asset may not be recoverable.  An impairment loss would be
recognized,  based on discounted cash flows or other fair value models, whenever
evidence exists that the carrying value is not recoverable.

Use of Estimates

The preparation of financial statements in conformity with accounting principles
generally  accepted in the United States of America requires  management to make
estimates  and  assumptions  that  affect  the  reported  amounts  of assets and
liabilities  and disclosure of contingent  assets and liabilities at the date of
the  financial  statements  and the  reported  amounts of revenues  and expenses
during the reporting period. Actual results could differ from those estimates.

Accounting Pronouncements

In June 1998, the Financial  Accounting  Standards Board (FASB) issued Statement
of  Financial   Accounting  Standard  (SFAS)  133,  "Accounting  for  Derivative
Instruments and Hedging  Activities",  which was delayed by SFAS 137 "Accounting
for Derivative  Instruments and Hedging  Activities - Deferral of Effective Date
of FASB No. 133" and  amended by SFAS 138  "Accounting  for  Certain  Derivative
Instruments  and Certain  Hedging  Activities".  SFAS 133  requires an entity to
recognize  all of  its  derivatives  as  either  assets  or  liabilities  in its
statement of financial position and measure those instruments at fair value. The
Guarantors adopted the new standards on January 1, 2001. The initial adoption of
SFAS 133 did not have any impact on the Guarantors' financial position,  results
of operations or cash flows.

In July 2001, the Financial  Accounting  Standards Board (FASB) issued Statement
of Financial  Accounting Standard (SFAS) No. 141, "Business  Combinations",  and
SFAS No. 142, "Goodwill and Other Intangible Assets", which establish accounting
and  reporting  for  business  combinations.  SFAS No. 141 requires all business
combinations  entered into subsequent to June 30, 2001 to be accounted for using
the purchase method of accounting. SFAS No. 142 provides that goodwill and other
intangible  assets  with  indefinite  lives will not be  amortized,  but will be
tested  for  impairment  on an  annual  basis.  SFAS  142 is  effective  for the
Guarantors  beginning  January 1, 2002.  Under the current  method of  assessing
goodwill for  impairment,  which uses an  undiscounted  cash flow  approach,  no
material  impairment  existed at December 31, 2001.  For 2002,  the Company will
begin  to  test  goodwill  for  impairment  under  the  new  rules,  applying  a
fair-value-based  approach. The Guarantors are in the process of quantifying the
anticipated  impact on its  financial  condition  and results of  operations  of
adopting  the  provisions  of SFAS No.  142,  which  could be  significant.  The
historical  impact of not  amortizing  goodwill  would have been to increase net
income for the years ended  December  31, 2001,  2000 and 1999 by  approximately
$1.3 million, $1.3 million and $1.3 million,  respectively.  However, impairment
reviews may result in future periodic write-downs.

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 143 is effective for the Guarantor's 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 and is effective
for the Guarantors'  fiscal year beginning  January 1, 2002. The Guarantors have
not quantified the impact resulting from the adoption of this standard.

3.  PROPERTY, PLANT, CONTRACTS AND EQUIPMENT

Property, plant, contracts and equipment consisted of the following:

                                             December 31,
                                      2001               2000
                                      ----               ----
Plant and equipment                 $451,554           $458,762
Power sale agreements                  7,913              7,913
Mineral reserves                      91,811             90,119
Wells and resource development        44,569             43,585
                                  ----------          ---------
                                     595,847            600,379
Less accumulated depreciation
    and amortization                  91,526             75,498
                                  ----------          ---------

                                    $504,321           $524,881
                                    ========           ========

<PAGE>

The asset impairment in 2001 reflects the write off of the book value of a steam
turbine.  In 2001, the  Guarantors  made the decision to dispose of the turbine.
The Guarantors have determined that the cost of the turbine, which had been held
in storage for use in new construction at the Salton Sea Projects, no longer was
recoverable.

4. SENIOR SECURED PROJECT NOTE

The Guarantors'  project note payable to Salton Sea Funding  Corporation consist
of the following (in thousands):

         Senior              Final Maturity                   December 31,
     Secured Series               Date        Rate       2001           2000
July 21, 1995     B Bonds     May 30, 2005    7.37%    $ 74,752    $   91,695
July 21, 1995     C Bonds     May 30, 2010    7.84%     109,250       109,250
October 13, 1998  F Bonds   November 30,2018 7.475%      82,897        83,272
                                                       ---------     ---------
                                                    $   266,899   $   284,217
                                                        =======       =======

The Guarantors have also guaranteed,  along with other  guarantors,  the debt of
Salton Sea Funding Corporation, which amounted to $520.3 million at December 31,
2001. The guarantee issued is  collateralized by a lien on substantially all the
assets of and a pledge of the equity interests in the Guarantors.  The structure
has been designed to cross  collateralize cash flows from each guarantor without
cross collateralizing all of the guarantors' assets.

    Principal maturities of the senior secured project note are as follows (in
thousands):

                           2002                               $   20,487
                           2003                                   22,765
                           2004                                   24,409
                           2005                                   23,917
                           2006                                   22,620
                           Thereafter                            152,701
                                                              ----------
                                                                $266,899

The estimated fair values of the senior  secured  projects notes at December 31,
2001 and 2000 were $253.0 million and $249.8 million, respectively.

5.  RELATED PARTY TRANSACTIONS

    The Guarantors have entered into the following agreements:

     Amended and Restated Easement Grant Deed and Agreement Regarding Rights for
     Geothermal  Development  dated  February 23, 1994, as amended,  whereby the
     Guarantors acquired from Magma Land I, a wholly-owned  subsidiary of Magma,
     rights  to  extract  geothermal  brine  from the  geothermal  lease  rights
     property  which is  necessary  to operate the Salton Sea Power  Generation,
     L.P.  facilities in return for 5% of all electricity  revenues  received by
     the Guarantors.  The amount expensed for the years ended December 31, 2001,
     2000  and  1999  was  $4.4   million,   $4.1  million  and  $3.7   million,
     respectively.

     Administrative  Services Agreement dated April 1, 1993 with Magma,  whereby
     Magma  will  provide   administrative   and  management   services  to  the
     Guarantors,  excluding Salton Sea IV and V. Fees payable to Magma amount to
     3% of total electricity  revenues.  The amount expensed for the years ended
     December 31, 2001,  2000 and 1999 was $1.6  million,  $1.4 million and $1.5
     million, respectively.
<PAGE>

     Operating  and  Maintenance  Agreement  dated April 1, 1993 with  CalEnergy
     Operating  Corporation  ("CEOC"),  whereby  the  Guarantors  retain CEOC to
     operate the Salton Sea facilities for a period of 32 years. Payment is made
     to CEOC in the form of  reimbursements of expenses  incurred.  During 2001,
     2000  and  1999,  the  Guarantors  reimbursed  CEOC for  expenses  of $16.2
     million, $7.4 million and $6.7 million, respectively.

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

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

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

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

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

On March 27, 2001 and May 1, 2001,  the  Guarantor  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 Guarantors Projects (excluding the Salton Sea
V Project)  ceased  selling  available  power to EPME and resumed power sales to
Edison.

Pursuant  to these  agreements,  sales to EPME from the  Company  totaled  $53.4
million, $16.1 million and $0 million in 2001, 2000 and 1999,  respectively.  As
of December 31, 2001 and 2000,  accounts receivable from EPME were $11.8 million
and $7.1 million, respectively.

6.  CONTINGENCY

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.  The
Guarantors  are aware that there have been public  announcements  that  Edison's
financial condition has deteriorated as a result of reduced liquidity. Following
Edison's recent  financing,  Edison's  senior  unsecured debt  obligations  were
upgraded to Ba3 by Moody's and BB by S&P.

Edison failed to pay  approximately  $42.3 million due under the power  purchase
agreements with certain  Guarantors  (Imperial  Valley  Projects,  excluding the
Salton Sea V and Turbo  Projects)  for power  delivered in November and December
2000  and  January,  February  and  March  2001,  although  the  Power  Purchase
Agreements  provide for billing and payment on a schedule  where  payments would
have normally been received in early  January,  February,  March,  April and May
2001.

On February 21,  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  payments under the Power Purchase  Agreements.  The
lawsuit also  requested,  among other things,  that the court order permit these
Guarantors to suspend deliveries of power to Edison and to permit the Guarantors
to sell such power to other purchasers in California.
<PAGE>

On March 22, 2001,  the Superior  Court granted  Guarantors'  Motion for Summary
Adjudication  and a  Declaratory  Judgment  ordering  that:  1) under  the Power
Purchase Agreements, Guarantors have the right to temporarily suspend deliveries
of  capacity  and energy to Edison,  2)  Guarantors  are  entitled to resell the
energy  and  capacity  to other  purchasers  and 3) the  interim  suspension  of
deliveries  to Edison shall not in any respect  result in the  modifications  or
termination of the Power Purchase  Agreements and the Power Purchase  Agreements
shall in all respects continue in full force and effect other than the temporary
suspension of deliveries to Edison.

As a  result  of the  March  22,  2001  Declaratory  Judgment,  the  Guarantors'
suspended  deliveries  of  energy  to  Edison  and  entered  into a  transaction
agreement with EPME in which the  Guarantors'  available  power was sold to EPME
based on  percentages  of the Dow  Jones  SP-15  Index.  On June 18,  2001,  the
Superior Court  prospectively  vacated its order  authorizing the Guarantors' to
resell power.

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") and, as a result, resumed power sales to Edison
on June 22, 2001. The Settlement Agreements required that Edison make an initial
payment to repay the past due balances under the Power Purchase  Agreements (the
"stipulated amounts").  The initial payment of approximately $4.1 million, which
represented  10% of the  stipulated  amounts,  was received  June 22,  2001.  On
October 2, 2001, the California Public Utilities  Commission  ("CPUC") announced
an agreement with Edison that allowed Edison to recover in retail electric rates
its past due obligations.  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.  On March 1, 2002,  Edison  obtained  $1.8 billion in secured
financing that,  when combined with cash on hand,  enabled Edison to pay off its
past due debts. The final payment of approximately  $36.9 million,  representing
the remaining  stipulated  amounts,  was received  March 1, 2002. In addition to
these payments, Edison was required to make monthly interest payments calculated
at a rate of 7% per annum on the  outstanding  stipulated  amounts.  The amended
Settlement Agreements provide a revised energy pricing structure, whereby Edison
elects  to  pay  the   Guarantors'   a  fixed   energy  price  in  lieu  of  the
Commission-approved  Avoided Cost of Energy Methodology under the Power Purchase
Agreements.  The fixed energy price is 3.25 cents/kWh from December 2001 through
April 30, 2002 and 5.37 cents/kWh commencing May 1, 2002 for a five-year period.
Following  the  five-year  period,  the  energy  payments  revert  back  to  the
Commission-approved  Avoided Cost of Energy Methodology under the Power Purchase
Agreements.   Estimates  of  Edison's   future   avoided  cost  of  energy  vary
substantially from year to year.

As a result of the  uncertainties  related to Edison,  the letter of credit that
supports the debt service reserve fund at Salton Sea Funding Corporation has not
been not 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 current  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 are  contractually  entitled to receive  payments under the Power
Purchase Agreements, Settlement Agreements and Transactions Agreements. However,
due to the  uncertainties  associated  with  Edison's  financial  condition  and
failure to pay  contractual  obligations  at December 31,  2001,  along with the
California  Power  Exchange  bankruptcy,  the  Guarantors  have  established  an
allowance for doubtful  accounts of  approximately  $9.8 million on December 31,
2001.

Southern California Edison - Capacity Bonus Payments

Edison has failed to pay  approximately  $.4 million of capacity  bonus payments
for the months of October,  November  and  December  2001.  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.
<PAGE>

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 December 31, 2001 and December 31, 2000,
the environmental liabilities recorded on the balance sheet were not material.




<PAGE>



                          INDEPENDENT AUDITORS' REPORT


Board of Directors and Stockholder
Magma Power Company
Omaha, Nebraska

We have audited the  accompanying  combined  balance  sheets of the  Partnership
Guarantors as of December 31, 2001 and 2000, and the related combined statements
of operations,  Guarantors' equity and cash flows for each of the three years in
the period  ended  December  31, 2001.  Our audits also  included the  financial
statements schedule listed in Item 14. These financial  statements and financial
statement  schedule  are  the  responsibility  of  the  Partnership  Guarantors'
management.  Our  responsibility  is to express  an  opinion on these  financial
statements and financial statement schedule based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audit to obtain  reasonable  assurance  about  whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

In our opinion,  such  combined  financial  statements  present  fairly,  in all
material respects,  the financial  position of the Partnership  Guarantors as of
December  31, 2001 and 2000 and the results of their  operations  and their cash
flows for each of the three  years in the  period  ended  December  31,  2001 in
conformity with accounting principles generally accepted in the United States of
America. Also in our opinion, such financial statement schedule, when considered
in  relation  to the  basic  combined  financial  statements  taken  as a whole,
presents fairly in all material respects the information set forth therein.

As  discussed  in Note 2 to the  combined  financial  statements,  in  2001  the
Partnership  Guarantors  changed their  accounting  policy for overhaul and well
workover costs.

DELOITTE & TOUCHE LLP
Omaha, Nebraska
January 17, 2002 (March 1, 2002 as to Note 8A)


<PAGE>


                             PARTNERSHIP GUARANTORS
                             COMBINED BALANCE SHEETS
                             (Dollars in Thousands)

                                                             December 31,
-------------------------------------------------------------------------------
                                                           2001          2000
-------------------------------------------------------------------------------
ASSETS
Accounts receivable, net of allowance of $14,925
    and $0, respectively  (Note 8)                    $    59,384  $    28,319
Prepaid expenses and other assets                          19,358       26,661
                                                        ---------   ----------
Total current assets                                       78,742       54,980

Restricted cash                                            21,282          106
Property, plant, contracts and equipment, net (Note 3)    633,574      640,204
Management fee                                             70,806       70,855
Due from affiliates                                        13,072       31,126
Excess of fair value over net assets acquired, net        120,866      124,430
                                                          -------      -------

                                                      $   938,342  $   921,701
                                                      ===========  ===========

LIABILITIES AND GUARANTORS' EQUITY
Liabilities:
Accounts payable                                      $     5,480  $       101
Accrued liabilities                                        14,458       17,722
Current portion of long term debt                           4,625        1,907
                                                        ---------    ---------
Total current liabilities                                  24,563       19,730

Senior secured project note (Note 4)                      244,117      248,743
Deferred income taxes                                     102,083      101,734
                                                        ---------      -------
Total liabilities                                         370,763      370,207

Commitments and contingencies (Notes 4, 5 and 8)

Guarantors' equity:
Common stock                                                    3            3
Additional paid-in capital                                387,663      387,663
Retained earnings                                         179,913      163,828
                                                          -------      -------

Total Guarantors' equity                                  567,579      551,494
                                                          -------      -------

                                                      $   938,342  $   921,701
                                                      ===========  ===========

The accompanying notes are an integral part of the combined financial statements


<PAGE>


                             PARTNERSHIP GUARANTORS
                        COMBINED STATEMENTS OF OPERATIONS
                             (Dollars in Thousands)

<TABLE>
<CAPTION>
                                                                                 Years Ended December 31,
-----------------------------------------------------------------------------------------------------------------
                                                                             2001           2000          1999
-----------------------------------------------------------------------------------------------------------------

Revenues:
<S>                                                                      <C>            <C>            <C>
Sales of electricity                                                      $119,738       $103,250       $105,921
Interest and other income                                                    6,580          4,934          9,067
                                                                         ---------       --------       --------

Total revenues                                                             126,318        108,184        114,988
Costs and expenses:
Operating, general and administrative costs                                 62,749         52,996         47,967
Depreciation and amortization                                               22,773         19,743         22,566
Interest expense                                                            19,330         20,092         22,200
Less capitalized interest                                                  (13,237)       (19,521)       (15,773)
                                                                           -------        --------       --------
Total expenses                                                              91,615         73,310         76,960
                                                                         ---------      ---------       --------

Income before income taxes                                                  34,703         34,874         38,028
Provision for income taxes (Note 7)                                         11,728          7,694         12,547
                                                                         ---------      ---------       --------
Income before cumulative effect
    of accounting change                                                    22,975         27,180         25,481

Cumulative effect of accounting change, net of tax (Note 2)                 (6,890)           ---            ---
                                                                         ----------      --------       --------

Net income                                                                $ 16,085       $ 27,180       $ 25,481
                                                                          ========       ========       ========
</TABLE>



The accompanying notes are an integral part of the combined financial statements


<PAGE>


                             PARTNERSHIP GUARANTORS
                    COMBINED STATEMENTS OF GUARANTORS' EQUITY
                   FOR THE THREE YEARS ENDED DECEMBER 31, 2001
                             (Dollars in Thousands)
<TABLE>
<CAPTION>
                                                                      Additional
                                                   Common Stock         Paid-in        Retained        Total
                                             Shares        Amount       Capital        Earnings       Equity
                                             ------        ------      --------        --------       -------

<S>                                          <C>          <C>           <C>          <C>            <C>
Balance, January 1, 1999                          3       $     3       $387,663      $111,167      $ 498,833

Net income                                        -             -              -        25,481         25,481
                                             ------       -------       --------     ---------       ---------

Balance, December 31, 1999                        3             3        387,663       136,648        524,314

Net income                                        -             -              -        27,180         27,180
                                             ------        ------       --------     ---------       ---------

Balance, December 31, 2000                        3             3        387,663       163,828        551,494

Net income                                        -             -              -        16,085         16,085
                                             ------        ------       --------     ---------       --------

Balance, December 31, 2001                        3       $     3       $387,663      $179,913      $ 567,579
                                             ======       =======       ========      ========      =========
</TABLE>



The accompanying notes are an integral part of the combined financial statements


<PAGE>


                             PARTNERSHIP GUARANTORS
                        COMBINED STATEMENTS OF CASH FLOWS
                             (Dollars in Thousands)

<TABLE>
<CAPTION>

                                                          Years Ended December 31,
------------------------------------------------------------------------------------------
                                                      2001          2000          1999
------------------------------------------------------------------------------------------

Cash flows from operating activities:
<S>                                             <C>            <C>              <C>
 Net income                                     $    16,085    $    27,180      $  25,481
 Adjustments to reconcile net income to net
  cash provided by operating activities:
  Depreciation and amortization                      22,773         19,743         22,566
  Cumulative effect of change in accounting
    principle, net of tax                             6,890            ---            ---
  Deferred income taxes                                 725          2,827          1,266
  Changes in assets and liabilities:
    Accounts receivable                             (31,065)       (12,024)        17,109
    Prepaid expenses and other assets                (4,326)        (4,461)         4,129
    Accounts payable and accrued liabilities          2,115            364           (310)
                                                  ---------      ---------       ---------

Net cash flows from operating activities             13,197         33,629         70,241
                                                  ---------      ---------       --------

Cash flows from investing activities:
Capital expenditures                                (17,871)       (42,349)       (40,455)
Construction in progress                            (22,507)       (75,856)      (107,346)
Liquidated damages                                   29,648            ---            ---
Decrease (increase) in restricted cash              (21,176)        60,348        104,529
Management fee                                       (1,800)        (2,177)        (2,704)
                                                  ----------     ----------      ---------

Net cash flows from investing activities            (33,706)       (60,034)       (45,976)
                                                  ----------     ----------      ---------

Cash flows from financing activities:
Repayments of senior secured project notes           (1,908)       (10,562)       (32,364)
Due from affiliates                                  22,417         36,967          8,099
                                                  ---------      ---------       --------

Net cash flows from financing activities             20,509         26,405        (24,265)
                                                  ---------      ---------       ---------

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

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

Supplemental disclosure:
Cash paid for interest,
        net of capitalized interest             $     5,863     $       89      $   5,942
                                                ===========     ==========      =========

Income taxes paid                               $     9,460    $     4,867      $  11,281
                                                ===========    ===========      =========
</TABLE>


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


<PAGE>


                             PARTNERSHIP GUARANTORS
                     NOTES TO COMBINED FINANCIAL STATEMENTS

1. ORGANIZATION AND OPERATIONS

The Partnership  Guarantors (the  "Guarantors") (not a legal entity) include the
Vulcan/BN   Geothermal  Power  Company  ("Vulcan"),   Elmore,  L.P.  ("Elmore"),
Leathers,  L.P.  ("Leathers"),  Del Ranch,  L.P.  ("Del Ranch") and CE Turbo LLC
("Turbo "), each of which owns an operating  geothermal  power plant  located in
Imperial Valley, California known as the Vulcan Project, the Elmore Project, the
Leathers  Project,  the Del Ranch Project and Turbo Project,  respectively  (the
"Partnership  Projects").  The  Partnership  Guarantors  also include  CalEnergy
Minerals LLC ("Minerals LLC"),  which is constructing a zinc recovery project in
the Imperial Valley,  California.  Finally,  the Partnership  Guarantors include
CalEnergy Operating Corporation ("CEOC"), Vulcan Power Company ("VPC"), both 99%
owned by Magma  Power  Company  ("Magma")  and 1% owned by  Salton  Sea  Funding
Corporation  (the  "Funding   Corporation")  San  Felipe  Energy  Company  ("San
Felipe"),  Conejo Energy Company  ("Conejo"),  Niguel Energy Company ("Niguel"),
VPC  Geothermal  LLC ("VPCG"),  Salton Sea Minerals Corp. and CE Salton Sea Inc.
VPC and VPCG, collectively own 100% of the partnership interests in Vulcan. CEOC
and Niguel, San Felipe and Conejo, collectively own 90% partnership interests in
each of Elmore,  Leathers  and Del  Ranch,  respectively.  Salton  Sea  Minerals
Corporation  owns  Minerals  LLC.  Minerals  LLC  is  an  indirect  wholly-owned
subsidiary of MidAmerican Energy Holdings Company ("MidAmerican"). CE Salton Sea
Inc. owns Power LLC and Turbo LLC.

Magma owns all of the remaining  10%  interests in each of Elmore,  Leathers and
Del Ranch.  CEOC is entitled to receive from Magma,  as payment for certain data
and  services  provided  by CEOC,  all of the  partnership  distributions  Magma
receives  with  respect to its 10%  ownership  interests  in each of the Elmore,
Leathers and Del Ranch Projects and Magma's special  distributions equal to 4.5%
of total energy revenues from the Leathers Project.

Magma is a wholly-owned subsidiary of CE Generation LLC ("CE Generation"), which
is owned equally by MidAmerican and El Paso CE Generation Holding Company, which
was merged into EPME on December 31,  2000,  an indirect  subsidiary  of El Paso
Corporation.

Minerals LLC owns the rights to proprietary processes for the extraction of zinc
from  elements in solution in the  geothermal  brine and fluids  utilized at the
Guarantors'  Imperial  Valley plants.  A pilot plant has  successfully  produced
commercial  quality  zinc  at  the  Guarantors'  Imperial  Valley  Project.  The
Guarantor's  affiliates  intend  to  sequentially  develop  facilities  for  the
extraction of manganese,  silver,  gold, lead, boron, lithium and other products
as they further develop the extraction technology.

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  operation in 2002.  In September  1999,  Minerals LLC entered into a
sales agreement  whereby all zinc produced by the Zinc Recovery  Project will be
sold to Cominco,  Ltd.  The initial  term of the  agreement  expires in December
2005.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying  financial statements of the Guarantors present the accounts of
CEOC,  VPC, CE Turbo LLC and Minerals LLC and their  proportionate  share of the
Partnerships  in which  they have an  undivided  interest  in the assets and are
proportionately  liable  for their  share of the  liabilities.  All  significant
intercompany balances and transactions have been eliminated.

The financial statements reflect the acquisition of Magma and the resulting push
down to the Guarantors of the accounting as a purchase business combination.
<PAGE>

Revenue Recognition

The Guarantors  recognize revenues and related accounts receivable from sales of
electricity on an accrual basis.  All of the  Guarantors'  sales of electricity,
except for Turbo,  are to Southern  California  Edison Company  ("Edison") under
long-term power purchase contracts.

Each of the Partnership Projects,  except for Turbo, sells electricity generated
by the respective  plants pursuant to four long-term  power purchase  agreements
("SO4 Agreements") between the projects and Edison. These SO4 Agreements provide
for capacity payments, capacity bonus payments and energy payments. Edison makes
fixed annual capacity payments to the projects,  and to the extent that capacity
factors exceed certain  benchmarks is required to make capacity bonus  payments.
The price for capacity and capacity  bonus payments is fixed for the life of the
SO4 Agreements. Energy is sold at increasing fixed rates for the first ten years
of each  contract and  thereafter at a rate based on the cost that Edison avoids
by purchasing energy from the project instead of obtaining the energy from other
sources  ("Avoided  Cost of  Energy").  The fixed  energy  price  periods of the
Partnership  Project SO4  Agreements  extended  until  February 1996 for Vulcan,
December  1998 for Hoch  (Del  Ranch)  and  Elmore,  and  December  1999 for the
Leathers Partnership.  In June and November 2001, the Partnership Projects which
receive Edison's Avoided Cost of Energy entered into agreements that provide for
a fixed  energy  payment /kWh in lieu of Edison's  Avoided  Cost of Energy.  The
fixed energy payments are 3.25 cents/kWh from December 1, 2001 through April 30,
2002 and 5.37 cents/kWh commencing May 1, 2002 for a five-year period. Following
the five-year  period,  the energy payment reverts back to Edison's Avoided Cost
of Energy.

For the years ended December 31, 2001, 2000 and 1999,  Edison's  average Avoided
Cost of Energy  was 7.4  cents,  5.8 cents and 3.1 cents per kWh,  respectively.
Estimates of Edison's future Avoided Cost of Energy vary substantially from year
to year.  The  Guarantors  cannot  predict the likely  level of Avoided  Cost of
Energy prices.

The Turbo Project,  which commenced commercial operation in the third quarter of
2000, sells its output through other market transactions.  The Turbo Project may
sell its output to the Zinc Recovery Project,  which is owned by a subsidiary of
MidAmerican and is expected to commence operations in 2002.

Overhaul and Well Rework Costs

The  Guarantors  have  changed  their  accounting  policy for  overhaul and well
workover costs.  These costs,  which have  historically been accounted for using
the deferral  method,  are now  expensed as  incurred.  The new policy went into
effect January 1, 2001 and the Guarantors  have recorded a cumulative  effect of
this change of approximately  $6.9 million,  net of tax of $4.7 million.  If the
Guarantors  had adopted the policy as of January 1, 2000,  net income would have
been $4.9 million higher in 2000 on a proforma basis.

Restricted Cash

The restricted cash balance primarily  included  commercial paper,  money market
securities and mortgage backed  securities and was composed of amounts deposited
in  restricted  accounts,   which  the  Guarantors  will  use  to  fund  capital
expenditures.

Property, Plant, Contracts and Equipment

Property,  plant,  contracts and equipment are carried at cost less  accumulated
depreciation.  The Guarantors provide depreciation and amortization of property,
plants, contracts and equipment upon the commencement of revenue production over
the estimated useful life of the assets.

Depreciation  of the  operating  power plant  costs,  net of salvage  value,  is
computed on the straight-line method over the estimated useful lives, between 10
and 30 years.  Depreciation of furniture,  fixtures and equipment is computed on
the straight-line  method over the estimated useful lives of the related assets,
which range from three to ten years.

Power sale agreements  have been assigned values  separately for each of (1) the
remaining  portion of the fixed price periods of the power sales  agreements and
(2) the 20-year  avoided  cost  periods of the power  sales  agreements  and are
amortized separately over such periods using the straight-line method.

The Salton Sea reservoir contains commercial quantities of extractable minerals.
The carrying value of the mineral  reserves will be amortized upon  commencement
of commercial production.
<PAGE>

The process  license  represents the economic  benefits  expected to be realized
from the  installation  of the license and related  technology  at the  Imperial
Valley.  The  carrying  value of the  process  license  is  amortized  using the
straight-line  method over 24 years, the remaining  estimated useful life of the
license.

Excess of Cost over Fair Value

Total  acquisition costs in excess of the fair values assigned to the net assets
acquired are amortized over a 40-year period using the straight-line  method. At
December 31, 2001 and 2000  accumulated  amortization of the excess of cost over
fair  value  of net  assets  acquired  was  $24.6  million  and  $21.1  million,
respectively.

Capitalization of Interest and Deferred Financing Costs

Prior to the commencement of operations, interest is capitalized on the costs of
the  plants  and  geothermal  resource   development  to  the  extent  incurred.
Capitalized  interest and other deferred charges are amortized over the lives of
the related assets.

Deferred  financing  costs are amortized over the term of the related  financing
using the effective interest method.

Income Taxes

The entities  comprising the Guarantors are included in consolidated  income tax
returns with their parent and affiliates;  however, income taxes are provided on
a separate  return basis.  Tax obligations of the Guarantors will be remitted to
the parent only to the extent of cash flows available  after operating  expenses
and debt service.

Management Fee

Pursuant  to the Magma  Services  Agreement,  Magma  has  agreed to pay CEOC all
equity cash flows and certain  royalties  payable by the  Guarantors in exchange
for providing  data and services to Magma.  As security for the  obligations  of
Magma under the Magma Services  Agreement,  Magma has  collaterally  assigned to
CEOC its rights to such equity cash flows and certain royalties.

Statements of Cash Flows

For purposes of the statement of cash flows, the Guarantors consider only demand
deposits at banks to be cash.

Fair Values of Financial Instruments

Fair values of financial  instruments  that are not actively traded are based on
market prices of similar  instruments  and/or valuation  techniques using market
assumptions.  Unless  otherwise  noted,  the estimated fair value amounts do not
differ significantly from recorded values.

Impairment of Long-Lived Assets

The Guarantors review long-lived assets and certain identifiable intangibles for
impairment  whenever  events  or  changes  in  circumstances  indicate  that the
carrying amount of an asset may not be recoverable.  An impairment loss would be
recognized,  based on discounted cash flows or various models, whenever evidence
exists that the carrying value is not recoverable.

Use of Estimates

The preparation of financial statements in conformity with accounting principles
generally  accepted in the United States of America requires  management to make
estimates  and  assumptions  that  affect  the  reported  amounts  of assets and
liabilities  and disclosure of contingent  assets and liabilities at the date of
the  financial  statements  and the  reported  amounts of revenues  and expenses
during the reporting period. Actual results could differ from those estimates.
<PAGE>

Accounting Pronouncements

In June 1998, the Financial  Accounting  Standards Board (FASB) issued Statement
of  Financial   Accounting  Standard  (SFAS)  133,  "Accounting  for  Derivative
Instruments and Hedging  Activities",  which was delayed by SFAS 137 "Accounting
for Derivative  Instruments and Hedging  Activities - Deferral of Effective Date
of FASB No. 133" and  amended by SFAS 138  "Accounting  for  Certain  Derivative
Instruments  and Certain  Hedging  Activities".  SFAS 133  requires an entity to
recognize  all of  its  derivatives  as  either  assets  or  liabilities  in its
statement of financial position and measure those instruments at fair value. The
Guarantors adopted the new standards on January 1, 2001. The initial adoption of
SFAS 133 did not have any material impact on the Guarantors' financial position,
results of operations or cash flows.

In July 2001, FASB issued SFAS No. 141,  "Business  Combinations",  and SFAS No.
142,  "Goodwill and Other  Intangible  Assets",  which establish  accounting and
reporting  for  business  combinations.  SFAS  No.  141  requires  all  business
combinations  entered into subsequent to June 30, 2001 to be accounted for using
the purchase method of accounting. SFAS No. 142 provides that goodwill and other
intangible  assets  with  indefinite  lives will not be  amortized,  but will be
tested for impairment on an annual basis.  These standards are effective for the
Guarantors  beginning  on  January  1,  2002.  SFAS  142 is  effective  for  the
Guarantors  beginning  January 1, 2002.  Under the current  method of  assessing
goodwill for  impairment,  which uses an  undiscounted  cash flow  approach,  no
material  impairment  existed at December 31, 2001.  For 2002,  the Company will
begin  to  test  goodwill  for  impairment  under  the  new  rules,  applying  a
fair-value-based  approach. The Guarantors are in the process of quantifying the
anticipated  impact on its  financial  condition  and results of  operations  of
adopting  the  provisions  of SFAS No.  142,  which  could be  significant.  The
historical  impact of not  amortizing  goodwill  would have been to increase net
income for the years ended  December  31, 2001,  2000 and 1999 by  approximately
$3.6 million, $3.6 million and $3.6 million,  respectively.  However, impairment
reviews may result in future periodic write-downs.

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 143 is effective for the Guarantor's 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 and is effective
for the Guarantors'  fiscal year beginning  January 1, 2002. The Guarantors have
not quantified the impact resulting from the adoption of this standard.

3. PROPERTY, PLANT, CONTRACTS AND EQUIPMENT

Property,  plant,  contracts  and  equipment  consisted  of  the  following  (in
thousands):

                                                December 31,
-------------------------------------------------------------------------
                                          2001                  2000
-------------------------------------------------------------------------
Plant and equipment                     $205,993              $196,113
Power sale agreements                    123,588               123,588
Process license                           46,290                46,290
Mineral reserves                         168,988               166,650
Wells and resource development           100,876                95,570
                                      ----------                ------
                                         645,735               628,211
Less accumulated depreciation
    and amortization                    (170,952)             (153,592)
                                        --------              ---------
                                         474,783               474,619
Construction in progress:
Zinc recovery project                    158,791               165,585
                                         -------               -------
                                      $  633,574             $ 640,204
                                      ==========            ===========

4. SENIOR SECURED PROJECT NOTE

The Guarantors' project note payable to Salton Sea Funding Corporation  consists
of the following (in thousands):

<PAGE>

         Senior             Final Maturity                    December 31,
     Secured Series              Date            Rate       2001      2000
June 20, 1996      E Bonds    May 30, 2011       8.30%     $47,922  $48,922
October 13, 1998   F Bonds    November 30, 2018  7.475%    200,820  201,728
                                                          --------  -------
                                                          $248,742 $250,650
                                                         ========= ========

Principal maturities of the senior secured project note are as follows
                                (in thousands):

                           2002                             $    4,625
                           2003                                  5,017
                           2004                                  5,771
                           2005                                  6,022
                           2006                                  5,124
                           Thereafter                          222,183
                                                             ----------
                                                              $248,742

The Guarantors have also guaranteed,  along with other  guarantors,  the debt of
Salton Sea Funding Corporation, which amounted to $520.3 million at December 31,
2001.  The guarantee is  collateralized  by a lien on the available cash flow of
and a pledge of stock in the  Guarantors.  The  structure  has been  designed to
cross collateralize cash flows from each guarantor without cross collateralizing
all of the guarantors' assets.

The  estimated  fair values of the senior  secured  project note at December 31,
2001 and 2000 were $221.2 million and $210.6 million, respectively.

5. RELATED PARTY TRANSACTIONS

The  Guarantors  are party to a  30-year  brine  supply  agreement  through  the
Vulcan/BN   Geothermal  Power  Company  partnership  and  a  technology  license
agreement for the rights to use the  technology  necessary for the  construction
and  operation  of the  Vulcan  Plant.  Under the brine  supply  agreement,  the
Guarantors will pay VPC 4.167% of the contract energy  component of the price of
electricity  provided by the Vulcan Plant. In addition,  VPC has been designated
as operator of the Vulcan Plant and receives  agreed-upon  compensation for such
services.

Charges to the Guarantors  related to the brine supply  agreement and operator's
fees on a pro rata basis  amounted to $918,000 and $824,000,  respectively,  for
the year ended December 31, 2001, $709,000 and $676,000,  respectively,  for the
year ended December 31, 2000, $423,000 and $472,000,  respectively, for the year
ended December 31, 1999, respectively.

In addition, the Guarantors entered into the following agreements:

     Easement  Grant  Deed  and  Agreement   Regarding   Rights  for  Geothermal
     Development,  whereby the Guarantors  acquired from Magma rights to extract
     geothermal  brine  from  the  geothermal  lease  rights  property  which is
     necessary to operate the  Leathers,  Del Ranch and Elmore  Plants in return
     for 17.333%,  on a pro rata basis, of all energy revenues  received by each
     plant.  The Guarantors'  share of amounts expensed under this agreement for
     2001,  2000 and 1999 were $11.5  million,  $9.6 million and $11.9  million,
     respectively.

     Ground  Leases  dated March 15 and August 15,  1988 with Magma  whereby the
     Guarantors  lease  from  Magma  for 32  years  the  surface  of the land as
     described in the  Imperial  County  Assessor's  official  records.  Amounts
     expensed  under the ground leases for 2001,  2000 and 1999 were $70,000 per
     year.

     Administrative  Services  Agreements  whereby  CEOC  will  provide  to  the
     Partnerships  administrative  and  management  services  for a period of 32
     years  through  2020.  Fees  payable to CEOC amount to the greater of 3% of
     total  electricity  revenues  or $60,000  per month.  The  minimum  monthly
     payments for years  subsequent to 1989 are increased  based on the consumer
     price index of the Bureau of Labor and Statistics. Amounts expensed related
     to these agreements for 2001, 2000 and 1999 amounted to $2.6 million,  $2.3
     million and $2.7 million, respectively.

     Operating and Maintenance  Agreements whereby the Guarantors retain CEOC to
     operate the plants for a period of 32 years through  2020.  Payment is made
     to CEOC in the form of reimbursements of expenses incurred and a guaranteed
     capacity  payment  ranging from 10% to 25% of energy  revenues  over stated
     amounts. The Guarantors in 2001, 2000 and 1999 reimbursed CEOC for expenses
     of $14.6 million, $10.6 million and $7.5 million, respectively, and accrued
     a  guaranteed  capacity  payment of $3.0  million,  $1.9  million  and $3.3
     million at December 31, 2001, 2000 and 1999, respectively.
<PAGE>

On  September  29,  2000,  CE Turbo LLC entered  into an  agreement  to sell all
available power from the Turbo Project to El Paso Merchant Energy L.P. ("EPME").
Under  the  terms of the  agreement,  commencing  October  1,  2000  and  ending
September 30, 2001,  EPME  purchased and sold  available  power on behalf of the
Turbo  Project,  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,  CE Turbo LLC entered  into an agreement to sell  available
power from the Turbo  Project to EPME.  Under the terms of the  agreement at the
option of CE Turbo,  EPME will purchase all available  power from CE Turbo based
on day ahead price quotes received from EPME.

On March 27, 2001 and May 1, 2001,  the  Guarantors  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  Guarantors  (excluding  the 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  $49.4
million, $3.4 million and $0 million in 2001, 2000 and 1999, respectively. As of
December 31, 2001 and 2000,  accounts receivable from EPME were $2.4 million and
$1.5 million, respectively.


<PAGE>


          6. CONDENSED FINANCIAL INFORMATION
<TABLE>
<CAPTION>

                                   Vulcan
                                   Power         CEOC      Elmore      Del Ranch     Leathers
                                   -----         ----      ------      ---------     --------

December 31, 2001 Assets:
<S>                            <C>          <C>          <C>          <C>           <C>
Restricted cash                $        -   $        -   $       -    $        -    $        -
Accounts receivable and
   other assets                         3       17,364      15,348        14,487        15,136
Due from affiliates               (3,847)       41,358      35,510        27,950        34,301
Property, plant, contracts and
   equipment, net                   7,098       13,868      59,913        64,782        67,108
Management fee and
   goodwill, net                        -            -           -             -             -
Investments in
   partnerships                   108,861      328,580           -             -             -
                               ----------   ----------   ---------    ----------    ----------

                               $  112,115   $  401,170   $ 110,771    $  107,219    $  116,545
                               ==========   ==========   =========    ==========    ==========

Liabilities and Equity:
Accounts payable, accrued
   liabilities and deferred
   taxes                       $      320   $    8,928   $   2,233    $    1,528    $    2,194
Senior secured project note             -            -           -             -             -
                                ---------   ----------    --------    ----------    ----------

Total liabilities                     320        8,928       2,233         1,528         2,194
Guarantors' equity                111,795      392,242     108,538       105,691       114,351
                               ----------   ----------     -------    ----------    ----------

                               $  112,115   $  401,170   $ 110,771    $  107,219    $  116,545
                               ==========   ==========   =========    ==========    ==========
</TABLE>


<PAGE>
          6. CONDENSED FINANCIAL INFORMATION (Continued)
<TABLE>
<CAPTION>

                                  Vulcan                           Adjustments/     Combined
                                    BNG      Minerals     Turbo    Eliminations       Total
                                   ----     --------     -----     ------------       ------

December 31, 2001 Assets:
<S>                            <C>          <C>          <C>          <C>           <C>
Restricted cash                $        -   $   21,282   $       -    $        -    $   21,282
Accounts receivable and
   other assets                    14,246          640         217         1,301        78,742
Due from affiliates                28,326      (25,197)     (3,498)     (121,831)       13,072
Property, plant, contracts and
   equipment, net                  67,306      135,242       9,417       208,840       633,574
Management fee and
   goodwill, net                        -            -           -       191,672       191,672
Investments in
   partnerships                         -            -                  (437,441)            -
                               ----------   ----------   ---------    ----------    ----------

                                 $109,878   $  131,967   $   6,136    $ (157,459)   $  938,342
                               ==========   ==========   =========    ==========    ==========

Liabilities and Equity:
Accounts payable, accrued
   liabilities and deferred
   taxes                       $    1,017   $   (1,610)  $   1,818    $  105,593    $  122,021
Senior secured project note             -      139,896           -       108,846       248,742
                               ----------   ----------   ---------    ----------    ----------

Total liabilities                   1,017      138,286       1,818       214,439       370,763
Guarantors' equity                108,861       (6,319)      4,318      (371,898)   $  567,579

                               $  109,878   $  131,967   $   6,136    $ (157,459)   $  938,342
                               ==========   ==========   =========    ==========    ==========
</TABLE>


<PAGE>



6. CONDENSED FINANCIAL INFORMATION  (Continued)
<TABLE>
<CAPTION>

                                 Vulcan
                                  Power         CEOC      Elmore      Del Ranch     Leathers
                                 ------         ----      ------      ---------     --------

December 31, 2000 Assets:
<S>                            <C>          <C>          <C>          <C>           <C>
Restricted cash                $        -   $        -   $       -    $        -    $       -
Accounts receivable and
    other assets                        -       15,304      10,019         8,105        9,946
Due from affiliates                (4,218)      36,919      31,307        42,659       31,353
Property, plant, contracts and
    equipment, net                  7,377       15,173      61,078        52,953       69,179
Management fee and
     goodwill, net                      -            -           -             -            -
Investments in
    partnerships                   98,656      312,381           -             -            -
                               ----------   ----------   ---------    ----------    ---------

                               $  101,815   $  379,777   $ 102,404    $  103,717    $ 110,478
                               ==========   ==========   =========    ==========    =========

Liabilities and Equity:
Accounts payable, accrued
 liabilities and deferred taxes$    1,098   $    7,849   $   1,244    $    1,554    $   1,419
Senior secured project note             -            -           -             -            -
                               ----------   ----------   ---------    ----------    ---------
Total liabilities                   1,098        7,849       1,244         1,554        1,419
Guarantors' equity                100,717      371,928     101,160       102,163      109,059
                               ----------   ----------   ---------    ----------    ---------

                               $  101,815   $  379,777   $ 102,404    $  103,717    $ 110,478
                               ==========   ==========   =========    ==========    =========
</TABLE>



<PAGE>
<TABLE>
<CAPTION>
                                 Vulcan                             Adjustments/     Combined
                                   BNG      Minerals     Turbo      Eliminations      Total
                                   ---      --------     -----      ------------      ------

December 31, 2000 Assets:
<S>                            <C>          <C>          <C>          <C>           <C>
Restricted cash                $        -   $        -   $       -    $      106    $      106
Accounts receivable and
    other assets                    7,923          195       1,922         1,566        54,980
Due from affiliates                42,002      (16,747)     (8,358)     (123,791)       31,126
Property, plant, contracts and
    equipment, net                 49,852      152,933      10,114       221,545       640,204
Management fee and
     goodwill, net                      -            -           -       195,285       195,285
Investments in
    partnerships                        -            -           -      (411,037)            -
                               ----------   ----------   ---------    ----------    ----------

                               $   99,777   $  136,381   $   3,678    $ (116,326)   $  921,701
                               ==========   ==========   =========    ==========    ==========

Liabilities and Equity:
Accounts payable, accrued
  liabilities and deferred taxe$    1,121    $  (1,208)  $   1,252    $  105,228    $  119,557
Senior secured project note             -      140,528           -       110,122       250,650
                               ----------   ----------   ---------    ----------    ----------
Total liabilities                   1,121      139,320       1,252       215,350       370,207
Guarantors' equity                 98,656       (2,939)      2,426      (331,676)      551,494
                               ----------   ----------   ---------    ----------    ----------

                               $   99,777   $  136,381   $   3,678    $ (116,326)   $  921,701
                               ==========   ==========   =========    ==========    ==========
</TABLE>

<PAGE>



6. CONDENSED FINANCIAL INFORMATION  (Continued)

Condensed  combining  statements  of  operations  including  information  of the
Guarantors'  pro rata  interest in the  respective  entities for the years ended
December 31, 2001, 2000 and 1999 is as follows:
<TABLE>
<CAPTION>

                                 Vulcan
                                 Power         CEOC       Elmore      Del Ranch     Leathers
                                 -----         ----       ------      ---------     --------
December 31, 2001

<S>                             <C>          <C>          <C>         <C>           <C>
Revenues                        $   1,757    $   5,417    $ 31,165    $   28,446    $   30,591
Expenses                              884        1,302      23,787        24,918        25,299
                                ---------    ---------    --------     ---------     ---------

Net income                      $     873    $   4,115    $  7,378    $    3,528    $    5,292
                                =========      =======    ========    ==========    ==========

December 31, 2000
Revenues                        $   1,386    $   4,657    $ 25,762    $   25,610    $   25,662
Expenses                              709            -      18,887        18,866        19,684
                                ---------      -------    --------     ---------     ---------

Net income                      $     677    $   4,657    $  6,875    $    6,744    $    5,978
                                =========    =========    ========    ==========    ==========
December 31, 1999
Revenues                        $     892    $   6,104    $ 16,908    $   17,299    $   56,127
Expenses                              485            -      15,764        13,914        36,320
                                ---------      -------    --------     ---------     ---------

Net income                      $     407    $   6,104    $  1,144    $    3,385    $   19,807
                                ==========     =======    ========      ========     =========
</TABLE>



<PAGE>
<TABLE>
<CAPTION>

                                   Vulcan                           Adjustments/     Combined
                                     BNG      Minerals      Turbo   Eliminations       Total
                                     ---      --------      -----   ------------    ----------
December 31, 2001

<S>                             <C>          <C>          <C>         <C>           <C>
Revenues                        $ 28,375     $     847    $  5,082    $   (5,362)   $  126,318
Expenses                          18,170         5,271       2,797         7,805       110,233
                                --------     ---------    --------    ----------    ----------

Net income                      $ 10,205     $  (4,424)   $  2,285    $  (13,167)   $   16,085
                                ========     =========    ========    ==========    ==========

December 31, 2000
Revenues                        $ 22,749     $     576    $  4,652    $   (2,870)   $  108,184
Expenses                          12,214         4,962       1,031         4,651        81,004
                                ---------    ---------    --------    ----------    ----------

Net income                      $ 10,535     $  (4,386)   $  3,621    $   (7,521)   $   27,180
                                =========    =========    ========    ==========    ==========

December 31, 1999
Revenues                        $ 15,756     $     ---    $    ---    $    1,902    $  114,988
Expenses                           9,663           ---         ---        13,361        89,507
                                ---------    ---------    --------    ----------    ----------

Net income                      $  6,093     $     ---    $    ---    $  (11,459)   $   25,481
                                =========    =========    ========    ==========    ==========
</TABLE>



<PAGE>



7. INCOME TAXES

The provision for income taxes for the years ended  December 31, 2001,  2000 and
1999 consisted of the following (in thousands):

               Current          Deferred          Total
2001

Federal     $    8,190         $     880        $   9,070
State            2,813              (155)           2,658
            ----------          ---------       ---------

Total       $   11,003         $     725        $  11,728
            ==========         ==========       =========

2000

Federal     $    3,956         $     946          $ 4,902
State              911             1,881            2,792
             ---------         ---------        ---------

Total       $    4,867         $   2,827        $   7,694
            ==========         =========        =========

1999

Federal     $    8,527         $     991        $   9,518
State            2,754               275            3,029
             ---------          --------        ---------

Total       $   11,281         $   1,266          $12,547
            ==========         =========          =======


The net deferred tax  liability at December 31, 2001 and 2000 consisted of the
following (in thousands).

                                                        2001            2000
                                                        ----            ----

Liabilities:
Properties, plant contracts and equipment           $ 115,843       $ 106,447
Other                                                       -           1,125
                                                    ---------       ---------
                                                      115,843         107,572

Assets:
Accruals not currently deductible for tax purposes     (6,577)              -
Energy credits                                         (5,126)         (5,170)
AMT credit                                             (2,057)           (668)
                                                    ---------       ---------
                                                      (13,760)         (5,838)
                                                    ---------       ---------
Net deferred tax liability                          $ 102,083       $ 101,734
                                                    =========       =========

A  reconciliation  of the federal  statutory  tax rate to the effective tax rate
applicable to income before provision for income taxes follows:

                                            2001          2000          1999

 Federal statutory rate                     35.0%         35.0%        35.0%
 Percentage depletion                       (8.6)         (9.5)        (6.8)
 Investment and energy tax credits          (1.2)        (12.2)        (3.7)
 Goodwill amortization                       3.6           3.6          3.3
 State taxes, net of federal benefit         5.0           5.2          5.2
                                      ---------------------------------------
 Effective tax rate                         33.8%         22.1%        33.0%
                                      =========== ============= =============

8. COMMITMENTS AND CONTINGENCIES

A.  Financial Condition of 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. The Funding
Corporation  is aware that there have been public  announcements  that  Edison's
financial condition has deteriorated as a result of reduced liquidity. Following
Edison's  recent  financing  Edison's  senior  unsecured debt  obligations  were
upgraded to Ba3 by Moody's and BB by S&P.
<PAGE>

Edison failed to pay  approximately  $76.9 million due under the power  purchase
agreements with certain  Guarantors  (Imperial  Valley  Projects,  excluding the
Salton Sea V and Turbo  Projects)  for power  delivered in November and December
2000  and  January,  February  and  March  2001,  although  the  Power  Purchase
Agreements  provide for billing and payment on a schedule  where  payments would
have normally been received in early  January,  February,  March,  April and May
2001.

On February 21,  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  payments under the Power Purchase  Agreements.  The
lawsuit also  requested,  among other things,  that the court order permit these
Guarantors to suspend deliveries of power to Edison and to permit the Guarantors
to sell such power to other purchasers in California.

On March 22, 2001,  the Superior  Court granted  Guarantors'  Motion for Summary
Adjudication  and a  Declaratory  Judgment  ordering  that:  1) under  the Power
Purchase Agreements, Guarantors have the right to temporarily suspend deliveries
of  capacity  and energy to Edison,  2)  Guarantors  are  entitled to resell the
energy  and  capacity  to other  purchasers  and 3) the  interim  suspension  of
deliveries  to Edison shall not in any respect  result in the  modifications  or
termination of the Power Purchase  Agreements and the Power Purchase  Agreements
shall in all respects continue in full force and effect other than the temporary
suspension of deliveries to Edison.

As a  result  of the  March  22,  2001  Declaratory  Judgment,  the  Guarantors'
suspended  deliveries  of  energy  to  Edison  and  entered  into a  transaction
agreement with EPME in which the  Guarantors'  available  power was sold to EPME
based on  percentages  of the Dow  Jones  SP-15  Index.  On June 18,  2001,  the
Superior Court  prospectively  vacated its order  authorizing the Guarantors' to
resell power.

On June 20, 2001, the  Guarantors'  (excluding  the Turbo Project)  entered into
Agreements  Addressing  Renewable  Energy Pricing and Payment Issues with Edison
("Settlement  Agreements")  and, as a result,  resumed  power sales to Edison on
June 22, 2001.  The Settlement  Agreements  required that Edison make an initial
payment to repay the past due balances under the Power Purchase  Agreements (the
"stipulated amounts").  The initial payment of approximately $7.5 million, which
represented  10% of the  stipulated  amounts,  was received  June 22,  2001.  On
October 2, 2001, the California Public Utilities  Commission  ("CPUC") announced
an agreement with Edison that allowed Edison to recover in retail electric rates
its past due obligations.  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.  On March 1, 2002,  Edison  obtained  $1.8 billion in secured
financing that,  when combined with cash on hand,  enabled Edison to pay off its
past due debts. The final payment of approximately  $67.7 million,  representing
the remaining  stipulated  amounts,  was received  March 1, 2002. In addition to
these payments, Edison was required to make monthly interest payments calculated
at a rate of 7% per annum on the  outstanding  stipulated  amounts.  The amended
Settlement Agreements provide a revised energy pricing structure, whereby Edison
elects  to  pay  the   Guarantors'   a  fixed   energy  price  in  lieu  of  the
Commission-approved  Avoided Cost of Energy Methodology under the Power Purchase
Agreements.  The fixed energy price is 3.25 cents/kWh from December 2001 through
April 30, 2002 and 5.37 cents/kWh commencing May 1, 2002 for a five-year period.
Following  the  five-year  period,  the  energy  payments  revert  back  to  the
Commission-approved  Avoided Cost of Energy Methodology under the Power Purchase
Agreements.   Estimates  of  Edison's   future   avoided  cost  of  energy  vary
substantially from year to year.

As a result of the  uncertainties  related to Edison,  the letter of credit that
supports the debt service reserve fund at Salton Sea Funding Corporation has not
been  not  renewed,  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
renewed 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
$0.8 million.
<PAGE>

The Guarantors are  contractually  entitled to receive  payments under the Power
Purchase Agreements, Settlement Agreements and Transactions Agreements. However,
due to the  uncertainties  associated  with  Edison's  financial  condition  and
failure to pay  contractual  obligations  at December 31,  2001,  along with the
California  Power  Exchange  bankruptcy,  the  Guarantors  have  established  an
allowance for doubtful  accounts of approximately  $14.9 million on December 31,
2001.

Southern California Edison - Capacity Bonus Payments

Edison has failed to pay  approximately  $.9 million of capacity  bonus payments
for the months of October,  November and December 2001. On December 10, 2001 the
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 Guarantor will
vigorously pursue the collection of the capacity bonus payments.

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

<PAGE>

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 December 31, 2001 and December 31, 2000,
the environmental liabilities recorded on the balance sheet were not material.



<PAGE>


                          INDEPENDENT AUDITORS' REPORT


Board of Directors and Stockholder
Magma Power Company
Omaha, Nebraska

We have audited the accompanying balance sheets of the Salton Sea Royalty LLC as
of December 31, 2001 and 2000, and the related statements of operations,  equity
and cash flows for each of the three  years in the  period  ended  December  31,
2001.  These  financial  statements  are  the  responsibility  of the  Company's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audit to obtain  reasonable  assurance  about  whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

In our  opinion,  such  financial  statements  present  fairly,  in all material
respects,  the  financial  position of the Salton Sea Royalty LLC as of December
31, 2001 and 2000 and the results of its  operations and its cash flows for each
of the three years in the period  ended  December  31, 2001 in  conformity  with
accounting principles generally accepted in the United States of America.

As discussed in Note 2 to the financial  statements,  Salton Sea Royalty LLC was
converted to a limited  liability company during 1999 and as such the statements
of operations  and cash flows for the years ended December 31, 2001 and 2000 are
not  comparable  due to the change in reporting  entity which  results in no tax
expense beginning in fiscal 2000.


DELOITTE & TOUCHE LLP
Omaha, Nebraska
January 17, 2002 (March 1, 2002 as to Note 5)


<PAGE>


                             SALTON SEA ROYALTY LLC
                                 BALANCE SHEETS
                (Dollars in Thousands, Except Per Share Amounts)
<TABLE>
<CAPTION>

                                                                                December 31,
----------------------------------------------------------------------------------------------------
                                                                          2001              2000
----------------------------------------------------------------------------------------------------

ASSETS
<S>                                                                    <C>                <C>
Prepaid expenses and other assets                                      $       31         $      82
                                                                       ----------         ---------

Total current assets                                                          31                 82

Royalty stream, net                                                       14,865             15,719
Excess of cost over fair value of net assets acquired, net                30,464             31,372
Due from affiliates                                                       33,940             26,497
                                                                       ---------          ---------

                                                                         $79,300            $73,670
                                                                         =======            =======


LIABILITIES AND EQUITY
Liabilities:
Accrued liabilities                                                    $      29          $      57
Current portion of long term debt                                          3,460              4,434
                                                                        --------          ---------

Total current liabilities                                                  3,489              4,491

Senior secured project note (Note 3)                                       1,147              4,607
                                                                        --------          ---------

    Total liabilities                                                      4,636             9,098

Commitments and contingencies (Note 3 and 5)

Equity:
Common stock, par value $.01 per share; 100 shares
    authorized, issued and outstanding                                         -                  -
Additional paid-in capital                                                 1,561              1,561
Retained earnings                                                         73,103             63,011
                                                                        --------          ---------

    Total equity                                                          74,664             64,572
                                                                        --------          ---------

                                                                         $79,300            $73,670
                                                                         =======            =======
</TABLE>


     The accompanying notes are an integral part of the financial statements


<PAGE>


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


                                                   Years Ended December 31,
-------------------------------------------------------------------------------
                                                2001         2000         1999
-------------------------------------------------------------------------------

Revenues:
Royalty income                                $ 16,882   $   14,130   $  26,274

Expenses:
Operating, general and administrative expenses   4,420        3,859       4,610
Amortization of royalty stream and goodwill      1,762        1,965       7,064
Interest expense                                   608          954       1,682
                                               -------    ---------    --------

Total expenses                                   6,790        6,778      13,356
                                               -------    ---------    --------

Income before income taxes                      10,092        7,352      12,918
Income tax benefit                                 ---          ---      (6,304)
                                               -------    ---------    ---------

Net income                                    $ 10,092   $    7,352   $   19,222
                                              ========   ==========  ===========



     The accompanying notes are an integral part of the financial statements




<PAGE>


                             SALTON SEA ROYALTY LLC
                              STATEMENTS OF EQUITY
                   FOR THE THREE YEARS ENDED DECEMBER 31, 2001
                             (Dollars in Thousands)


                                                   Additional
                                  Common Stock      Paid-in   Retained
                               Shares      Amount   Capital   Earnings  Total
                               ------      ------  ---------  --------  ------


Balance, January 1, 1999          100   $       -   $ 1,561    $36,437  $37,998

Net income                          -           -         -     19,222   19,222
                              -------   ---------  -------- ----------  -------

Balance, December 31, 1999        100           -     1,561     55,659   57,220

Net income                          -           -         -      7,352    7,352
                              -------    --------  -------- ----------  -------

Balance, December 31, 2000        100           -     1,561     63,011   64,572

Net income                          -           -         -     10,092   10,092
                              -------    --------  -------- ----------  -------

Balance, December 31, 2001        100   $       -  $  1,561   $ 73,103  $74,664
                              =======   =========  ========  =========  =======


     The accompanying notes are an integral part of the financial statements




<PAGE>


                             SALTON SEA ROYALTY LLC
                            STATEMENTS OF CASH FLOWS
                             (Dollars in Thousands)
<TABLE>
<CAPTION>

                                                                                  Years Ended December 31,
----------------------------------------------------------------------------------------------------------------
                                                                              2001           2000        1999
----------------------------------------------------------------------------------------------------------------

Cash flow from operating activities:
<S>                                                                        <C>            <C>           <C>
Net income                                                                 $  10,092      $   7,352     $ 19,222
Adjustments to reconcile net income to net cash provided by
  operating activities:
     Amortization of royalty stream and goodwill                               1,762          1,965        7,064
     Deferred income taxes                                                       ---            ---       (6,769)
     Changes in assets and liabilities:
       Prepaid expenses and other assets                                          51            153          278
       Accrued liabilities                                                       (28)           (25)      (9,373)
                                                                            ---------       --------     --------

Net cash flows from operating activities                                      11,877          9,445       10,422
                                                                            --------        --------      ------

Net cash flows from financing activities:
Increase in due from affiliates                                               (7,443)        (4,672)      (1,026)
Repayment of senior secured project note                                      (4,434)        (4,773)      (9,396)
                                                                            ---------       --------     --------
Net cash flows from financing activities                                     (11,877)        (9,445)     (10,422)
                                                                             --------       --------     --------

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

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

Supplemental disclosure:
  Interest paid                                                            $     585      $     978     $  1,738
                                                                           =========      =========     ========

  Income taxes paid                                                        $       -      $       -     $    465
                                                                           =========      =========     ========
</TABLE>



     The accompanying notes are an integral part of the financial statements


<PAGE>


                             SALTON SEA ROYALTY LLC
                          NOTES TO FINANCIAL STATEMENTS

1. ORGANIZATION AND OPERATIONS

Salton Sea Royalty LLC (the "Royalty Company") is a special-purpose  entity, 99%
owned by Magma  Power  Company  ("Magma")  and 1% owned by  Salton  Sea  Funding
Corporation (the "Funding  Corporation").  Magma is a wholly-owned subsidiary of
CE Generation LLC ("CE Generation") which is owned equally by MidAmerican Energy
Holdings  Company  ("MidAmerican")  and El Paso CE Generation  Holding  Company,
which  was  ultimately  merged  into  EPME  an  indirect  subsidiary  of El Paso
Corporation.

The Royalty Company receives an assignment of royalties and certain fees paid by
three partnership projects,  Del Ranch, Elmore and Leathers  (collectively,  the
"Partnership  Projects").  All of the  Partnership  Projects  are engaged in the
operation  of  geothermal  power  plants  in the  Imperial  Valley  in  Southern
California.  Substantially  all  of  the  assigned  royalties  are  based  on  a
percentage of energy and capacity revenues of the Partnership Projects. Included
in royalty  income in 1999 are  payments  from East Mesa related to a settlement
agreement in 1998 for prior years.

Each of the Partnership Projects,  sells electricity generated by the respective
plants pursuant to four long-term power purchase  agreements ("SO4  Agreements")
between the  projects  and Edison.  These SO4  Agreements  provide for  capacity
payments, capacity bonus payments and energy payments. Edison makes fixed annual
capacity  payments  to the  projects,  and to the extent that  capacity  factors
exceed certain benchmarks is required to make capacity bonus payments. The price
for  capacity  and  capacity  bonus  payments  is fixed  for the life of the SO4
Agreements.  Energy is sold at increasing fixed rates for the first ten years of
each  contract and  thereafter at a rate based on the cost that Edison avoids by
purchasing  energy from the project  instead of obtaining  the energy from other
sources  ("Avoided  Cost of  Energy").  The fixed  energy  price  periods of the
Partnership  Project SO4 Agreements  extended until February 1996, December 1998
for Hoch (Del Ranch) and Elmore, and December 1999 for the Leathers Partnership.
In June and November 2001, the Partnership Projects entered into agreements that
provide for a fixed  energy  payment  /kWh in lieu of Edison's  Avoided  Cost of
Energy.  The fixed energy  payments  are 3.25  cents/kWh  from  December 1, 2001
through April 30, 2002 and 5.37 cents/kWh commencing May 1, 2002 for a five-year
period.  Following  the five-year  period,  the energy  payment  reverts back to
Edison's  Avoided Cost of Energy.  In 1998, the East Mesa Project entered into a
Termination  Agreement,  to which  Magma  consented,  which  terminated  its SO4
Agreement upon CPUC approval becoming final in 1999.

For the year ended December 31, 2001,  2000 and 1999,  Edison's  average Avoided
Cost of Energy  was 7.4  cents,  5.8 cents and 3.1 cents per kWh,  respectively.
Estimates of Edison's future Avoided Cost of Energy vary substantially from year
to year. The Royalty  Company cannot predict the likely level of Avoided Cost of
Energy prices.

As discussed  above,  all revenues except those derived from East Mesa are from,
and all operating expenses are paid by, related parties.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying  statement of operations presents revenues and expenses,  which
have been assigned to the Royalty Company under the arrangements described above
on the  accrual  method of  accounting.  This  presentation  is a "carve out" of
information  from Magma and certain of its  affiliates.  Such  revenues,  net of
related expenses,  guarantee loans from the Funding Corporation,  a wholly-owned
subsidiary of Magma.

The financial statements reflect the acquisition of Magma and the resulting push
down  to  the  Royalty  Company  of  the  accounting  as  a  purchase   business
combination.
<PAGE>

The Royalty Company was converted to a limited liability company during 1999 and
as such the  statements of operations and cash flows for the year ended December
31, 2001, 2000 and 1999 are not comparable due to the change in reporting entity
which results in no tax expense  beginning in fiscal 2000.  Income taxes are now
the  responsibility of the partners and the Royalty Company has no obligation to
provide funds to the partners for payment of any tax  liabilities.  Accordingly,
the Royalty Company has no tax obligations.

Royalty Stream

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

The royalty  streams have been assigned  values  separately  for each of (1) the
remaining  portion of the fixed  price  periods  of the  Projects'  power  sales
agreements and (2) the 20-year avoided cost periods of the Projects' power sales
agreements  and are  amortized  separately  over such periods using the straight
line method. At December 31, 2001 and 2000,  accumulated  amortization was $45.8
million and $44.8 million, respectively.

Excess of Cost over Fair Value

Total  acquisition costs in excess of the fair values assigned to the net assets
acquired are amortized over a 40-year period using the straight-line  method. At
December 31, 2001 and 2000, accumulated  amortization of the excess of cost over
fair value was $6.3 million and $5.4 million, respectively.

Income Taxes

The  Royalty  Company is included in  consolidated  income tax returns  with its
parent and  affiliates.  Income taxes are provided on a separate  return  basis,
however,  tax  obligations of the Royalty Company will be remitted to the parent
only to the extent of cash flows  available  after  operating  expenses and debt
service.  On February 19, 1999,  the Royalty  Company was converted to a limited
liability  company,  which  is  not  taxed.  Therefore,   since  that  date,  no
recognition  has been  given to  federal  or state  income  taxes as that is the
responsibility of the individual members of the LLC.

Fair Values of Financial Instruments

Fair values of financial  instruments  that are not actively traded are based on
market prices of similar  instruments  and/or valuation  techniques using market
assumptions.  Unless  otherwise  noted,  the estimated fair value amounts do not
differ significantly from recorded values.

Impairment of Long-Lived Assets

The  Royalty  Company  reviews   long-lived  assets  and  certain   identifiable
intangibles for impairment whenever events or changes in circumstances  indicate
that the carrying amount of an asset may not be recoverable.  An impairment loss
would be recognized,  based on discounted cash flows or various models, whenever
evidence exists that the carrying value is not recoverable.

Accounting Pronouncements

In June 1998, the Financial  Accounting  Standards Board (FASB) issued Statement
of  Financial   Accounting  Standard  (SFAS)  133,  "Accounting  for  Derivative
Instruments and Hedging  Activities",  which was delayed by SFAS 137 "Accounting
for Derivative  Instruments and Hedging  Activities - Deferral of Effective Date
of FASB No. 133" and  amended by SFAS 138  "Accounting  for  Certain  Derivative
Instruments  and Certain  Hedging  Activities".  SFAS 133  requires an entity to
recognize  all of  its  derivatives  as  either  assets  or  liabilities  in its
statement of financial position and measure those instruments at fair value. The
Royal Company adopted the new standards on January 1, 2001. The initial adoption
of SFAS 133 did not have any impact on the Royalty Company's financial position,
results of operations or cash flows.
<PAGE>

In July 2001, the Financial  Accounting  Standards Board (FASB) issued Statement
of Financial  Accounting Standard (SFAS) No. 141, "Business  Combinations",  and
SFAS  No.  142,  "Goodwill  and  Other  Intangible  Assets",   which,  establish
accounting  and reporting for business  combinations.  SFAS No. 141 requires all
business  combinations  entered into subsequent to June 30, 2001 to be accounted
for using the purchase method of accounting. SFAS No. 142 provides that goodwill
and other  intangible  assets with indefinite  lives will not be amortized,  but
will be tested for impairment on an annual basis.  SFAS 142 is effective for the
Royalty Company beginning January 1, 2002. Under the current method of assessing
goodwill for  impairment,  which uses an  undiscounted  cash flow  approach,  no
material  impairment existed at December 31, 2001. For 2002, the Royalty Company
will begin to test  goodwill  for  impairment  under the new  rules,  applying a
fair-value-based  approach. The Royalty Company is in the process of quantifying
the anticipated  impact on its financial  condition and results of operations of
adopting  the  provisions  of SFAS No.  142,  which  could be  significant.  The
historical  impact of not  amortizing  goodwill  would have been to increase net
income for the years ended  December  31, 2001,  2000 and 1999 by  approximately
$1.0 million, $1.0 million and $1.0 million,  respectively.  However, impairment
reviews may result in future periodic write-downs.

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 143 is effective for the Royalty Company's
fiscal year beginning  January 1, 2003.  The Royalty  Company has not quantified
the  impact  resulting from the adoption of this statement.

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 and is effective
for the Royalty  Company's  fiscal year  beginning  January 1, 2002. The Royalty
Company  has not  quantified  the impact  resulting  from the  adoption  of this
standard.

Use of Estimates

The preparation of financial statements in conformity with accounting principles
generally  accepted in the United States of America requires  management to make
estimates  and  assumptions  that  affect  the  reported  amounts  of assets and
liabilities  and disclosure of contingent  assets and liabilities at the date of
the  financial  statements  and the  reported  amounts of revenues  and expenses
during the reporting period. Actual results could differ from those estimates.

3. SENIOR SECURED PROJECT NOTE

The Royalty Company has a project note payable to Salton Sea Funding Corporation
at an interest rate of 7.37%. Principal maturities of the senior secured project
note are as follows (in thousands):

                  2002                                 $ 3,460
                  2003                                     304
                  2004                                     408
                  2005                                     435
                                                      --------
                                                       $ 4,607
<PAGE>

The  estimated  fair values of the senior  secured  project note at December 31,
2001 and 2000 were $4.6 million and $8.3 million, respectively.

The Royalty Company has also guaranteed,  along with other guarantors,  the debt
of Salton Sea Funding Corporation,  which amounted to $520.3 million at December
31, 2001. The guarantee issued is  collateralized by a lien on substantially all
the assets of and a pledge of stock in the Royalty  Company.  The  structure has
been  designed to cross  collateralize  cash flows from each  guarantor  without
cross collateralizing all of the guarantors' assets.

4.  INCOME TAXES

The provision for income taxes for the years ended December 31, 1999,  consisted
of the following:

                         Current           Deferred          Total
                         -------           --------         -------

1999
Federal                  $   363          $(5,921)          $(5,558)
State                        102             (848)             (746)
                         -------          --------         ---------

Total                    $   465          $(6,769)          $(6,304)
                         =======          ========          ========


The Royalty  Company's  effective  tax rate differs from the  statutory  federal
income  tax rate  due  primarily  to  percentage  depletion  in  excess  of cost
depletion and goodwill amortization.

5. CONTINGENCY

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. The Funding
Corporation  is aware that there have been public  announcements  that  Edison's
financial  condition  deteriorated as a result of reduced  liquidity.  Following
Edison's recent  financing,  Edison's  senior  unsecured debt  obligations  were
upgraded to Ba3 by Moody's and BB by S&P.

Edison  failed to pay  approximately  $119 million due under the Power  Purchase
Agreements  for power  delivered  in November  and  December  2000 and  January,
February and March 2001,  although  the Power  Purchase  Agreements  provide for
billing  and  payment on a schedule  where  payments  would have  normally  been
received in early January, February, March, April and May 2001.

On February 21,  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  payments under the Power Purchase  Agreements.  The
lawsuit  also  requested,  among other  things,  that the court order permit the
Guarantors  to suspend  deliveries of power to Edison and to permit the Imperial
Valley Projects to sell such power to other purchasers in California.

On March 22, 2001, the Superior Court granted the Guarantors' Motion for Summary
Adjudication  and a  Declaratory  Judgment  ordering  that:  1) under  the Power
Purchase  Agreements,  the  Guarantors  have the  right to  temporarily  suspend
deliveries of capacity and energy to Edison,  2) the  Guarantors are entitled to
resell the energy and capacity to other purchasers and 3) the interim suspension
of deliveries to Edison shall not in any respect result in the  modifications or
termination of the Power Purchase  Agreements and the Power Purchase  Agreements
shall in all respects continue in full force and effect other than the temporary
suspension of deliveries to Edison.
<PAGE>

As a result of the March 22, 2001 Declaratory Judgment, the Guarantors suspended
deliveries  of energy to Edison and entered into a  transaction  agreement  with
EPME in  which  the  Guarantors'  available  power  was  sold to EPME  based  on
percentages  of the Dow Jones SP-15 Index.  On June 18, 2001 the Superior  Court
terminated the  Guarantors'  right to resell power  pursuant to the  Declaratory
Judgment.

On June 20,  2001,  the  Guarantors  (excluding  the Salton Sea Unit V and Turbo
Projects)  entered  into  Agreements  Addressing  Renewable  Energy  Pricing and
Payment Issues with Edison ("Settlement  Agreements") and, as a result,  resumed
power sales to Edison on June 22, 2001. The Settlement  Agreements required that
Edison make an initial  payment to repay the past due  balances  under the Power
Purchase  Agreements  (the  "stipulated   amounts").   The  initial  payment  of
approximately  $11.6 million,  which represented 10% of the stipulated  amounts,
was received June 22, 2001. 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,  representing the
remaining  stipulated amounts,  was received March 1, 2002. In addition to these
payments,  Edison was required to make monthly interest payments calculated at a
rate  of 7% per  annum  on  the  outstanding  stipulated  amounts.  The  amended
Settlement Agreements provide a revised energy pricing structure, whereby Edison
elects  to  pay  the   Guarantors   a  fixed   energy   price  in  lieu  of  the
Commission-approved  Avoided Cost of Energy Methodology under the Power Purchase
Agreements.  The fixed  energy  price is 3.25  cents/kWh  from  December 1, 2001
through April 30, 2002 and 5.37 cents/kWh commencing May 1, 2002 for a five-year
period.  Following the five-year period,  the energy payments revert back to the
Commission-approved  Avoided Cost of Energy Methodology under the Power Purchase
Agreements.

As a result of the  uncertainties  related to Edison,  the letter of credit that
supports the debt service reserve fund at Salton Sea Funding Corporation has not
been  not  renewed,  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
renewed or replaced.

In January 2001, the California Power Exchange ("PX") declared bankruptcy.  As a
result,  the Salton Sea Unit V and CE 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 are  contractually  entitled to receive  payments under the Power
Purchase Agreements and Settlement Agreements. However, due to the uncertainties
associated  with Edison's  financial  condition  and failure to pay  contractual
obligations,  along with the bankruptcy of the PX, the Guarantors established an
allowance for doubtful  accounts of approximately  $24.8 million at December 31,
2001.  The allowance  for doubtful  accounts has been recorded as a reduction of
net sales in the statement of operations.

<PAGE>


Item  9.  Changes  in and  Disagreements  with  Accountants  on  Accounting  and
Financial Disclosure

     Not applicable.



<PAGE>


                                    PART III


Item 10.    Directors and Executive Officers of the Registrant

Set forth below are the current  executive  officers of the Funding  Corporation
and the Guarantors and their positions with the Funding  Corporation and each of
the Guarantors (or general partner thereof):

     EXECUTIVE OFFICER          POSITION

     Gregory E. Abel*           Director
     Brian K. Hankel            Vice President and Treasurer
     Joseph M. Lillo            Vice President and Controller
     Douglas L. Anderson        Director, Vice President, and General Counsel
     Patrick J. Goodman         Director
     Larry Kellerman*           Director
     John L. Harrison*          Director

* Gregory E. Abel is Director of CalEnergy  Minerals LLC and Salton Sea Minerals
Corp. only.

* Larry Kellerman is Director for all entities except CalEnergy Minerals LLC and
Salton Sea Minerals Corp.

* John L. Harrison is Director for all entities  except  CalEnergy  Minerals LLC
and Salton Sea Minerals Corp.

GREGORY E. ABEL, 39, Director for CalEnergy Minerals LLC and Salton Sea Minerals
Corp.  only.  Mr.  Abel  joined  MidAmerican  in 1992.  Mr.  Abel is a Chartered
Accountant  and from  1984 to 1992 he was  employed  by Price  Waterhouse.  As a
Manager in the San Francisco office of Price Waterhouse,  he was responsible for
clients in the energy industry.

BRIAN K. HANKEL, 39, Vice President and Treasurer of each Guarantor  subsidiary.
Mr. Hankel joined MidAmerican in February 1992 as Treasury Analyst and served in
that position to December 1995. Mr. Hankel was appointed  Assistant Treasurer in
January 1996 and was  appointed  Treasurer in January 1997.  Prior to that,  Mr.
Hankel was a Money  Position  Analyst at FirsTier  Bank of Lincoln  from 1988 to
1992 and Senior Credit Analyst at FirsTier from 1987 to 1988.

JOSEPH M. LILLO, 32, Vice President and Controller. Mr. Lillo joined MidAmerican
in November 1996, and served as Manager of Financial  Reporting and was promoted
to  Controller/IPP  in March 1998.  Mr. Lillo was promoted to Controller in July
1999.  Prior to joining  the  Company,  Mr.  Lillo was a senior  associate  with
Coopers & Lybrand LLP.

DOUGLAS L. ANDERSON, 44, Director,  Senior Vice President and General Counsel of
CalEnergy Minerals LLC and Salton Sea Minerals Corp and Director, Vice President
and General  Counsel of the other  Guarantor  subsidiaries.  Mr. Anderson joined
MidAmerican  in February 1993.  From 1990 to 1993,  Mr.  Anderson was a business
attorney  with  Fraser,  Stryker  in  Omaha.  Prior to that Mr.  Anderson  was a
principal in the firm Anderson & Anderson.

PATRICK J. GOODMAN,  35, Director.  Mr. Goodman joined MidAmerican in June 1995,
and served as Manager of  Consolidation  Accounting until September 1996 when he
was promoted to Controller.  Mr. Goodman was promoted to Chief Financial Officer
in April 1999. Prior to joining MidAmerican, Mr. Goodman was a financial manager
for National Indemnity Company and a senior associate at Coopers & Lybrand.

LARRY KELLERMAN,  46, President of El Paso Power Services Company and a Director
of each  Guarantor  subsidiary  except  CalEnergy  Minerals  LLC and  Salton Sea
Minerals Corp. Mr.  Kellerman  joined El Paso in February 1998. Prior to joining
El Paso,  he was  President  of Citizens  Power,  where he  initiated  Citizens'
activities in the power  marketing  field in 1988, when Citizens was the initial
power marketer granted FERC authorization. From 1982 through 1988, Mr. Kellerman
was General  Manager of Power  Marketing  and Power Supply for Portland  General
Electric.  From 1979 through 1982, Mr. Kellerman was Financial Analyst and Power
Contract Negotiator with Southern California Edison, where he negotiated some of
the first Public Utility Regulatory  Policies Act qualifying  facility contracts
in the nation.
<PAGE>

JOHN L. HARRISON, 43, Senior Managing Director and Chief Financial Officer of El
Paso Merchant  Energy Group and a Director of each Guarantor  subsidiary  except
CalEnergy Minerals LLC and Salton Sea Minerals Corp. Mr. Harrison joined El Paso
in June 1996. Prior to joining El Paso , Mr. Harrison was a partner with Coopers
& Lybrand LLP for five years.



<PAGE>


Item 11.      Executive Compensation

The Funding  Corporation's and the Guarantors'  directors and executive officers
receive no remuneration for serving in such capacities.

Item 12. Security Ownership of Certain Beneficial Owners and Management

Description of Capital Stock

As of December 31, 2001, the authorized capital stock of the Funding Corporation
consisted of 1,000 shares of common stock, par value $.01 per share (the "Common
Stock"), of which 100 shares were outstanding. There is no public trading market
for the Common Stock. As of December 31, 2001, there was one holder of record of
the Common Stock.  Holders of Common Stock are entitled to one vote per share on
any matter coming before the stockholders for a vote.

The Funding  Corporation  does not expect in the  foreseeable  future to pay any
dividends on the Common Stock. The Indenture  contains  certain  restrictions on
the payment of dividends with respect to the Common Stock.

Principal Holders

Since  the  formation  of the  Funding  Corporation  in  June  1995,  all of the
outstanding  shares of Common Stock have been owned by Magma.  Magma directly or
indirectly  owns all of the capital  stock of or  partnership  interests  in the
Funding Corporation and the Guarantors.

Item 13. Certain Relationships and Related Transactions

Other Relationships and Related Transactions

The Salton Sea Projects' and the Partnership  Projects'  geothermal power plants
are  owned,  administered  and  operated  by Magma  or  subsidiaries  of  Magma.
Geothermal  fluid  supplying  these  facilities  is provided  from Magma's (or a
subsidiary's) geothermal resource holdings in the SSKGRA.

In  providing  rights  to  geothermal   resources  and/or   geothermal   fluids,
administering and operating the geothermal power plants, and disposing of solids
from these  facilities,  Magma  (directly  and  through  subsidiaries)  receives
certain royalties,  cost reimbursements and fees for its services and the rights
it provides. See the financial statements in Item 8.

The Funding  Corporation  believes that the  transactions  with related  parties
described  above,  taking into  consideration  all of the  respective  terms and
conditions  of each of the relevant  contracts and  agreements,  are at least as
favorable  to the  Guarantors  as those  which  could  have been  obtained  from
unrelated parties in arms' length negotiations.

Relationship  of the  Funding  Corporation  and  the  Guarantors  to  Magma  and
MidAmerican

The Funding  Corporation is a wholly owned direct  subsidiary of Magma organized
for the sole  purpose  of  acting  as  issuer  of the  Securities.  The  Funding
Corporation is restricted,  pursuant to the terms of the Indenture, to acting as
issuer  of  the  Securities  and  other  indebtedness  as  permitted  under  the
Indenture, making loans to the Guarantors pursuant to the Credit Agreements, and
transactions related thereto. The Funding Corporation and each of the Guarantors
(and, in the case of SSBP, SSPG,  Elmore,  Leathers,  Del Ranch and Vulcan,  the
general partners thereof) have been organized and are operated as legal entities
separate and apart from MidAmerican, El Paso, CE Generation, Magma and any other
Affiliates of MidAmerican,  El Paso, CE Generation or Magma,  and,  accordingly,
the assets of the Funding  Corporation  and the Guarantors  (and, in the case of
SSBP,  SSPG,  Elmore,  Leathers,  Del Ranch and  Vulcan,  the  general  partners
thereof)  will  not  be  generally  available  to  satisfy  the  obligations  of
MidAmerican,  El  Paso,  CE  Generation,   Magma  or  any  other  Affiliates  of
MidAmerican,   El  Paso,  CE  Generation  or  Magma;  provided,   however,  that
unrestricted cash of the Funding  Corporation and the Guarantors or other assets
which are  available for  distribution  may,  subject to applicable  law and the
terms of financing  arrangements of such parties,  be advanced,  loaned, paid as
dividends or otherwise  distributed or contributed to  MidAmerican,  El Paso, CE
Generation, Magma or Affiliates thereof.


<PAGE>


                                     PART IV


Item 14. Exhibits, Financial Statements Schedule and Reports on Form 8-K

     (a) Financial Statements and Schedules

         (i)  Financial Statements

              Financial Statements are included in Part II of this Form 10-K

         (ii) Financial Statement Schedules

              See schedule II on page 121.

(b) Reports on Form 8-K

          Current  Report  dated  December  14,  2001,  reporting  that  Moody's
          Investors  Services,  Inc. upgraded the rating on the Company's senior
          secured debt to Ba3 from Caa2, and that it's affiliates  filed suit to
          force  Edison to meet the terms of  agreements  it signed to  purchase
          electricity from the plants.

     (c) Exhibits

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

For the purposes of complying  with the  amendments to the rules  governing Form
S-4 effective July 13, 1990 under the  Securities  Act of 1933, the  undersigned
hereby  undertakes  as  follows,  which  undertaking  shall be  incorporated  by
reference  into  the  Funding  Corporation's  currently  effective  Registration
Statements on Form S-4.

Insofar as indemnification  for liabilities  arising under the Securities Act of
1933 may be permitted to  directors,  officers  and  controlling  persons of the
registrant,  the  registrant has been advised that in the opinion the Securities
and  Exchange  Commission  such  indemnification  is  against  public  policy as
expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the
event that a claim for indemnification  against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director, officer or
controlling  person of the registrant in the  successful  defense of any action,
suit or proceeding) is asserted by such director,  officer or controlling person
in connection with the securities being registered,  the registrant will, unless
in the  opinion  of its  counsel  the matter  has been  settled  by  controlling
precedent, submit to a court of appropriate jurisdiction the question of whether
such  indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.

     (d) Financial statements required by Regulations S-X, which are excluded
from the Annual Report by Rule 14a-3(b).

     Not Applicable


<PAGE>


                                   Signatures

Pursuant to the requirements of Section 13 or 15 (d) of the Securities  Exchange
Act of 1934,  the  Registrant  has duly  caused  this report to be signed on its
behalf by the  undersigned,  thereunto  duly  authorized,  in the City of Omaha,
State of Nebraska, on March 29, 2002.

                         SALTON SEA FUNDING CORPORATION

                           By:/s/ Douglas L. Anderson
                           Douglas L. Anderson
                           Director, Vice President and General Counsel

Pursuant to the  requirements  of the Securities Act of 1933, the Registrant has
duly  caused  this  report to be signed on its behalf by the  undersigned,  each
thereunto duly authorized in the City of Omaha, State of Nebraska,  on the dates
indicated.

Signature                                                       Date
-------------------------------------------------------------------------

/s/  Douglas L. Anderson                                     March 29, 2002
------------------------
Douglas L. Anderson
Director, Vice President and General Counsel
(Principal Executive Officer)

/s/  Joseph M. Lillo*                                        March 29, 2002
--------------------
Joseph M. Lillo
Vice President and Controller
(Principal Accounting Officer)

/s/   Patrick J. Goodman*                                    March 29, 2002
------------------------
Patrick J. Goodman
Director

/s/  Larry Kellerman                                         March 29, 2002
--------------------
Larry Kellerman
Director

/s/  John L. Harrison                                        March 29, 2002
---------------------
John L. Harrison
Director

* By: /s/ Douglas L. Anderson
          Douglas L. Anderson
          Attorney-in-fact



<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 by the  undersigned,  thereunto  duly  authorized,  in the City of Omaha,
State of Nebraska, on March 29, 2002.

                                  SALTON SEA BRINE PROCESSING, L.P.
                                  a California limited partnership

                                  By: Salton Sea Power Company,
                                      a California corporation, its
                                      general partner

                                  By:/s/ Douglas L. Anderson
                                  Douglas L. Anderson
                                  Director, Vice President and General Counsel

Pursuant to the  requirements  of the Securities Act of 1933, the Registrant has
duly  caused  this  report to be signed on its behalf by the  undersigned,  each
thereunto duly authorized in the City of Omaha, State of Nebraska,  on the dates
indicated.

Signature                                                      Date
-------------------------------------------------------------------------------

/s/  Douglas L. Anderson                                   March 29, 2002
------------------------
Douglas L. Anderson
Director, Vice President and General Counsel
 (Principal Executive Officer)

/s/  Joseph M. Lillo*                                      March 29, 2002
--------------------
Joseph M. Lillo
Vice President and Controller
(Principal Accounting Officer)

/s/   Patrick J. Goodman*                                  March 29, 2002
------------------------
Patrick J. Goodman
Director

/s/  Larry Kellerman                                       March 29, 2002
--------------------
Larry Kellerman
Director

/s/  John L. Harrison                                      March 29, 2002
---------------------
John L. Harrison
Director

* By: /s/ Douglas L. Anderson
          Douglas L. Anderson
          Attorney-in-fact



<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 by the  undersigned,  thereunto  duly  authorized,  in the City of Omaha,
State of Nebraska, on March 29, 2002.

                                  SALTON SEA POWER GENERATION, L.P.,
                                  a California  limited partnership

                                  By: Salton Sea Power Company, a
                                  California corporation, its
                                  general partner

                                  By:/s/ Douglas L. Anderson
                                  Douglas L. Anderson
                                  Director, Vice President and General Counsel

Pursuant to the  requirements  of the Securities Act of 1933, the Registrant has
duly  caused  this  report to be signed on its behalf by the  undersigned,  each
thereunto duly authorized in the City of Omaha, State of Nebraska,  on the dates
indicated.

Signature                                                       Date
--------------------------------------------------------------------------------

/s/  Douglas L. Anderson                                    March 29, 2002
------------------------
Douglas L. Anderson
Director, Vice President and General Counsel
 (Principal Executive Officer)

/s/  Joseph M. Lillo*                                       March 29, 2002
--------------------
Joseph M. Lillo
Vice President and Controller
(Principal Accounting Officer)

/s/   Patrick J. Goodman*                                   March 29, 2002
------------------------
Patrick J. Goodman
Director

/s/  Larry Kellerman                                        March 29, 2002
--------------------
Larry Kellerman
Director

/s/  John L. Harrison                                       March 29, 2002
---------------------
John L. Harrison
Director

* By: /s/ Douglas L. Anderson
          Douglas L. Anderson
          Attorney-in-fact




<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 by the  undersigned,  thereunto  duly  authorized,  in the City of Omaha,
State of Nebraska, on March 29, 2002.

                                   FISH LAKE POWER LLC

                                   By:/s/ Douglas L. Anderson
                                   Douglas L. Anderson
                                   Director, Vice President and General Counsel

Pursuant to the  requirements  of the Securities Act of 1933, the Registrant has
duly  caused  this  report to be signed on its behalf by the  undersigned,  each
thereunto duly authorized in the City of Omaha, State of Nebraska,  on the dates
indicated.

Signature                                                        Date
--------------------------------------------------------------------------------

/s/  Douglas L. Anderson                                     March 29, 2002
------------------------
Douglas L. Anderson
Director, Vice President and General Counsel
 (Principal Executive Officer)

/s/  Joseph M. Lillo*                                        March 29, 2002
--------------------
Joseph M. Lillo
Vice President and Controller
(Principal Accounting Officer)

/s/   Patrick J. Goodman*                                    March 29, 2002
------------------------
Patrick J. Goodman
Director

/s/  Larry Kellerman                                         March 29, 2002
--------------------
Larry Kellerman
Director

/s/  John L. Harrison                                        March 29, 2002
---------------------
John L. Harrison
Director

* By: /s/ Douglas L. Anderson
          Douglas L. Anderson
          Attorney-in-fact


<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 by the  undersigned,  thereunto  duly  authorized,  in the City of Omaha,
State of Nebraska, on March 29, 2002.

                                  VULCAN POWER COMPANY

                                  By:/s/ Douglas L. Anderson
                                  Douglas L. Anderson
                                  Director, Vice President and General Counsel

Pursuant to the  requirements  of the Securities Act of 1933, the Registrant has
duly  caused  this  report to be signed on its behalf by the  undersigned,  each
thereunto duly authorized in the City of Omaha, State of Nebraska,  on the dates
indicated.

Signature                                                       Date
--------------------------------------------------------------------------------

/s/  Douglas L. Anderson                                  March 29, 2002
------------------------
Douglas L. Anderson
Director, Vice President and General Counsel
 (Principal Executive Officer)

/s/  Joseph M. Lillo*                                     March 29, 2002
--------------------
Joseph M. Lillo
Vice President and Controller
(Principal Accounting Officer)

/s/   Patrick J. Goodman*                                 March 29, 2002
------------------------
Patrick J. Goodman
Director

/s/  Larry Kellerman                                      March 29, 2002
--------------------
Larry Kellerman
Director

/s/  John L. Harrison                                     March 29, 2002
---------------------
John L. Harrison
Director

* By: /s/ Douglas L. Anderson
          Douglas L. Anderson
          Attorney-in-fact





<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 by the  undersigned,  thereunto  duly  authorized,  in the City of Omaha,
State of Nebraska, on March 29, 2002.

                                   CALENERGY OPERATING CORPORATION

                                   By:/s/ Douglas L. Anderson
                                   Douglas L. Anderson
                                   Director, Vice President and General Counsel

Pursuant to the  requirements  of the Securities Act of 1933, the Registrant has
duly  caused  this  report to be signed on its behalf by the  undersigned,  each
thereunto duly authorized in the City of Omaha, State of Nebraska,  on the dates
indicated.

Signature                                                        Date
-------------------------------------------------------------------------------

/s/  Douglas L. Anderson                                    March 29, 2002
------------------------
Douglas L. Anderson
Director, Vice President and General Counsel
 (Principal Executive Officer)

/s/  Joseph M. Lillo*                                       March 29, 2002
--------------------
Joseph M. Lillo
Vice President and Controller
(Principal Accounting Officer)

/s/   Patrick J. Goodman*                                   March 29, 2002
------------------------
Patrick J. Goodman
Director

/s/  Larry Kellerman                                        March 29, 2002
--------------------
Larry Kellerman
Director

/s/  John L. Harrison                                       March 29, 2002
---------------------
John L. Harrison
Director

* By: /s/ Douglas L. Anderson
          Douglas L. Anderson
          Attorney-in-fact


<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 by the  undersigned,  thereunto  duly  authorized,  in the City of Omaha,
State of Nebraska, on March 29, 2002.

                             SALTON SEA ROYALTY LLC

                             By:/s/ Douglas L. Anderson
                             Douglas L. Anderson
                             Director, Vice President and General Counsel

Pursuant to the  requirements  of the Securities Act of 1933, the Registrant has
duly  caused  this  report to be signed on its behalf by the  undersigned,  each
thereunto duly authorized in the City of Omaha, State of Nebraska,  on the dates
indicated.

Signature                                                    Date
--------------------------------------------------------------------------------

/s/  Douglas L. Anderson                                 March 29, 2002
------------------------
Douglas L. Anderson
Director, Vice President and General Counsel
 (Principal Executive Officer)

/s/  Joseph M. Lillo*                                    March 29, 2002
--------------------
Joseph M. Lillo
Vice President and Controller
(Principal Accounting Officer)

/s/   Patrick J. Goodman*                                March 29, 2002
------------------------
Patrick J. Goodman
Director

/s/  Larry Kellerman                                     March 29, 2002
--------------------
Larry Kellerman
Director

/s/  John L. Harrison                                    March 29, 2002
---------------------
John L. Harrison
Director

* By: /s/ Douglas L. Anderson
          Douglas L. Anderson
          Attorney-in-fact


<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 by the  undersigned,  thereunto  duly  authorized,  in the City of Omaha,
State of Nebraska, on March 29, 2002.

                               LEATHERS, L.P., a
                               California limited partnership

                               By:  CalEnergy Operating Corporation, a
                               Delaware corporation, its
                               general partner

                               By:/s/ Douglas L. Anderson
                               Douglas L. Anderson
                               Director, Vice President and General Counsel

Pursuant to the  requirements  of the Securities Act of 1933, the Registrant has
duly  caused  this  report to be signed on its behalf by the  undersigned,  each
thereunto duly authorized in the City of Omaha, State of Nebraska,  on the dates
indicated.

Signature                                                     Date
--------------------------------------------------------------------------------

/s/  Douglas L. Anderson                                  March 29, 2002
------------------------
Douglas L. Anderson
Director, Vice President and General Counsel
 (Principal Executive Officer)

/s/  Joseph M. Lillo*                                     March 29, 2002
--------------------
Joseph M. Lillo
Vice President and Controller
(Principal Accounting Officer)

/s/   Patrick J. Goodman*                                 March 29, 2002
------------------------
Patrick J. Goodman
Director

/s/  Larry Kellerman                                      March 29, 2002
--------------------
Larry Kellerman
Director

/s/  John L. Harrison                                     March 29, 2002
---------------------
John L. Harrison
Director

* By: /s/ Douglas L. Anderson
          Douglas L. Anderson
          Attorney-in-fact





<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 by the  undersigned,  thereunto  duly  authorized,  in the City of Omaha,
State of Nebraska, on March 29, 2002.

                              ELMORE L.P., a California  limited partnership

                              By:  CalEnergy Operating Corporation, a
                              Delaware corporation, its
                              general partner

                              By:/s/ Douglas L. Anderson
                              Douglas L. Anderson
                              Director, Vice President and General Counsel

Pursuant to the  requirements  of the Securities Act of 1933, the Registrant has
duly  caused  this  report to be signed on its behalf by the  undersigned,  each
thereunto duly authorized in the City of Omaha, State of Nebraska,  on the dates
indicated.

Signature                                                    Date
--------------------------------------------------------------------------------

/s/  Douglas L. Anderson                                 March 29, 2002
------------------------
Douglas L. Anderson
Director, Vice President and General Counsel
 (Principal Executive Officer)

/s/  Joseph M. Lillo*                                    March 29, 2002
--------------------
Joseph M. Lillo
Vice President and Controller
(Principal Accounting Officer)

/s/   Patrick J. Goodman*                                March 29, 2002
------------------------
Patrick J. Goodman
Director

/s/  Larry Kellerman                                     March 29, 2002
--------------------
Larry Kellerman
Director

/s/  John L. Harrison                                    March 29, 2002
---------------------
John L. Harrison
Director

* By: /s/ Douglas L. Anderson
          Douglas L. Anderson
          Attorney-in-fact





<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 by the  undersigned,  thereunto  duly  authorized,  in the City of Omaha,
State of Nebraska, on March 29, 2002.

                                DEL RANCH L.P., a
                                California limited partnership

                                By:  CalEnergy Operating Corporation, a
                                Delaware corporation, its
                                general partner

                                By:/s/ Douglas L. Anderson
                                Douglas L. Anderson
                                Director, Vice President and General Counsel

Pursuant to the  requirements  of the Securities Act of 1933, the Registrant has
duly  caused  this  report to be signed on its behalf by the  undersigned,  each
thereunto duly authorized in the City of Omaha, State of Nebraska,  on the dates
indicated.

Signature                                                       Date
--------------------------------------------------------------------------------

/s/  Douglas L. Anderson                                    March 29, 2002
------------------------
Douglas L. Anderson
Director, Vice President and General Counsel
 (Principal Executive Officer)

/s/  Joseph M. Lillo*                                       March 29, 2002
--------------------
Joseph M. Lillo
Vice President and Controller
(Principal Accounting Officer)

/s/   Patrick J. Goodman*                                   March 29, 2002
------------------------
Patrick J. Goodman
Director

/s/  Larry Kellerman                                        March 29, 2002
--------------------
Larry Kellerman
Director

/s/  John L. Harrison                                       March 29, 2002
---------------------
John L. Harrison
Director

* By: /s/ Douglas L. Anderson
          Douglas L. Anderson
          Attorney-in-fact






<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 by the  undersigned,  thereunto  duly  authorized,  in the City of Omaha,
State of Nebraska, on March 29, 2002.

                                    VPC GEOTHERMAL LLC., a
                                    Delaware corporation

                                    By:/s/ Douglas L. Anderson
                                    Douglas L. Anderson
                                    Director, Vice President and General Counsel

Pursuant to the  requirements  of the Securities Act of 1933, the Registrant has
duly  caused  this  report to be signed on its behalf by the  undersigned,  each
thereunto duly authorized in the City of Omaha, State of Nebraska,  on the dates
indicated.

Signature                                                      Date
--------------------------------------------------------------------------------

/s/  Douglas L. Anderson                                   March 29, 2002
------------------------
Douglas L. Anderson
Director, Vice President and General Counsel
 (Principal Executive Officer)

/s/  Joseph M. Lillo*                                      March 29, 2002
--------------------
Joseph M. Lillo
Vice President and Controller
(Principal Accounting Officer)

/s/   Patrick J. Goodman*                                  March 29, 2002
------------------------
Patrick J. Goodman
Director

/s/  Larry Kellerman                                       March 29, 2002
--------------------
Larry Kellerman
Director

/s/  John L. Harrison                                      March 29, 2002
---------------------
John L. Harrison
Director

* By: /s/ Douglas L. Anderson
          Douglas L. Anderson
          Attorney-in-fact






<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 by the  undersigned,  thereunto  duly  authorized,  in the City of Omaha,
State of Nebraska, on March 29, 2002.

                            NIGUEL ENERGY COMPANY, a
                            California corporation

                            By:/s/ Douglas L. Anderson
                            Douglas L. Anderson
                            Director, Vice President and General Counsel

Pursuant to the  requirements  of the Securities Act of 1933, the Registrant has
duly  caused  this  report to be signed on its behalf by the  undersigned,  each
thereunto duly authorized in the City of Omaha, State of Nebraska,  on the dates
indicated.

Signature                                                     Date
--------------------------------------------------------------------------------

/s/  Douglas L. Anderson                                  March 29, 2002
------------------------
Douglas L. Anderson
Director, Vice President and General Counsel
 (Principal Executive Officer)

/s/  Joseph M. Lillo*                                     March 29, 2002
--------------------
Joseph M. Lillo
Vice President and Controller
(Principal Accounting Officer)

/s/   Patrick J. Goodman*                                 March 29, 2002
------------------------
Patrick J. Goodman
Director

/s/  Larry Kellerman                                      March 29, 2002
--------------------
Larry Kellerman
Director

/s/  John L. Harrison                                     March 29, 2002
---------------------
John L. Harrison
Director

* By: /s/ Douglas L. Anderson
          Douglas L. Anderson
          Attorney-in-fact




<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 by the  undersigned,  thereunto  duly  authorized,  in the City of Omaha,
State of Nebraska, on March 29, 2002.

                            CONEJO ENERGY COMPANY, a
                            California corporation

                            By:/s/ Douglas L. Anderson
                            Douglas L. Anderson
                            Director, Vice President and General Counsel

Pursuant to the  requirements  of the Securities Act of 1933, the Registrant has
duly  caused  this  report to be signed on its behalf by the  undersigned,  each
thereunto duly authorized in the City of Omaha, State of Nebraska,  on the dates
indicated.

Signature                                                      Date
--------------------------------------------------------------------------------

/s/  Douglas L. Anderson                                    March 29, 2002
------------------------
Douglas L. Anderson
Director, Vice President and General Counsel
 (Principal Executive Officer)

/s/  Joseph M. Lillo*                                       March 29, 2002
--------------------
Joseph M. Lillo
Vice President and Controller
(Principal Accounting Officer)

/s/   Patrick J. Goodman*                                   March 29, 2002
------------------------
Patrick J. Goodman
Director

/s/  Larry Kellerman                                        March 29, 2002
--------------------
Larry Kellerman
Director

/s/  John L. Harrison                                       March 29, 2002
---------------------
John L. Harrison
Director

* By: /s/ Douglas L. Anderson
          Douglas L. Anderson
          Attorney-in-fact





<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 by the  undersigned,  thereunto  duly  authorized,  in the City of Omaha,
State of Nebraska, on March 29, 2002.

                          SAN FELIPE ENERGY COMPANY, a
                          California corporation
                          By:/s/ Douglas L. Anderson
                          Douglas L. Anderson
                          Director, Vice President and General Counsel

Pursuant to the  requirements  of the Securities Act of 1933, the Registrant has
duly  caused  this  report to be signed on its behalf by the  undersigned,  each
thereunto duly authorized in the City of Omaha, State of Nebraska,  on the dates
indicated.

Signature                                                    Date
--------------------------------------------------------------------------------

/s/  Douglas L. Anderson                                 March 29, 2002
------------------------
Douglas L. Anderson
Director, Vice President and General Counsel
 (Principal Executive Officer)

/s/  Joseph M. Lillo*                                    March 29, 2002
--------------------
Joseph M. Lillo
Vice President and Controller
(Principal Accounting Officer)

/s/   Patrick J. Goodman*                                March 29, 2002
------------------------
Patrick J. Goodman
Director

/s/  Larry Kellerman                                     March 29, 2002
--------------------
Larry Kellerman
Director

/s/  John L. Harrison                                    March 29, 2002
---------------------
John L. Harrison
Director

* By: /s/ Douglas L. Anderson
          Douglas L. Anderson
          Attorney-in-fact





<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 by the  undersigned,  thereunto  duly  authorized,  in the City of Omaha,
State of Nebraska, on March 29, 2002.

                           VULCAN/BN GEOTHERMAL POWER COMPANY, a
                           Nevada general partnership

                           By: VULCAN POWER COMPANY, a
                           Nevada corporation, Partner

                           By:/s/ Douglas L. Anderson
                           Douglas L. Anderson
                           Director, Vice President and General Counsel

Pursuant to the  requirements  of the Securities Act of 1933, the Registrant has
duly  caused  this  report to be signed on its behalf by the  undersigned,  each
thereunto duly authorized in the City of Omaha, State of Nebraska,  on the dates
indicated.

Signature                                                           Date
--------------------------------------------------------------------------------

/s/  Douglas L. Anderson                                       March 29, 2002
------------------------
Douglas L. Anderson
Director, Vice President and General Counsel
 (Principal Executive Officer)

/s/  Joseph M. Lillo*                                          March 29, 2002
--------------------
Joseph M. Lillo
Vice President and Controller
(Principal Accounting Officer)

/s/   Patrick J. Goodman*                                      March 29, 2002
------------------------
Patrick J. Goodman
Director

/s/  Larry Kellerman                                           March 29, 2002
--------------------
Larry Kellerman
Director

/s/  John L. Harrison                                          March 29, 2002
---------------------
John L. Harrison
Director

* By: /s/ Douglas L. Anderson
          Douglas L. Anderson
          Attorney-in-fact




<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 by the  undersigned,  thereunto  duly  authorized,  in the City of Omaha,
State of Nebraska, on March 29, 2002.

                           SALTON SEA POWER L.L.C., a
                           Delaware Limited Liability Company

                           By:/s/ Douglas L. Anderson
                           Douglas L. Anderson
                           Director, Vice President and General Counsel

Pursuant to the  requirements  of the Securities Act of 1933, the Registrant has
duly  caused  this  report to be signed on its behalf by the  undersigned,  each
thereunto duly authorized in the City of Omaha, State of Nebraska,  on the dates
indicated.

Signature                                                             Date
--------------------------------------------------------------------------------

/s/  Douglas L. Anderson                                         March 29, 2002
------------------------
Douglas L. Anderson
Director, Vice President and General Counsel
 (Principal Executive Officer)

/s/  Joseph M. Lillo*                                            March 29, 2002
--------------------
Joseph M. Lillo
Vice President and Controller
(Principal Accounting Officer)

/s/   Patrick J. Goodman*                                        March 29, 2002
------------------------
Patrick J. Goodman
Director

/s/  Larry Kellerman                                             March 29, 2002
--------------------
Larry Kellerman
Director

/s/  John L. Harrison                                            March 29, 2002
---------------------
John L. Harrison
Director

* By: /s/ Douglas L. Anderson
          Douglas L. Anderson
          Attorney-in-fact





<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 by the  undersigned,  thereunto  duly  authorized,  in the City of Omaha,
State of Nebraska, on March 29, 2002.

                                   CE TURBO LLC, a
                                   Delaware Limited Liability Company

                                   By:/s/ Douglas L. Anderson
                                   Douglas L. Anderson
                                   Director, Vice President and General Counsel

Pursuant to the  requirements  of the Securities Act of 1933, the Registrant has
duly  caused  this  report to be signed on its behalf by the  undersigned,  each
thereunto duly authorized in the City of Omaha, State of Nebraska,  on the dates
indicated.

Signature                                                           Date
--------------------------------------------------------------------------------

/s/  Douglas L. Anderson                                        March 29, 2002
------------------------
Douglas L. Anderson
Director, Vice President and General Counsel
 (Principal Executive Officer)

/s/  Joseph M. Lillo*                                           March 29, 2002
--------------------
Joseph M. Lillo
Vice President and Controller
(Principal Accounting Officer)

/s/   Patrick J. Goodman*                                       March 29, 2002
------------------------
Patrick J. Goodman
Director

/s/  Larry Kellerman                                            March 29, 2002
--------------------
Larry Kellerman
Director

/s/  John L. Harrison                                           March 29, 2002
---------------------
John L. Harrison
Director

* By: /s/ Douglas L. Anderson
          Douglas L. Anderson
          Attorney-in-fact




<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 by the  undersigned,  thereunto  duly  authorized,  in the City of Omaha,
State of Nebraska, on March 29, 2002.

                              CE SALTON SEA INC., a
                              Delaware Corporation

                              By:/s/ Douglas L. Anderson
                              Douglas L. Anderson
                              Director, Vice President and General Counsel

Pursuant to the  requirements  of the Securities Act of 1933, the Registrant has
duly  caused  this  report to be signed on its behalf by the  undersigned,  each
thereunto duly authorized in the City of Omaha, State of Nebraska,  on the dates
indicated.

Signature                                                     Date
-------------------------------------------------------------------------------

/s/  Douglas L. Anderson                                  March 29, 2002
------------------------
Douglas L. Anderson
Director, Vice President and General Counsel
 (Principal Executive Officer)

/s/  Joseph M. Lillo*                                     March 29, 2002
--------------------
Joseph M. Lillo
Vice President and Controller
(Principal Accounting Officer)

/s/   Patrick J. Goodman*                                 March 29, 2002
------------------------
Patrick J. Goodman
Director

/s/  Larry Kellerman                                      March 29, 2002
--------------------
Larry Kellerman
Director

/s/  John L. Harrison                                     March 29, 2002
---------------------
John L. Harrison
Director

* By: /s/ Douglas L. Anderson
          Douglas L. Anderson
          Attorney-in-fact




<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 by the  undersigned,  thereunto  duly  authorized,  in the City of Omaha,
State of Nebraska, on March 29, 2002.

                            CALENERGY MINERALS LLC, a
                            Delaware Limited Liability Company

                            By:/s/ Douglas L. Anderson
                            Douglas L. Anderson
                            Director, Vice President and General Counsel

Pursuant to the  requirements  of the Securities Act of 1933, the Registrant has
duly  caused  this  report to be signed on its behalf by the  undersigned,  each
thereunto duly authorized in the City of Omaha, State of Nebraska,  on the dates
indicated.

Signature                                                           Date
------------------------------------------------------------------------------

/s/  Douglas L. Anderson                                       March 29, 2002
------------------------
Douglas L. Anderson
Director, Vice President and General Counsel
 (Principal Executive Officer)

/s/  Joseph M. Lillo*                                          March 29, 2002
--------------------
Joseph M. Lillo
Vice President and Controller
(Principal Accounting Officer)

/s/   Patrick J. Goodman*                                      March 29, 2002
------------------------
Patrick J. Goodman
Director

/s/  Gregory E. Abel *                                         March 29, 2002
--------------------
Greg E. Abel
Director

* By: /s/ Douglas L. Anderson
          Douglas L. Anderson
          Attorney-in-fact



<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 by the  undersigned,  thereunto  duly  authorized,  in the City of Omaha,
State of Nebraska, on March 29, 2002.

                          SALTON SEA MINERALS CORP., a
                          Delaware Corporation

                          By:/s/ Douglas L. Anderson
                          Douglas L. Anderson
                          Director, Vice President and General Counsel

Pursuant to the  requirements  of the Securities Act of 1933, the Registrant has
duly  caused  this  report to be signed on its behalf by the  undersigned,  each
thereunto duly authorized in the City of Omaha, State of Nebraska,  on the dates
indicated.

Signature                                                         Date
------------------------------------------------------------------------------

/s/  Douglas L. Anderson                                      March 29, 2002
------------------------
Douglas L. Anderson
Director, Vice President and General Counsel
 (Principal Executive Officer)

/s/  Joseph M. Lillo*                                         March 29, 2002
--------------------
Joseph M. Lillo
Vice President and Controller
(Principal Accounting Officer)

/s/   Patrick J. Goodman*                                     March 29, 2002
------------------------
Patrick J. Goodman
Director

/s/  Gregory E. Abel *                                        March 29, 2002
--------------------
Greg E. Abel
Director

* By: /s/ Douglas L. Anderson
          Douglas L. Anderson
          Attorney-in-fact






<PAGE>


                         SALTON SEA FUNDING CORPORATION
                 CONSOLIDATED VALUATION AND QUALIFYING ACCOUNTS
                   FOR THE THREE YEARS ENDED DECEMBER 31, 2001
                                 (in thousands)
<TABLE>
<CAPTION>

                                                                                          SCHEDULE II


Column A                            Column B           Column C           Column D           Column E
                                    Balance at         Additions                             Balance
                                    Beginning          Charged                                at End
                                      of Year          to Income          Deductions         of Year

Allowance for doubtful accounts
    Salton Sea Guarantors:

<S>                                 <C>                <C>                <C>               <C>
        Year ended 2001             $       -          $    9,829         $        -        $     9,829
                                    =========          ==========         ==========        ===========

        Year ended 2000             $       -          $        -         $        -        $         -
                                    =========          ==========         ==========        ===========

        Year ended 1999             $       -          $        -         $        -        $         -
                                    =========          ==========         ==========        ===========


Partnership Guarantors:

        Year ended 2001             $       -          $   14,925         $        -        $    14,925
                                    =========          ==========         ==========        ===========

        Year ended 2000             $       -          $        -         $        -        $         -
                                    =========          ==========         ==========        ===========

        Year ended 1999             $       -          $        -         $        -        $         -
                                    =========          ==========         ==========        ===========
</TABLE>


<PAGE>


                                INDEX TO EXHIBITS


Exhibit No.                   Description of Exhibit

     3.1  Articles of Incorporation of the Funding Corporation  (incorporated by
          reference  to  Exhibit  3.1 to the  Funding  Corporation  Registration
          Statement on Form S-4 dated August 9, 1995, 33-95538 ("Form S-4")).

     3.2  By-laws of the  Funding  Corporation  (incorporated  by  reference  to
          Exhibit 3.2 to the Funding Corporation Form S-4).

     3.3  Limited  Partnership  Agreement of SSBP  (incorporated by reference to
          Exhibit 3.3 to the Funding Corporation Form S-4).

     3.4  Limited  Partnership  Agreement of SSPG  (incorporated by reference to
          Exhibit 3.4 to the Funding Corporation Form S-4).

     3.5  Certificate of Formation of Fish Lake, LLC  (incorporated by reference
          to  Exhibit  3.5 to the  Amendment  No. 1 dated  June 29,  1999 of the
          Funding Corporation Form S-4 ("99 Form S 4)).

     3.6  Limited  Liability  Company  Agreement of Fish Lake  (incorporated  by
          reference to Exhibit 3.6 to the Funding Corporation Form 99 Form S-4).

     3.7  Articles of Incorporation of VPC (incorporated by reference to Exhibit
          3.7 to the Funding Corporation Form S-4).

     3.8  By-laws  of VPC  (incorporated  by  reference  to  Exhibit  3.8 to the
          Funding Corporation Form S-4).

     3.9  Articles  of  Incorporation  of CEOC  (incorporated  by  reference  to
          Exhibit 3.9 to the Funding Corporation Form S-4).

     3.10 By-laws of CEOC  (incorporated  by  reference  to Exhibit  3.10 to the
          Funding Corporation Form S-4).

     3.11 Certificate  of Formation of the Royalty  Guarantor  (incorporated  by
          reference to Exhibit 3.11 to the Funding Corporation 99 Form S-4).

     3.12 Limited   Liability   Company   Agreement  of  the  Royalty  Guarantor
          (incorporated by reference to Exhibit 3.12 to the Funding  Corporation
          99 Form S-4).

     3.13 Certificate of Formation of VPC Geothermal  (incorporated by reference
          to Exhibit 3.13 to the Funding Corporation 99 Form S 4).

     3.14 Limited Liability Company Agreement of VPG Geothermal (incorporated by
          reference to Exhibit 3.14 to the Funding Corporation 99 Form S-4).

     3.15 Articles of Incorporation of San Felipe  (incorporated by reference to
          Exhibit 3.15 to the Funding Corporation Registration Statement of Form
          S-4  dated  July 2,  1996,  333-07527  ("Funding  Corporation  II Form
          S-4")).

     3.16 By-laws of San Felipe  (incorporated  by  reference to Exhibit 3.16 to
          the Funding Corporation II Form S-4).

     3.17 Articles of  Incorporation  of Conejo  (incorporated  by  reference to
          Exhibit 3.17 to the Funding Corporation II Form S-4).
<PAGE>

     3-18 By-laws of Conejo  (incorporated  by  reference to Exhibit 3.18 to the
          Funding Corporation II Form S-4).

     3.19 Articles of  Incorporation  of Niguel  (incorporated  by  reference to
          Exhibit 3.19 to the Funding Corporation II Form S-4).

     3.20 By-laws of Niguel  (incorporated  by  reference to Exhibit 3.20 to the
          Funding Corporation II Form S-4).

     3.21 General Partnership  Agreement of Vulcan (incorporated by reference to
          Exhibit 3.21 to the Funding Corporation II Form S-4).

     3.22 Limited Partnership  Agreement of Leathers  (incorporated by reference
          to Exhibit 3.22 to the Funding Corporation II Form S-4).

     3.23 Amended  and  Restated  Limited  Partnership  Agreement  of Del  Ranch
          (incorporated by reference to Exhibit 3.23 to the Funding  Corporation
          II Form S-4).

     3.24 Amended  and  Restated   Limited   Partnership   Agreement  of  Elmore
          (incorporated by reference to Exhibit 3.24 to the Funding  Corporation
          II Form S-4).

     3.25 Certificate of Formation of Minerals LLC (incorporated by reference to
          Exhibit 3.25 to the Funding Corporation 99 Form S-4)

     3.26 Limited  Liability  Company Agreement of Minerals LLC (incorporated by
          reference to Exhibit 3.26 to the Funding Corporation 99 Form S-4).

     3.27 Certificate  of Formation of Turbo LLC  (incorporated  by reference to
          Exhibit 3.27 to the Funding Corporation 99 Form S-4).

     3.28 Limited  Liability  Company  Agreement of turbo LLC  (incorporated  by
          reference to Exhibit 3.28 to the Funding Corporation 99 Form S-4).

     3.29.Articles  of  Incorporation  of CESS  (incorporated  by  reference  to
          Exhibit 3.29 to the Funding Corporation 99 Form S-4).

     3.30 By-laws of CESS  (incorporated  by  reference  to Exhibit  3.30 to the
          Funding Corporation 99 Form S-4).

     3.31 Articles  of  Incorporation  of SSMC  (incorporated  by  reference  to
          Exhibit 3.31 to the Funding Corporation 99 Form S-4).

     3.32 By-laws of SSMC  (incorporated  by  reference  to Exhibit  3.32 to the
          Funding Corporation 99 Form S-4).

     3.33 Certificate  of Formation of Power LLC  (incorporated  by reference to
          Exhibit 3.33 to the Funding Corporation 99 Form S-4).

     3.34 Limited  Liability  Company  Agreement of Power LLC  (incorporated  by
          reference to Exhibit 3.34 to the Funding Corporation 99 Form S-4).

     4.1(a) Indenture, dated as of July 21, 1995, between Chemical Trust Company
          of California and the Funding  Corporation  (incorporated by reference
          to Exhibit 4.1(a) to the Funding Corporation Form S-4).
<PAGE>

     4.1(b) First Supplemental Indenture,  dated as of October 18, 1995, between
          Chemical  Trust  Company of  California  and the  Funding  Corporation
          (incorporated   by  reference   to  Exhibit   4.1(b)  to  the  Funding
          Corporation Form S-4).

     4.1(c) Second  Supplemental  Indenture,  dated as of June 20, 1996, between
          Chemical  Trust  Company of  California  and the  Funding  Corporation
          (incorporated   by  reference   to  Exhibit   4.1(c)  to  the  Funding
          Corporation II Form S-4).

     4.1(d) Third  Supplemental  Indenture  between  Chemical  Trust  Company of
          California and the Funding  Corporation  (incorporated by reference to
          Exhibit 4.1(d) to the Funding Corporation II Form S-4).

     4.1(e) Fourth  Supplemental  Indenture  between  Chemical  Trust Company of
          California and the Funding  Corporation  (incorporated by reference to
          Exhibit  4.1(e) to the  Funding  Corporation  Form 10-K/A for the year
          ending December 31, 1998).

     4.2  Amended and Restated  Salton Sea Secured  Guarantee,  dated as of July
          21,  1995,  by SSBP,  SSPG and Fish  Lake in favor of  Chemical  Trust
          Company of California (incorporated by reference to Exhibit 4.2 to the
          Funding Corporation Form S-4).

     4.3  Second Amended and Restated  Partnership  Secured  Limited  Guarantee,
          dated as of October 13, 1998 by CEOC,  and VPC,  Conejo,  Niguel,  Sal
          Felipe,  BNG,  Del  Ranch,  Elmore,  Leathers  and  Vulcan in favor of
          Chemical  Trust  Company of California  (incorporated  by reference to
          Exhibit  4.3(c) to the  Funding  Corporation  Form 10-K/A for the year
          ending December 31, 1998).

     4.4  Royalty  Guarantor  Secured  Limited  Guarantee,  dated as of July 21,
          1995, by the Royalty  Guarantor in favor of Chemical  Trust Company of
          California  (incorporated  by  reference to Exhibit 4.4 to the Funding
          Corporation Form S-4).

     4.5(a) Exchange and Registration Rights Agreement,  dated July 21, 1995, by
          and among CS First Boston  Corporation,  Lehman  Brothers Inc. and the
          Funding  Corporation  (incorporated by reference to Exhibit 4.5 to the
          Funding Corporation Form S-4).

     4.5(b) Exchange and Registration Rights Agreement,  dated June 20, 1996, by
          and between CS First Boston  Corporation  and the Funding  Corporation
          (incorporated  by reference to Exhibit 4.5 to the Funding  Corporation
          II Form S-4).

     4.5(c) Exchange and Registration  Rights Agreement,  dated October 13, 1998
          by and among CS First Boston Corporation, Goldman Sachs & Co., and the
          Funding  Corporation  (incorporated  by reference to Exhibit 4.5(c) of
          the 99 Form S-4).

     4.6(a) Collateral Agency and Intercreditor Agreement,  dated as of July 21,
          1995,  by  and  among  Credit   Suisse,   Chemical  Trust  Company  of
          California,  the Funding Corporation and the Guarantors  (incorporated
          by reference to Exhibit 4.6 to the Funding Corporation Form S-4).

     4.6(b)  First  Amendment  to  the  Collateral   Agency  and   Intercreditor
          Agreement,  dated as of June 20,  1996,  by and among  Credit  Suisse,
          Chemical Trust Company of California,  the Funding Corporation and the
          Guarantors (incorporated by reference to Exhibit 4.6(b) to the Funding
          Corporation II Form S-4).

     4.6(c)  Second  Amendment  to  the  Collateral   Agency  and  Intercreditor
          Agreement,  dated as of October 13, 1998, by and among Credit  Suisse,
          Chemical Trust Company of California,  the Funding Corporation and the
          Guarantors (incorporated by reference to Exhibit 4.6(c) to the Funding
          Corporation Form 10-K/A for the year ending December 31, 1998).

     4.7  Stock  Pledge  Agreement,  dated as of July 21,  1995,  by Magma Power
          Company in favor of Chemical Trust Company of California (incorporated
          by reference to Exhibit 4.7 to the Funding Corporation Form S-4).
<PAGE>

     4.8(a)  Purchase  Agreement,  dated  July 18,  1995,  by and among CS First
          Boston  Corporation,  Lehman  Brothers  Inc.,  the  Guarantors and the
          Funding  Corporation  (incorporated by reference to Exhibit 4.8 to the
          Funding Corporation Form S-4).

     4.8(b)  Purchase  Agreement,  dated  June 17,  1996,  by and among CS First
          Boston  Corporation,   the  Guarantors  and  the  Funding  Corporation
          (incorporated  by reference to Exhibit 4.8 to the Funding  Corporation
          II Form S-4).

     4.8(c) Purchase  Agreement,  dated  October  13, 1998 by and among CS First
          Boston  Corporation,   the  Guarantors  and  the  Funding  Corporation
          (incorporated   by  reference   to  Exhibit   4.8(c)  to  the  Funding
          Corporation Form 10-K/A for the year ending December 31, 1998).

     4.9  Support  Letter,  dated as of July 21, 1995,  by and among Magma Power
          Company,  the Funding Corporation and the Guarantors  (incorporated by
          reference to Exhibit 4.9 to the Funding Corporation Form S-4).

     4.10 Debt Service  Reserve  Letter of Credit and  Reimbursement  Agreement,
          dated as of July 21,  1995,  by and  among  the  Funding  Corporation,
          certain banks and Credit Suisse,  as agent  (incorporated by reference
          to Exhibit 4.10 to the Funding Corporation Form S-4).

     4.10(a) Amendment to Notes and to Amended  Debt Service  Reserve  Letter of
          Credit and  Reimbursement  Agreement,  dated  October 13, 1998, by and
          among the Funding  Corporation,  certain banks and Credit  Suisse,  as
          agent  (incorporated  by reference  to Exhibit  4.10(a) to the Funding
          Corporation Form 10-K/A for the year ending December 31, 1998).

     4.11 Revolving  Credit  Agreement,  dated as of July 21, 1995, by and among
          Credit Suisse and the Funding  Corporation  (incorporated by reference
          to Exhibit 4.11 to the Funding Corporation Form S-4).

     4.12 Amended and Restated  Salton Sea Credit  Agreement,  dated October 13,
          1998, by and among SSBP, SSPG,  Power LLC and Fish Lake  (incorporated
          by reference to Exhibit 4.12 to the Funding Corporation 99 Form S-4).

     4.13 Salton Sea Project Note (SSI),  dated October 13, 1998, by SSBP, SSPG,
          Power  LLC  and  Fish  Lake  in  favor  of  the  Funding   Corporation
          (incorporated by reference to Exhibit 4.13 to the Funding  Corporation
          99 Form S-4).

     4.13aSalton Sea Project Note  (SSIII),  dated  October 13,  1998,  by SSBP,
          SSPG,  Power  LLC and Fish  Lake in favor of the  Funding  Corporation
          (incorporated   by  reference  to  Exhibit   4.13(a)  to  the  Funding
          Corporation 99 Form S-4).

     4.14 Amended and Restated Deposit and Disbursement  Agreement,  dated as of
          October 13, 1998, by and among the Funding Corporation, Chemical Trust
          Company of California and the Guarantors.  (incorporated  by reference
          to Exhibit 4.14 to the Funding Corporation 99 Form S-4).

     4.15 Partnership  Interest Pledge Agreement,  dated as of July 21, 1995, by
          Magma Power  Company and Salton Sea Power Company in favor of Chemical
          Trust Company of California (incorporated by reference to Exhibit 4.15
          to the Funding Corporation Form S-4).

     4.16 Partnership  Interest Pledge Agreement,  dated as of July 21, 1995, by
          SSBP and Salton Sea Power  Company in favor of Chemical  Trust Company
          of  California  (incorporated  by  reference  to  Exhibit  4.16 to the
          Funding Corporation Form S-4).

     4.17 Stock  Pledge  Agreement  (Pledge of Stock of Fish Lake by Magma Power
          Company and the Funding  Corporation),  dated as of July 21, 1995,  by
          Magma Power Company and the Funding  Corporation  in favor of Chemical
          Trust Company of California (incorporated by reference to Exhibit 4.17
          to the Funding Corporation Form S-4).
<PAGE>

     4.18 Cost  Overrun   Commitment,   dated  as  of  July  21,  1995,  between
          MidAmerican,  SSPG, SSBP and Fish Lake  (incorporated  by reference to
          Exhibit 4.18 to the Funding Corporation Form S-4).

     4.19 Second Amended and Restated  Partnership  Guarantors Credit Agreement,
          dated October 13, 1998, by and among the  Partnership  Guarantors  and
          the Funding Corporation  (incorporated by reference to Exhibit 4.19(c)
          to the Funding Corporation Form 10-K/A).

     4.20 Partnership  Guarantors  Security  Agreement and Assignment of Rights,
          dated as of July 21, 1995, by CEOC and VPC in favor of Chemical  Trust
          Company of  California  (incorporated  by reference to Exhibit 4.20 to
          the Funding Corporation Form S-4).

     4.21 Stock Pledge Agreement (Pledge of Stock of CEOC by Magma Power Company
          and the  Funding  Corporation),  dated as of July 21,  1995,  by Magma
          Power  Company and  Funding  Corporation  in favor of  Chemical  Trust
          Company of  California  (incorporated  by reference to Exhibit 4.21 to
          the Funding Corporation Form S-4).

     4.22 Stock Pledge Agreement  (Pledge of Stock of VPC by Magma Power Company
          and the  Funding  Corporation),  dated as of July 21,  1995,  by Magma
          Power Company and the Funding  Corporation  in favor of Chemical Trust
          Company of  California  (incorporated  by reference to Exhibit 4.22 to
          the Funding Corporation Form S-4).

     4.23 Royalty  Guarantor Credit  Agreement,  among the Royalty Guarantor and
          the Funding  Corporation,  dated as of July 21, 1995  (incorporated by
          reference to Exhibit 4.23 to the Funding Corporation Form S-4).

     4.24 Royalty  Project  Note,  dated as of July  21,  1995,  by the  Royalty
          Guarantor  in  favor  of  the  Funding  Corporation  (incorporated  by
          reference to Exhibit 4.24 to the Funding Corporation Form S-4).

     4.25 Royalty  Security  Agreement and  Assignment of Revenues,  dated as of
          July 21, 1995,  by the Royalty  Guarantor  in favor of Chemical  Trust
          Company of  California  (incorporated  by reference to Exhibit 4.25 to
          the Funding Corporation Form S-4).

     4.26 Royalty  Deed of  Trust,  dated as of July 21,  1995,  by the  Royalty
          Guarantor to Chicago Title Company for the use and benefit of Chemical
          Trust Company of California (incorporated by reference to Exhibit 4.26
          to the Funding Corporation Form S-4).

     4.27 Stock Pledge Agreement  (Pledge of Stock of Royalty Guarantor by Magma
          Power Company and the Funding Corporation), dated as of July 21, 1995,
          by  Magma  Power  Company  and the  Funding  Corporation  in  favor of
          Chemical  Trust  Company of California  (incorporated  by reference to
          Exhibit 4.27 to the Funding Corporation Form S-4).

     4.28 Collateral  Assignment of the Imperial Irrigation District Agreements,
          dated as of July 21,  1995,  by SSBP,  SSPG and Fish  Lake in favor of
          Chemical  Trust  Company of California  (incorporated  by reference to
          Exhibit 4.28 to the Funding Corporation Form S-4).

     4.29 Collateral  Assignments of Certain Salton Sea Agreements,  dated as of
          July 21, 1995, by SSBP,  SSPG and Fish Lake in favor of Chemical Trust
          Company of  California  (incorporated  by reference to Exhibit 4.29 to
          the Funding Corporation Form S-4).

     4.30 Debt  Service  Reserve  Letter of Credit by Credit  Suisse in favor of
          Chemical  Trust  Company of California  (incorporated  by reference to
          Exhibit 4.30 to the Funding Corporation Form S-4).
<PAGE>

     4.31 Partnership  Project Note (SSI),  dated  October 13, 1998,  by VPC and
          CEOC, Conejo, San Felipe,  Niguel, VPC Geothermal,  Del Ranch, Elmore,
          Leathers,  Vulcan,  Turbo LLC and Minerals LLC in favor of the Funding
          Corporation  (incorporated  by  reference  to  Exhibit  4.31(a) to the
          Funding Corporation Form 10-K/A).

     4.31(a) Partnership Project Note (SSII), dated October 13, 1998, by VPC and
          CEOC, Conejo, San Felipe,  Niguel, VPC Geothermal,  Del Ranch, Elmore,
          Leathers,  Vulcan,  Turbo LLC and Minerals LLC in favor of the Funding
          Corporation  (incorporated  by  reference  to  Exhibit  4.31(b) to the
          Funding Corporation Form 10-K/A).

     4.31(b)  Partnership  Project Note (SSIII),  dated October 13, 1998, by VPC
          and CEOC,  Conejo,  San Felipe,  Niguel,  VPC  Geothermal,  Del Ranch,
          Elmore,  Leathers,  Vulcan, Turbo LLC and Minerals LLC in favor of the
          Funding  Corporation  (incorporated by reference to Exhibit 4.31(c) to
          the Funding Corporation Form 10-K/A).

     4.32 Collateral  Assignment of the Imperial Irrigation District Agreements,
          dated as of June 20, 1996, by Vulcan,  Elmore,  Leathers,  VPC and Del
          Ranch in favor of Chemical  Trust Company of California  (incorporated
          by reference to Exhibit 4.29 to the Funding Corporation II Form S-4).

     4.33 Collateral Assignments of Certain Partnership Agreements,  dated as of
          June 20, 1996,  by Vulcan  Elmore,  Leathers and Del Ranch in favor of
          Chemical  Trust  Company of California  (incorporated  by reference to
          Exhibit 4.31 to the Funding Corporation II Form S-4).

     4.34 Debt  Service  Reserve  Letter of Credit by Credit  Suisse in favor of
          Chemical  Trust  Company of California  (incorporated  by reference to
          Exhibit 4.32 to the Funding Corporation II Form S-4).

     4.35 Intentionally Omitted

     4.36 Intentionally Omitted

     4.37 Deed of Trust,  dated as of June 20, 1996,  by Vulcan to Chicago Title
          Company  for  the  use  and  benefit  of  Chemical  Trust  Company  of
          California  (incorporated  by reference to Exhibit 4.35 to the Funding
          Corporation II Form S-4).

     4.37(a) First Amendment to Deed of Trust,  dated October 13, 1998 by Vulcan
          to Chicago  Title  Company for the use and  benefit of Chemical  Trust
          Company of California (incorporated by reference to Exhibit 4.37(a) to
          the Form 10-K/A).

     4.38 Deed of Trust,  dated as of June 20, 1996,  by Elmore to Chicago Title
          Company  for  the  use  and  benefit  of  Chemical  Trust  Company  of
          California  (incorporated  by reference to Exhibit 4.36 to the Funding
          Corporation II Form S-4).

     4.38(a) First Amendment to Deed of Trust, dated October 13, 1998, by Elmore
          to Chicago  Title  Company for the use and  benefit of Chemical  Trust
          Company of California (incorporated by reference to Exhibit 4.38(a) to
          the Form 10-K/A).

     4.39 Deed of Trust, dated as of June 20, 1996, by Leathers to Chicago Title
          Company  for  the  use  and  benefit  of  Chemical  Trust  Company  of
          California  (incorporated  by reference to Exhibit 4.37 to the Funding
          Corporation II Form S-4).

     4.39(a) First  Amendment  to Deed of Trust,  dated  October  13,  1998,  by
          Leathers to Chicago  Title Company for the use and benefit of Chemical
          Trust  Company of  California  (incorporated  by  reference to Exhibit
          4.39(a) to the Form 10-K/A).
<PAGE>

     4.40 Deed of Trust,  dated as of June 20,  1996,  by Del  Ranch to  Chicago
          Title  Company for the use and benefit of  Chemical  Trust  Company of
          California  (incorporated  by reference to Exhibit 4.38 to the Funding
          Corporation II Form S-4).

     4.40(a) First  Amendment to Deed of Trust,  dated  October 13, 1998, by Del
          Ranch to Chicago  Title  Company  for the use and  benefit of Chemical
          Trust  Company of  California  (incorporated  by  reference to Exhibit
          4.40(a) to the Form 10-K/A).

     4.41 Stock Pledge Agreement,  Dated as of June 20, 1996, by CEOC,  pledging
          the stock of Conejo,  Niguel and San Felipe in favor of Chemical Trust
          Company of California  for the benefit of the Secured  Parties and the
          Funding Corporation  (incorporated by reference to Exhibit 4.39 to the
          Funding Corporation II Form S-4).

     4.42 Stock Pledge  Agreement,  dated as of June 20, 1996, by VPC,  pledging
          the stock of BNG in favor of Chemical  Trust Company of California for
          the  benefit  of the  Secured  Parties  and  the  Funding  Corporation
          (incorporated by reference to Exhibit 4.40 to the Funding  Corporation
          II Form S-4).

     4.43 Partnership  Interest Pledge Agreement,  dated as of June 20, 1996, by
          VPC and BNG, pledging the partnership  interests in Vulcan in favor of
          Chemical  Trust Company of  California  for the benefit of the Secured
          Parties and the Funding  Corporation  (incorporated  by  reference  to
          Exhibit 4.41 to the Funding Corporation II Form S-4).

     4.44 Partnership  Interest Pledge Agreement,  dated as of June 20, 1996, by
          Magma,  CEOC and each of Conejo,  Niguel,  San  Felipe,  respectively,
          pledging the partnership  interests in Del Ranch, Elmore and Leathers,
          respectively, in favor of Chemical Trust Company of California for the
          benefit  of  the  Secured   Parties   and  the   Funding   Corporation
          (incorporated by reference to Exhibit 4.42 to the Funding  Corporation
          II Form S-4).

     4.45 Agreement regarding Security Documents,  dated as of June 20, 1996, by
          and among the Initial Guarantors, Magma, SSPC, the Funding Corporation
          and Chemical Trust Company of California (incorporated by reference to
          Exhibit 4.45 to the Funding Corporation II Form S-4).

     5.1  Opinion of Willkie  Farr & Gallagher  (incorporated  by  reference  to
          Exhibit 5.1 of the 99 Form S-4).

     5.2  Opinion of Latham & Watkins  (incorporated by reference to Exhibit 5.2
          of the 99 Form S-4).

     5.3  Opinion of Lionel  Sawyer & Collines  (incorporated  by  reference  to
          Exhibit 5.3 of the 99 Form S-4).

     10.1(a) Salton Sea Deed of Trust,  Assignment of Rents,  Security Agreement
          and Fixture Filing,  dated as of July 21, 1995, by SSBP, SSPG and Fish
          Lake to Chicago  Title  Company  for the use and  benefit of  Chemical
          Trust Company of California (incorporated by reference to Exhibit 10.1
          to the Funding Corporation Form S-4) .

     10.1(b) First  Amendment to Salton Sea Deed of Trust,  Assignment of Rents,
          Security  Agreement  and Fixed  Filing,  dated as of June 20, 1996, by
          SSBP,  SSPG and Fish Lake to  Chicago  Title  Company  for the use and
          benefit of  Chemical  Trust  Company of  California  (incorporated  by
          reference to Exhibit 10.2 to the Funding Corporation II Form S-4).

     10.1(c) Second Amendment to Salton Sea Deed of Trust,  Assignment of Rents,
          Security Agreement and Fixed Filing,  dated as of October 13, 1998, by
          SSBP,  SSPG and Fish Lake to  Chicago  Title  Company  for the use and
          benefit of  Chemical  Trust  Company of  California  (incorporated  by
          reference to Exhibit 10.1(c) to the Form 10-K/A).

     10.2 Collateral   Assignment   of  Southern   California   Edison   Company
          Agreements,  dated as of July 21, 1995, by SSPG and Fish Lake in favor
          of Chemical Trust Company of California  (incorporated by reference to
          Exhibit 10.3 to the Funding Corporation Form S-4).
<PAGE>

     10.3 Contract for the  Purchase and Sale of Electric  Power from the Salton
          Sea Geothermal Facility, dated May 9, 1987 (the "Unit 1 Power Purchase
          Agreement"),  between  Southern  California  Edison  Company and Earth
          Energy, Inc. (incorporated by reference to Exhibit 10.4 to the Funding
          Corporation Form S-4).

     10.4 Amendment No. 1 to the Unit 1 Power  Purchase  Agreement,  dated as of
          March 30, 1993,  between Southern  California Edison Company and Earth
          Energy, Inc. (incorporated by reference to Exhibit 10.5 to the Funding
          Corporation Form S-4).

     10.5 Amendment No. 2 to Unit 1 Power Purchase Agreement, dated November 29,
          1994,   between   Southern   California   Edison   Company   and  SSPG
          (incorporated by reference to Exhibit 10.6 to the Funding  Corporation
          Form S-4).

     10.6 Contract for the Purchase and Sale of Electric Power,  dated April 16,
          1985  (the  "Unit  2  Power  Purchase  Agreement"),  between  Southern
          California  Edison  Company  and  Westmoreland  Geothermal  Associates
          (incorporated by reference to Exhibit 10.7 to the Funding  Corporation
          Form S-4).

     10.7 Amendment  No.  1 to  Unit 2 Power  Purchase  Agreement,  dated  as of
          December 18, 1987,  between  Southern  California  Edison  Company and
          Earth Energy,  Inc.  (incorporated by reference to Exhibit 10.8 to the
          Funding Corporation Form S-4).

     10.8 Power  Purchase  Contract,  dated  April 16,  1985 (the  "Unit 3 Power
          Purchase  Agreement"),  between Southern California Edison Company and
          Union Oil Company of California  (incorporated by reference to Exhibit
          10.9 to the Funding Corporation Form S-4).

     10.9 Power Purchase Contract (the "Unit 4 Power Purchase Agreement"), dated
          November 29, 1994,  between Southern  California Edison Company,  SSPG
          and Fish Lake  (incorporated  by  reference  to  Exhibit  10.10 to the
          Funding Corporation Form S-4).

     10.10Plant  Connection  Agreement (Unit 2), dated October 3, 1989,  between
          the Imperial Irrigation District and Earth Energy, Inc.  (incorporated
          by reference to Exhibit 10.11 to the Funding Corporation Form S-4).

     10.11Plant  Connection  Agreement,  dated August 2, 1988 (Unit 3),  between
          the   Imperial   Irrigation   District   and  Desert   Power   Company
          (incorporated by reference to Exhibit 10.12 to the Funding Corporation
          Form S-4).

     10.12Imperial  Irrigation  District Funding and Construction  Agreements as
          amended (Units 2 and 3), dated as of June 29, 1987, among the Imperial
          Irrigation District, Earth Energy, Inc., Chevron Geothermal Company of
          California,  Geo East Mesa No. 3, Inc.,  Magma Power  Company,  Desert
          Power Company,  Geo East Mesa No. 2, Inc., Heber  Geothermal  Company,
          Ormesa  Geothermal,  Ormesa Geothermal II, Vulcan/BN  Geothermal Power
          Company, Union Oil Company of California, Del Ranch L.P., Elmore L.P.,
          Leathers L.P., Geo East Mesa Limited Partnership and Imperial Resource
          Recovery Associates,  L.P. (incorporated by reference to Exhibit 10.13
          to the Funding Corporation Form S-4).

     10.13Transmission Service Agreement,  dated as of October 3, 1989 (Unit 2),
          between  the  Imperial  Irrigation  District  and Earth  Energy,  Inc.
          (incorporated by reference to Exhibit 10.14 to the Funding Corporation
          Form S-4).

     10.14Transmission  Service Agreement,  dated as of August 2, 1988 (Unit 3),
          between the Imperial  Irrigation  District  and Desert  Power  Company
          (incorporated by reference to Exhibit 10.15 to the Funding Corporation
          Form S-4).
<PAGE>

     10.15Plant  Connection  Agreement  (Unit 4), dated as of July 14, 1995,  by
          and  between  the  Imperial  Irrigation  District,  SSPG and Fish Lake
          (incorporated by reference to Exhibit 10.16 to the Funding Corporation
          Form S-4).

     10.16Letter Agreement,  dated February 2, 1995, between Magma Power Company
          and the Imperial  Irrigation  District  (incorporated  by reference to
          Exhibit 10.17 to the Funding Corporation Form S-4).

     10.17Transmission  Service  Agreement  (Unit 4), dated as of July 14, 1995,
          by and between the Imperial  Irrigation  District,  SSPG and Fish Lake
          (incorporated by reference to Exhibit 10.18 to the Funding Corporation
          Form S-4).

     10.18Transmission  Line  Construction  Agreement  (Unit 4),  dated July 14,
          1995,  between the Imperial  Irrigation  District,  SSPG and Fish Lake
          (incorporated by reference to Exhibit 10.19 to the Funding Corporation
          Form S-4).

     10.19Funding  Agreement,  dated June 15,  1988 (Unit 2),  between  Southern
          California  Edison  Company and Earth Energy,  Inc.  (incorporated  by
          reference to Exhibit 10.20 to the Funding Corporation Form S-4).

     10.20Second Amended and Restated  Administrative Services Agreement, by and
          among  CEOC,  SSBP,  SSPG and  Fish  Lake,  dated as of July 15,  1995
          (incorporated by reference to Exhibit 10.21 to the Funding Corporation
          Form S-4).

     10.21Second  Amended and  Restated  Operating  and  Maintenance  Agreement,
          dated as of July 15,  1995,  by and among Magma Power  Company,  SSBP,
          SSPG and Fish Lake  (incorporated by reference to Exhibit 10.22 to the
          Funding Corporation Form S-4).

     10.22 Intentionally Omitted.

     10.23Collateral   Assignment   of  Southern   California   Edison   Company
          Agreements, dated as of June 20, 1996, by Vulcan, Elmore, Leathers and
          Del  Ranch  in  favor  of  Chemical   Trust   Company  of   California
          (incorporated by reference to Exhibit 10.23 to the Funding Corporation
          II Form S-4).

     10.24Administrative Services Agreement,  dated as of June 17, 1996, between
          CEOC and Vulcan  (incorporated  by reference  to Exhibit  10.24 to the
          Funding Corporation II Form S-4).

     10.25Amended  and   Restated   Construction,   Operating   and   Accounting
          Agreement,  dated  as  of  June  17,  1996,  between  VPC  and  Vulcan
          (incorporated by reference to Exhibit 10.25 to the Funding Corporation
          II Form S-4).

     10.26Long Term Power  Purchase  Contract,  dated March 1, 1984, as amended,
          between  SCE and  Vulcan,  as  successor  to  Magma  Electric  Company
          (incorporated by reference to Exhibit 10.26 to the Funding Corporation
          II Form S-4).

     10.27Transmission  Service  Agreement,  dated December 1, 1988, between VPC
          and IID  (incorporated  by reference  to Exhibit  10.27 to the Funding
          Corporation II Form S-4).

     10.28Plant Connection Agreement,  dated as of December 1, 1988, between VPC
          and IID  (incorporated  by reference  to Exhibit  10.28 to the Funding
          Corporation II Form S-4).

     10.29Amended and Restated  Administrative  Services Agreement,  dated as of
          June 17, 1996  between CEOC and Elmore  (incorporated  by reference to
          Exhibit 10.29 to the Funding Corporation II Form S-4).

     10.30Amended and Restated Operating and Maintenance Agreement,  dated as of
          June 17, 1996,  between CEOC and Elmore  (incorporated by reference to
          Exhibit 10.30 to the Funding Corporation II Form S-4).
<PAGE>

     10.31Long Term Power  Purchase  Contract,  dated June 15, 1984, as amended,
          between  SCE and  Elmore,  as  successor  to  Magma  Electric  Company
          (incorporated by reference to Exhibit 10.31 to the Funding Corporation
          II Form S-4).

     10.32Transmission  Service  Agreement,  dated  as of  August  2,  1988,  as
          amended,  between Elmore and IID (incorporated by reference to Exhibit
          10.32 to the Funding Corporation II Form S-4).

     10.33Plant  Connection  Agreement,  dated as of  August  2,  1988,  between
          Elmore and IID  (incorporated  by  reference  to Exhibit  10.33 to the
          Funding Corporation II Form S-4).

     10.34Amended and Restated  Administrative  Services Agreement,  dated as of
          June 17, 1996, between CEOC and Leathers (incorporated by reference to
          Exhibit 10.34 to the Funding Corporation II Form S-4).

     10.35Amended and Restated Operating and Maintenance Agreement,  dated as of
          June 17, 1996, between CEOC and Leathers (incorporated by reference to
          Exhibit 10.35 to the Funding Corporation II Form S-4).

     10.36Long Term Power Purchase Contract,  dated August 16, 1985, as amended,
          between SCE and Leathers,  as successor to Imperial Energy Corporation
          (incorporated by reference to Exhibit 10.36 to the Funding Corporation
          II Form S-4).

     10.37Transmission  Service  Agreement,  dated as of  October  3,  1989,  as
          amended,  between  Leathers  and IID  (incorporated  by  reference  to
          Exhibit 10.37 to the Funding Corporation II Form S-4).

     10.38Plant  Connection  Agreement,  dated as of October  3,  1989,  between
          Leathers and IID  (incorporated  by reference to Exhibit  10.38 to the
          Funding Corporation II Form S-4).

     10.39Amended and Restated  Administrative  Services Agreement,  dated as of
          June 17, 1996,  between CEOC and Del Ranch  (incorporated by reference
          to Exhibit 10.39 to the Funding Corporation II Form S-4).

     10.40Amended and Restated Operating and Maintenance Agreement,  dated as of
          June 17, 1996,  between CEOC and Del Ranch  (incorporated by reference
          to Exhibit 10.40 to the Funding Corporation II Form S-4).

     10.41Long Term  Power  Purchase  Contract,  dated  February  22,  1984,  as
          amended,   between  SCE  and  Del  Ranch,   as   successor   to  Magma
          (incorporated by reference to Exhibit 10.41 to the Funding Corporation
          II Form S-4).

     10.42Transmission  Service  Agreement,  dated  as of  August  2,  1988,  as
          amended,  between  Del Ranch and IID  (incorporated  by  reference  to
          Exhibit 10.42 to the Funding Corporation II Form S-4).

     10.43Plant Connection  Agreement,  dated as of August 2, 1988,  between Del
          Ranch and IID  (incorporated  by  reference  to  Exhibit  10.43 to the
          Funding Corporation II Form S-4).

     10.44Funding  Agreement,  dated  May 18,  1990,  between  SCE and Del Ranch
          (incorporated by reference to Exhibit 10.44 to the Funding Corporation
          II Form S-4).

     10.45Funding  Agreement,  dated  May  18,  1990,  between  SCE  and  Elmore
          (incorporated by reference to Exhibit 10.45 to the Funding Corporation
          II Form S-4).

     10.46Funding  Agreement,  dated June 15,  1990,  between  SCE and  Leathers
          (incorporated by reference to Exhibit 10.46 to the Funding Corporation
          II Form S-4).
<PAGE>

     10.47Funding  Agreement,  dated  May 18,  1990,  between  SCE and  Leathers
          (incorporated by reference to Exhibit 10.47 to the Funding Corporation
          II Form S-4).

     10.48Funding  Agreement,  dated  May  18,  1990,  between  SCE  and  Vulcan
          (incorporated by reference to Exhibit 10.48 to the Funding Corporation
          II Form S-4).

     24.1 Power of Attorney

     24.2 Power of Attorney



<PAGE>


  Exhibit 24.1

                                POWER OF ATTORNEY

The undersigned, members of the Board of Directors and Officers of the following
companies:

      Salton Sea Brine Processing L.P.         Salton Sea Power Generation L.P.
      Fish Lake Power LLC                      Vulcan Power Company
      CalEnergy Operating Corporation          Salton Sea Royalty LLC
      VPC Geothermal LLC                       San Felipe Energy Company
      Conejo Energy Company                    Niguel Energy Company
      Vulcan/BN Geothermal Power Company       Leathers, L.P.
      Del Ranch, L.P.                          Elmore, L.P.
      Salton Sea Power L.L.C.                  CE Turbo LLC
      CE Salton Sea Inc.

hereby  constitute and appoint Douglas L. Anderson and Paul J. Leighton and each
of them, as his/her true and lawful  attorney-in-fact and agent, with full power
of  substitution  and  resubstitution,  for  and in his  stead,  in any  and all
capacities,  to sign on his behalf the Salton  Sea  Funding  Corporation's  (the
"Company")  Form 10-K Annual Report for the fiscal year ending December 31, 2001
and to execute any  amendments  thereto and to file the same,  with all exhibits
thereto,  and all other documents in connection  therewith,  with the Securities
and Exchange Commission and applicable stock exchanges,  with the full power and
authority to do and perform each and every act and thing  necessary or advisable
to all intents and purposes as he might or could do in person,  hereby ratifying
and  confirming  all that said  attorney-in-fact  and agent or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.

Dated as of March 29, 2002.

/s/ Douglas L. Anderson
DOUGLAS L. ANDERSON

/s/ Patrick J. Goodman
PATRICK J. GOODMAN

/s/ Joseph M. Lillo
JOSEPH M. LILLO



<PAGE>




Exhibit 24.2
                                POWER OF ATTORNEY


The undersigned, members of the Board of Directors and Officers of the following
companies:

         CalEnergy Minerals LLC
         Salton Sea Minerals Corp.

hereby  constitute and appoint Douglas L. Anderson and Paul J. Leighton and each
of them, as his/her true and lawful  attorney-in-fact and agent, with full power
of  substitution  and  resubstitution,  for and in his/her stead, in any and all
capacities,  to sign on his/her behalf the Salton Sea Funding Corporation's (the
"Company")  Form 10-K Annual Report for the fiscal year ending December 31, 2001
and to execute any  amendments  thereto and to file the same,  with all exhibits
thereto,  and all other documents in connection  therewith,  with the Securities
and Exchange Commission and applicable stock exchanges,  with the full power and
authority to do and perform each and every act and thing  necessary or advisable
to all  intents  and  purposes  as he/she  might or could do in  person,  hereby
ratifying and confirming all that said  attorney-in-fact  and agent,  or his/her
substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Executed as of March 29, 2002.


/s/ Gregory E. Abel
GREGORY E. ABEL


/s/ Patrick J. Goodman
PATRICK J. GOODMAN


/s/ Joseph M. Lillo
JOSEPH M. LILLO