SECURITIES AND EXCHANGE COMMISSION
                                  WASHINGTON, D.C. 20549

                                    FORM 10-Q

         [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE 
                   SECURITIES EXCHANGE ACT OF 1934

                          For the Quarterly Period ended September 30, 2001

                         Commission File Number 33-82034INDIANTOWN COGENERATION, L.P.
            (Exact name of co-registrant as specified in its charter)

Delaware
          
          
          
          
          
          
          
          
          
52-1722490
        
 (State or other jurisdiction of
          
          
          
          
          
          
(I.R.S. Employer Identification Number)
        
incorporation or organization)

INDIANTOWN COGENERATION FUNDING CORPORATION
            (Exact name of co-registrant as specified in its charter)

Delaware
          
          
          
          
          
          
          
          
          
52-1889595
        
(State or other jurisdiction of
          
          
          
          
          
          
(I.R.S. Employer Identification Number)
        
incorporation or organization)

7500 Old Georgetown Road, 13th FloorBethesda, Maryland 20814-6161
              (Registrants' address of principal executive offices)(301)-280-6800
              (Registrants' telephone number, including area code)

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  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. [ X ] Yes [  ] No

Indiantown Cogeneration, L.P.
                 Indiantown Cogeneration Funding Corporation

`PART I  FINANCIAL INFORMATION                                          Page No.

Item 1 Financial Statements:

  Consolidated Balance Sheets as of September 30, 2001 (Unaudited) and
         December 31, 2000.................................................1
  Consolidated Statements of Operations for the
         Three Months and Nine Months Ended September 30, 2001 (Unaudited)
         and September 30, 2000 (Unaudited)................................3
  Consolidated Statements of Cash Flows for the Nine Months
         Ended September 30, 2001 (Unaudited) and September 30, 2000
         (Unaudited).......................................................4
  Notes to Consolidated Financial Statements (Unaudited) ..................5

Item 2 Managements Discussion and Analysis of Financial

         Condition and Results of Operations...............................9

PART II OTHER INFORMATION

Item 1   Legal Proceedings................................................13

Item 5   Other Information................................................16

Item 6  Exhibits and Reports on Form 8K...................................18

Item 7  Market Risk Information...........................................18

Signatures................................................................19`

`PART I
                            FINANCIAL INFORMATION

                        Indiantown Cogeneration, L.P.
                           Consolidated Balance Sheets
               As of September 30, 2001 and December 31, 2000

                                                                               September 30,              December 31,
                            ASSETS                                                  2001                      2000
---------------------------------------------------------------            -----------------------    ---------------------
                                                                                (Unaudited)
CURRENT ASSETS:
     Cash and cash equivalents                                             $              379,482      $           821,955
     Accounts receivable-trade                                                         13,586,810               13,853,485
     Inventories                                                                        1,110,742                2,116,636
     Prepaids                                                                           1,208,646                  800,238
     Deposits                                                                              44,450                   44,450
     Investments held by Trustee, including restricted funds
        of $18,743,677 and $2,694,068, respectively
                                                                                       26,155,464                2,980,292
                                                                           -----------------------    ---------------------
               Total current assets                                                    42,485,594               20,617,056
                                                                           -----------------------    ---------------------

INVESTMENTS HELD BY TRUSTEE,
     restricted funds                                                                  15,187,560               15,108,428

DEPOSITS                                                                                  168,557                  159,365

PROPERTY, PLANT & EQUIPMENT:
     Land                                                                               8,582,363                8,582,363
     Electric and steam generating facilities                                         702,078,533              700,310,050
     Less accumulated depreciation                                                   (91,809,399)             (80,537,655)
                                                                           -----------------------    ---------------------
               Net property, plant & equipment                                        618,851,497              628,354,758
                                                                           -----------------------    ---------------------

FUEL RESERVE                                                                            2,134,732                  922,254

DEFERRED FINANCING COSTS, net of accumulated amortization of
    $45,297,629 and $44,679,212, respectively
                                                                                       14,889,287               15,507,704
                                                                           -----------------------    ---------------------

               Total assets                                                 $         693,717,227      $       680,669,565
                                                                           =======================    =====================



                           The accompanying notes are an integral part of these consolidated balance sheets.


                                                              1
Indiantown Cogeneration, L. P.
                          Consolidated Balance Sheets
                 As of September 30, 2001 and December 31, 2000

                                                                      September 30,           December 31, 2000
LIABILITIES AND PARTNERS' CAPITAL                                         2001
--------------------------------------------------------------    ----------------------    ----------------------
                                                                       (Unaudited)
CURRENT LIABILITIES:

     Accrued payables/liabilities                                 $          11,261,979      $          9,325,173
     Accrued interest                                                        15,553,918                 2,370,686
     Current portion - First Mortgage Bonds                                  11,300,651                11,140,896
     Current portion lease payable - railcars                                   350,076                   331,628
                                                                  ----------------------    ----------------------
               Total current liabilities                                     38,466,624                23,168,383
                                                                  ----------------------    ----------------------
LONG TERM DEBT:
     First Mortgage Bonds                                                   437,837,766               443,567,969
     Tax Exempt Facility Revenue Bonds                                      125,010,000               125,010,000
     Lease payable - railcars                                                 3,678,627                 3,943,538
                                                                  ----------------------    ----------------------
               Total long term debt                                         566,526,393               572,521,507

                                                                  ----------------------    ----------------------
               Total liabilities                                            604,993,017               595,689,890
                                                                  ----------------------    ----------------------

PARTNERS' CAPITAL:
    Toyan Enterprises                                                        26,661,626                25,536,395
    Palm Power Corporation                                                    8,872,420                 8,497,967
    Indiantown Project Investment Partnership                                17,700,480                16,953,444
    Thaleia                                                                  35,489,684                33,991,869
                                                                  ----------------------    ----------------------
                                                                  ----------------------    ----------------------
               Total partners' capital                                       88,724,210                84,979,675
                                                                  ----------------------    ----------------------

               Total liabilities and partners' capital            $         693,717,227     $         680,669,565
                                                                  ======================    ======================



                           The accompanying notes are an integral part of these consolidated balance sheets.

                                                                      2





                         Indiantown Cogeneration, L.P.
                      Consolidated Statements of Operations
        For the Three Months and Nine Months Ended September 30, 2001 and
                               September 30, 2000
                            ------------------------


                                                        Three Months Ended     Three Months Ended     Nine Months Ended    Nine Months Ended
                                                           September 30,       September 30, 2000       September 30,      September 30, 2000
                                                               2001                                          2001
                                                      ----------------------- ---------------------- -------------------- ---------------------
Operating Revenues:                                        (Unaudited)             (Unaudited)         (Unaudited)          (Unaudited)

     Electric capacity and capacity bonus revenue          $ 31,050,188             $31,032,537          $93,234,527           $92,934,747
     Electric energy revenue                                 14,880,333              16,255,453           44,181,448            40,999,423
     Steam revenue                                               41,973                  29,749              235,437                78,669
                                                           ------------             -----------          -----------           -----------
         Total operating revenues                            45,972,494              47,317,739          137,651,412           134,012,839
                                                           ------------             -----------          -----------           -----------

Cost of Sales:
     Fuel and ash                                            14,866,474             16,594,405            46,623,296            42,291,534
     Operating and maintenance                                4,918,801              3,954,014            14,383,730            13,801,455
     Depreciation                                             3,798,397              3,791,714            11,383,269            11,366,169
                                                           ------------             ----------           -----------            ----------
         Total cost of sales                                 23,583,672             24,340,133            72,390,295            67,459,158
                                                           ------------             ----------           -----------            -----------

Gross Profit                                                 22,388,822             22,977,606            65,261,117            66,553,681
                                                            ------------            ----------            ----------            ----------

Other Operating Expenses:

     General and administrative                                 758,755              1,248,806             3,119,801             3,719,234
     Insurance and taxes                                      1,700,636              1,603,558             5,006,646             4,820,204
                                                              ---------              ---------             ---------             ---------
         Total other operating expenses                       2,459,391              2,852,364             8,126,447             8,539,438
                                                              ---------              ---------             ---------             ---------

Operating Income                                              19,929,431             20,125,242           57,134,670            58,014,243
                                                              ----------             ----------           ----------            ----------

Non-Operating Income (Expenses):

     Interest expense                                        (14,233,047)          (14,099,272)          (42,340,721)          (42,807,244)
     Interest/Other income (expense)                             370,830               440,191             1,350,586             1,581,732
                                                             ------------          -----------            ----------          ------------
         Net non-operating expense                           (13,862,217)          (13,659,081)           (40,990,135)         (41,225,512)
                                                           ------------            ------------           ------------        ------------

Income before cumulative effect of
    change in accounting principle                             6,067,214             6,466,161             16,144,535           16,788,731


Cumulative effect of change in accounting principle                    -                     -                      -              920,536
                                                      --------------------    -----------------      -----------------        ------------

Net Income                                                   $6,067,214              $6,466,161        $16,144,535             $17,709,267
                                                      ====================    =================        ===============        =============


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

                                       3

                         Indiantown Cogeneration, L.P.
                     Consolidated Statements of Cash Flows
             For the Nine Months Ended September 30, 2001 and 2000

                                                                                Nine Months              Nine Months
                                                                                   Ended                    Ended
                                                                               September 30,            September 30,
                                                                                   2001                     2000
                                                                           ----------------------   ----------------------
                                                                                (Unaudited)              (Unaudited)

    CASH FLOWS FROM OPERATING ACTIVITIES:
         Net income                                                          $        16,144,535     $         17,709,267
             Adjustments to reconcile net income to net
                cash provided by operating activities:
                   Depreciation and amortization                                      12,001,686               11,984,594
                   Loss on disposal of assets                                            609,067                    1,032
                   Decrease (increase) in accounts receivable                            266,675                (859,061)
                   Increase in inventories and fuel reserves                           (206,584)              (1,325,012)
                   Increase in deposits and prepaids                                   (417,600)                (133,645)
                   Increase in accrued payable/liabilities
                       and accrued interest                                           15,120,038               18,383,778
                   Decrease  in major maintenance
                       Reserve                                                                 -                (920,536)
                   Decrease in lease payable                                           (246,463)                (229,300)
                                                                            ---------------------   ----------------------
                           Net cash provided by operating activities                  43,271,354               44,611,117
                                                                            ---------------------   ----------------------

    CASH FLOWS FROM INVESTING ACTIVITIES:
            Purchase of property, plant & equipment                                  (2,489,075)              (1,899,103)
            Increase in investment held by trustee                                   (23,254,30)             (23,085,053)
                                                                            ---------------------   ----------------------
                           Net cash used in investing activities                    (25,743,379)             (24,984,156)
                                                                            ---------------------   ----------------------

    CASH FLOWS FROM FINANCING ACTIVITIES:
            Payment of bonds                                                         (5,570,448)              (5,766,567)
            Capital distribution                                                    (12,400,000)             (15,300,000)
            Increase in working capital loan                                                   -                        -
                                                                            ---------------------   ----------------------
                           Net cash used in financing activities                    (17,970,448)             (21,066,567)

    CHANGE IN CASH AND CASH EQUIVALENTS                                                (442,473)              (1,439,606)
    CASH and CASH EQUIVALENTS, beginning of year                                         821,955                2,416,997
                                                                            ---------------------   ----------------------

    CASH and CASH EQUIVALENTS, end of period                             $               379,482                $ 977,391
                                                                            =====================   ======================


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

                                       4`

Indiantown Cogeneration, L.P.
                   Notes to Consolidated Financial Statements
                          As of September 30, 2001
                                   (Unaudited)1.   ORGANIZATION AND BUSINESS:

        

     Indiantown  Cogeneration,  L.P. (the  "Partnership")  is a special  purpose
Delaware  limited  partnership  formed on October 4, 1991. The  Partnership  was
formed to develop,  construct,  and operate an approximately  330 megawatt (net)
pulverized  coal-fired  cogeneration  facility  (the  "Facility")  located on an
approximately 240 acre site in southwestern Martin County, Florida. The Facility
produces  electricity  for sale to Florida  Power & Light  Company  ("FPL")  and
supplies  steam to Caulkins  Indiantown  Citrus Co.  ("Caulkins")  for its plant
located near the Facility. In September 2001, Caulkins sold its production plant
to Louis Dreyfus Citrus, Inc. ("LDC"). LDC and its parent, Louis Dreyfus Citrus,
S.A. ("Dreyfus"), have significant market positions in the world citrus industry
with operations in Florida and Brazil.

        

     The  original  general  partners  were  Toyan  Enterprises   ("Toyan"),   a
California corporation and a wholly owned special purpose indirect subsidiary of
PG&E  National  Energy  Group,  Inc.  ("NEG,  Inc.") and Palm Power  Corporation
("Palm"),  a Delaware  corporation and a special purpose indirect  subsidiary of
Bechtel Enterprises, Inc. ("Bechtel Enterprises").  The sole limited partner was
TIFD III-Y,  Inc.  ("TIFD"),  a special purpose  indirect  subsidiary of General
Electric Capital Corporation  ("GECC").  During 1994, the Partnership formed its
sole, wholly owned subsidiary, Indiantown Cogeneration Funding Corporation ("ICL
Funding"),  to  act as  agent  for,  and  co-issuer  with,  the  Partnership  in
accordance with the 1994 bond offering.  ICL Funding has no separate  operations
and has only $100 in assets.

        

     In 1998, Toyan  consummated  transactions  with DCC Project Finance Twelve,
Inc.  ("PFT"),  whereby  PFT,  through  a new  partnership  (Indiantown  Project
Investment,  L.P.  ("IPILP"))  with Toyan,  became a new general  partner in the
Partnership.  Toyan is the  sole  general  partner  of  IPILP.  Prior to the PFT
transaction,  Toyan  converted some of its general  partnership  interest into a
limited  partnership  interest such that Toyan now directly holds only a limited
partnership  interest  in  the  Partnership.  In  addition,  Bechtel  Generating
Company,  Inc. ("Bechtel  Generating") sold all of the stock of Palm to a wholly
owned indirect subsidiary of Cogentrix Energy, Inc. ("Cogentrix").  Palm holds a
10% general partner interest in the Partnership.

        

     On June 4, 1999,  Thaleia,  LLC ("Thaleia"),  a wholly-owned  subsidiary of
Palm and indirect  wholly-owned  subsidiary of  Cogentrix,  acquired from TIFD a
19.9%  limited  partner  interest in the  Partnership.  On  September  20, 1999,
Thaleia acquired another 20% limited  partnership  interest from TIFD and TIFD's
membership  on the Board of Control.  On November  24, 1999,  Thaleia  purchased
TIFD's remaining limited partner interest in the Partnership from TIFD.

5

The net profits and losses of the  Partnership  are currently  allocated to
Toyan,  Palm, TIFD, IPILP, and Thaleia  (collectively,  the "Partners") based on
the following ownership percentages:

`Toyan          30.05%
                        Palm           10%*
                        IPILP          19.95%**
                        TIFD           --
                        Thaleia        40%`

**Now beneficially owned by Cogentrix. ** PFTs beneficial ownership in the
Partnership  through IPILP was equal to 10% as of August 21, 1998, and 15% as of
November 23, 1998.

         

     All distributions  other than liquidating  distributions will be made based
on the Partners'  percentage  interest as shown above,  in  accordance  with the
project  documents and at such times and in such amounts as the Board of Control
of the Partnership determines.

         

     The Partnership is managed by PG&E National  Energy Group Company  ("NEG"),
pursuant  to a  Management  Services  Agreement  (the  "MSA").  The  Facility is
operated by PG&E Operating Services Company ("PG&E OSC"), pursuant to an
Operation and Maintenance Agreement (the "O&M Agreement").  NEG and PG&E
OSC are general  partnerships  indirectly wholly owned by NEG, Inc., an indirect
wholly owned subsidiary of PG&E Corporation.

        

     PG&E  Corporation  is also  the  parent  of  Pacific  Gas and  Electric
Company, the California utility. Because the California energy markets situation
has caused financial difficulties for Pacific Gas and Electric Company, PG&E
Corporation's  credit  ratings  were  downgraded  to below  investment  grade in
January  2001,  which  caused  PG&E  Corporation  to default on  outstanding
commercial paper and bank borrowings. In January 2001, certain corporate actions
were taken to  insulate  the  assets of NEG,  Inc.  and its direct and  indirect
subsidiaries  from an effort to  substantively  consolidate  those assets in any
insolvency or  bankruptcy  proceeding  of PG&E  Corporation.  In March 2001,
PG&E Corporation refinanced all of its outstanding commercial paper and bank
borrowings,  and  Standard & Poor's  subsequently  removed its below  investment
grade  credit  rating  since PG&E  Corporation  no longer  had rated  securities
outstanding.  On April 6,  2001,  Pacific  Gas and  Electric  Company  filed for
protection under Chapter 11 of the U.S.  Bankruptcy Code. On September 20, 2001,
PG&E  Corporation and Pacific Gas and Electric  Company jointly filed a proposed
plan of reorganization.

        

     Management of NEG, Inc. believes that NEG, Inc. and its direct and indirect
subsidiaries  as  described  above,  including  the  Partnership,  would  not be
substantively  consolidated  with PG&E  Corporation  or Pacific Gas and Electric
Company in any insolvency or bankruptcy proceeding involving PG&E Corporation.2.  FINANCIAL STATEMENTS:

         

     The  consolidated   balance  sheet  as  of  September  30,  2001,  and  the
consolidated  statements  of  operations  and cash  flows for the three and nine
months ended September 30, 2001 and 2000, have been prepared by the Partnership,
without audit and in accordance with the rules and regulations of the Securities
and  Exchange  Commission.  In  the  opinion  of  management,   these  financial
statements  include  all  adjustments   (consisting  only  of  normal  recurring
adjustments)   necessary  to  present  fairly  the  financial  position  of  the
Partnership  as of September 30, 2001,  and the results of  operations  and cash
flows for the three and nine months ended September 30, 2001 and 2000.

6

The financial  statements and related notes contained herein should be read
in conjunction  with the  Partnership's  Annual Report on Form 10-K for the year
ended December 31, 2000.Investments Held by Trustee
        

     The  investments  held by trustee  represent  bond and equity  proceeds and
revenue funds held by a bond trustee/disbursement agent and are carried at cost,
which  approximates  market.  All funds are invested in either Nations  Treasury
Fund-Class A or other permitted  investments for longer periods. The Partnership
also maintains  restricted  investments  covering a portion of the Partnership's
debt as required by the financing documents. The proceeds include $12,501,000 of
restricted  tax-exempt debt service reserve required by the financing  documents
and are classified as a noncurrent asset on the accompanying balance sheets. The
Partnership  maintains  restricted   investments  covering  a  portion  of  debt
principal and interest payable,  as required by the financing  documents.  These
investments  are classified as current assets in the  accompanying  consolidated
balance sheets. A qualifying  facility ("QF") reserve of $2,500,000 is also held
in long-term assets in the accompanying balance sheets.Property, Plant and Equipment

        

     Property, plant and equipment, which consist primarily of the Facility, are
recorded at actual cost. The Facility is depreciated  on a  straight-line  basis
over 35 years, with a residual value on the Facility approximating 25 percent of
the gross Facility costs.

        

     Other property and equipment are depreciated on a straight-line  basis over
the estimated  economic or service lives of the respective  assets (ranging from
five to seven years).  Routine maintenance and repairs are charged to expense as
incurred.New Accounting Pronouncement

        

     The Partnership adopted SFAS No. 133 "Accounting for Derivative Instruments
and  Hedging  Activities",  as amended by SFAS Nos.  137 and 138,  on January 1,
2001. This standard  requires the Partnership to recognize all  derivatives,  as
defined in the  statements  listed  above,  on the balance  sheet at fair value.
Derivatives,  or any  portion  thereof,  that are not  effective  hedges must be
adjusted to fair value through  income.  If  derivatives  are effective  hedges,
depending on the nature of the hedges,  changes in the fair value of derivatives
either will offset the change in fair value of the hedged  assets,  liabilities,
or  firm  commitments   through  earnings,   or  will  be  recognized  in  other
comprehensive  income until the hedged  items are  recognized  in earnings.  The
Partnership has certain derivative commodity contracts for the physical delivery
of purchase and sale  quantities  transacted  in the normal  course of business.
These  derivatives  are exempt from the  requirements  of SFAS No. 133 under the
normal purchases and sales exception,  and thus are not reflected on the balance
sheet at fair  value.  The  impact  of  adopting  this  standard  did not have a
material  impact  on the  financial  statements  of the  Partnership,  since all
contracts are exempt as normal purchases and sales, as currently defined.

7

In June 2001, the Financial Accounting Standards Board ("FASB") approved an
interpretation  issued by the  Derivatives  Implementation  Group  ("DIG")  that
changes  the  definition  of  normal  purchases  and  sales  for  certain  power
contracts.  Based on our  current  analysis,  the power  contract  with FPL is a
derivative, but qualifies as a normal purchase and sales exemption. The FASB has
also approved  another DIG  interpretation  that disallows  normal purchases and
sales  treatment  for  commodity  contracts  (other than power  contracts)  that
contain  volumetric  variability  or  optionality.  Certain  of  our  derivative
commodity  contracts may no longer be exempt from the  requirements  of SFAS No.
133.  We are  evaluating  the  impact  of  the  implementation  guidance  on our
financial statements,  and will implement this guidance, as appropriate,  by the
implementation deadline of April 1, 2002.3. DEPOSITS:

        

     In 1991, in accordance with the Planned Unit  Development  Zoning Agreement
between the Partnership and Martin County, the Partnership  deposited $1,000,000
in trust  with the Board of County  Commissioners  of  Martin  County  (the "PUD
Trustee").  Income from this trust will be used solely for  projects  benefiting
the community of  Indiantown.  On July 23, 2025,  the PUD Trustee is required to
return the deposit to the Partnership. As of September 30, 2001 and December 31,
2000,  estimated  present  value of this  deposit  was  $168,557  and  $159,365,
respectively.  The remaining  balance has been included in property  plant,  and
equipment as part of total construction expenses.Item 2   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
             
CONDITION AND RESULTS OF OPERATIONS

          

     The  following   discussion   should  be  read  in  conjunction   with  the
Consolidated  Financial  Statements  of the  Partnership  and the notes  thereto
included elsewhere in this report.General

         

     The  Partnership  is primarily  engaged in the ownership and operation of a
non-utility electric generating facility.  From its inception and until December
21, 1995,  the  Partnership  was in the  development  stage and had no operating
revenues or expenses.  On December 22, 1995 the  Facility  commenced  commercial
operation.  As of September 30, 2001, the Partnership had  approximately  $618.9
million of  property,  plant and  equipment  (net of  accumulated  depreciation)
consisting  primarily of purchased  equipment,  construction  related  labor and
materials,  interest  during  construction,  financing  cost,  and  other  costs
directly  associated with the construction of the Facility.  For the nine months
ended  September  30, 2001,  the  Partnership  had total  operating  revenues of
approximately  $137.6  million,  total operating  costs of  approximately  $80.5
million,  and  total net  interest  expenses  of  approximately  $41.0  million,
resulting in net income of approximately $16.1 million.

8

The  Partnership  was engaged in  litigation  with FPL,  the  Partnership's
primary source of revenue. Under certain circumstances, an adverse ruling in the
litigation  could  have  had a  material  adverse  effect  on the  Partnership's
business and financial condition.  Please see Part II Item 1, Legal Proceedings,
for  a  description  of  the  litigation   and  the  pending   settlement.   The
Partnership's fuel supplier is in bankruptcy.  Please see Part II, Item 5, Other
Information,  for a description of the bankruptcy and the Partnership's  actions
in respect of the bankruptcy.

        

     The  Facility  was  taken  out  of  service  for  a  scheduled  three  week
maintenance  outage on October  23,  2001.  As part of the  routine  maintenance
activities,  the turbine  generator was inspected and tested to ensure it was in
proper  operating  condition.  As a result of these  tests,  the  liquid  cooled
generator  was  found to have  leaks in  several  of its  stator  bars.  General
Electric Corporation, the manufacturer of the generator, and the Partnership are
currently  assessing  the  generator  condition  and  developing  a plan to make
temporary  repairs  that will allow the  Partnership  to return the  Facility to
service  as soon as  possible.  The  current  scheduled  outage was to have been
completed by November 13,  2001.  The earliest the Facility  will be returned to
service,  however,  is now estimated to be November 24, 2001. If the Partnership
makes only temporary  repairs at this time, the  Partnership  will  subsequently
have to make permanent repairs to the turbine generator. Under the current plan,
the  Partnership   would  make  those  permanent   repairs  during  a  scheduled
maintenance  outage in 2002. The  Partnership  is still  assessing the financial
impact of these  repairs and the extended  maintenance  outage on the results of
its operations this year and next, which could be material.

         

     The  Partnership  has  obtained  all  material  environmental  permits  and
approvals  required as of September 30, 2001, in order to continue the operation
of the Facility.  Certain of these permits and approvals are subject to periodic
renewal. Certain additional permits and approvals will be required in the future
for the continued operation of the Facility. The Partnership is not aware of any
technical  circumstances  that would  prevent the  issuance of such  permits and
approvals or the renewal of currently existing permits.

         

     The  Partnership  timely filed its  application for a Title V air permit on
May 24, 1996. The permit was issued on October 11, 1999.Results of Operations

         

     For the nine  months  ending  September  30,  2001 and 2000,  the  Facility
achieved  an average  Capacity  Billing  Factor  ("CBF")  of 96.69% and  98.31%,
respectively.   For  the  nine  months  ended   September  30,  2001  and  2000,
respectively,  this resulted in earning monthly  capacity  payments  aggregating
$84.8  million and $84.5  million and bonuses  aggregating  $8.4 million in each
period.  The Capacity  Billing Factor  measures the overall  availability of the
Facility, but gives a heavier weighting to on-peak availability. During the nine
months  ended  September  30,  2001,  the  Facility  was  dispatched  by FPL and
generated 1,879,194  megawatt-hours compared to 1,782,262  megawatt-hours during
the same  period in 2000.  The  increase  was due to higher  oil and gas  prices
incurred  by FPL during the first three  quarters  to  generate  energy from its
facilities.  The monthly  dispatch rate for the first nine months of 2001 ranged
from 78% to 95%,  as  compared  to a range  of 62% to 97% for the  corresponding
period in 2000.

9

For the three months ended September 30, 2001 and 2000,  respectively,  the
Partnership earned monthly capacity payments aggregating $28.3 million and $28.2
million and bonuses  aggregating  $2.8 million in each period.  During the three
months  ended  September  30,  2001,  the  Facility  was  dispatched  by FPL and
generated 619,521  megawatt-hours  compared to 703,105 megawatt-hours during the
same  period in 2000.  The  decrease  was due to forced  unit  outages to repair
boiler  tube  leaks.  The  monthly  dispatch  rate for the  three  months  ended
September  30, 2001 ranged from 78% to 95%, as compared to a range of 95% to 97%
for the corresponding period in 2000.

         

     Net income for the nine months ended September 30, 2001, was  approximately
$16.1 million compared to the net income of approximately  $17.7 million for the
corresponding  period in the prior year. The $1.6 million  decrease is primarily
attributable to an increase in net energy costs of $1.2 million primarily due to
ash disposal.  An alternate method known as pugging has been implemented to help
alleviate the increase in volume of ash resulting from higher dispatch from FPL.
Also included is an increase in operating and maintenance costs of $0.6 million,
and an expense reversal of $0.9 million made in 2000 for a cumulative  change in
accounting  principle  relating to major maintenance  costs. This is offset by a
decrease in net  non-operating  costs of $0.2  million,  an increase of electric
capacity  and bonus  revenue  of $0.3  million,  and a decrease  in general  and
administrative costs of $0.6 million.

         

     Net income for the three months ended September 30, 2001, was approximately
$6.1 million  compared to the net income of  approximately  $6.5 million for the
corresponding  period in the prior year. The $0.5 million  decrease is primarily
attributable to an increase in operating and  maintenance  costs of $1.0 million
in 2001 for the  replacement of baghouse  bags,  offset by a decrease in general
and  administrative  costs of $0.5  million  relating to the  reduction of legal
costs associated with the FPL litigation.Electric Energy Revenues

`For the nine months ended           For the three months ended
                             Sept. 30, 2001    Sept. 30, 2000    Sept. 30, 2001       Sept. 30, 2000
                             ---------------   --------------    ---------------      --------------

Revenues                     $137.6 million    $134.0 million     $46.0 million        $47.3 million
KWhs                          1,879,194,000     1,782,262,000       619,521,000          703,105,000
Avg. CBF                             96.69%            99.06%            96.69%               99.06%
Avg. Dispatch Rate                   89.11%            85.38%            85.00%               96.51%`

For the nine months ended  September 30, 2001,  the  Partnership  had total
operating revenues of approximately $137.6 million as compared to $134.0 million
for the  corresponding  period in the prior year.  The $3.6 million  increase in
operating  revenue is primarily  due to higher  energy  revenue  resulting  from
higher dispatch by FPL.

10

For the three months ended  September 30, 2001, the  Partnership  had total
operating  revenues of approximately  $46.0 million as compared to $47.3 million
for the  corresponding  period in the prior year.  The $1.3 million  decrease in
operating  revenue is primarily due to forced unit outages to repair boiler tube
leaks.

         

     Costs of revenues  for the nine  months  ended  September  30,  2001,  were
approximately  $72.4  million on sales of  1,879,194  MWhs as  compared to $67.5
million on sales of  1,782,262  MWhs for the  corresponding  period in the prior
year.  This  increase is primarily a result of higher fuel and ash costs of $4.3
million  resulting from higher dispatch and the higher cost to dispose of ash to
alternate  facilities using the pugging method, and an increase in operating and
maintenance expenses of $0.6 million primarily for baghouse bag replacements.

         

     Costs of revenues  for the three  months ended  September  30,  2001,  were
approximately  $23.6  million  on sales of  619,521  MWhs as  compared  to $24.3
million on sales of 703,105 MWhs for the corresponding period in the prior year.
This  decrease is primarily  due to lower  dispatch  resulting  from forced unit
outages to repair boiler tube leaks.

         

     Total other operating expenses for the nine months ended September 30, 2001
and 2000, were approximately $8.1 million and $8.5 million, respectively.  Total
other operating expenses for the three months ended September 30, 2001 and 2000,
were approximately $2.5 million and $2.9 million, respectively.

         

     Net interest  expense for the nine months  ended  September  30, 2001,  was
approximately $41.0 million compared to $41.2 million for the same period in the
prior  year.  December  2000 and June 2001  payments  on Series A-9 of the first
mortgage bonds decreased interest expense by approximately $0.5 million.

         

     Net interest  expense for the three months ended  September  30, 2001,  was
approximately $13.9 million compared to $13.7 million for the same period in the
prior year.Liquidity and Capital Resources

     On November 22, 1994 the  Partnership and ICL Funding issued first mortgage
bonds in an aggregate  principal  amount of $505  million  (the "First  Mortgage
Bonds"),  $236.6  million of which bear an  average  interest  rate of 9.26% and
$268.4  million of which bear an interest rate of 9.77%.  Concurrently  with the
Partnership's issuance of its First Mortgage Bonds, the Martin County Industrial
Development  Authority issued $113 million of Industrial  Development  Refunding
Revenue Bonds  (Series  1994A) which bear an interest rate of 7.875% (the "1994A
Tax Exempt  Bonds").  A second series of tax exempt bonds (Series  1994B) in the
approximate  amount of $12 million,  which bear an interest rate of 8.05%,  were
issued by the Martin  County  Industrial  Development  Authority on December 20,
1994 (the  "1994B  Tax Exempt  Bonds"  and,  together  with the 1994A Tax Exempt
Bonds,  the "1994 Tax Exempt Bonds").  The First Mortgage Bonds and the 1994 Tax
Exempt Bonds are hereinafter collectively referred to as the "Bonds."

11

Certain proceeds from the issuance of the First Mortgage Bonds were used to
repay $421 million of the  Partnership's  indebtedness  and  financing  fees and
expenses  incurred in connection with the  development  and  construction of the
Facility and the balance of the proceeds  were  deposited in various  restricted
funds that are being administered by an independent  disbursement agent pursuant
to trust  indentures and a disbursement  agreement.  Funds  administered by such
disbursement agent are invested in specified  investments.  These funds together
with other funds  available to the  Partnership  were being used: (i) to finance
completion of construction, testing, and initial operation of the Facility; (ii)
to finance  construction  interest  and  contingency;  and (iii) to provide  for
initial working capital.

         

     The  proceeds of the 1994 Tax Exempt Bonds were used to refund $113 million
principal  amount of  Industrial  Development  Revenue  Bonds  (Series 1992A and
Series  1992B)  previously  issued by the Martin County  Industrial  Development
Authority  for the  benefit of the  Partnership,  and to fund,  in part,  a debt
service reserve  account for the benefit of the holders of its tax-exempt  bonds
and to complete construction of certain portions of the Facility.

         

     The  Partnerships  total borrowings from inception  through September
30,  2001 were $769  million.  The  equity  loan of $139  million  was repaid on
December  26, 1995.  As of September  30, 2001,  the  borrowings  included  $125
million from the 1994 Tax Exempt Bonds and all of the available  First  Mortgage
Bond proceeds. The First Mortgage Bonds have matured as follows:

`Series            Aggregate Principal Amount                           Date Matured and Paid
------            --------------------------                           ---------------------

A-1                      $4,397,000                                        June 15, 1996
A-2                       4,398,000                                        December 15, 1996
A-3                       4,850,000                                        June 15, 1997
A-4                       4,851,000                                        December 15, 1997
A-5                       5,132,000                                        June 15, 1998
A-6                       5,133,000                                        December 15, 1998
A-7                       4,998,000                                        June 15, 1999
A-8                       4,999,000                                        December 15, 1999**`

**Note the A-9 Series does not fully mature until December 15, 2010.

         

     The weighted  average interest rate paid by the Partnership on its debt for
the nine  months  ended  September  30,  2001 and 2000,  was 9.197% and  9.204%,
respectively.

         

     The Partnership,  pursuant to certain of the Project Contracts, is required
to post letters of credit,  which, in the aggregate,  will have a face amount of
no more than $65  million.  Certain of these  letters of credit have been issued
pursuant to a Letter of Credit and  Reimbursement  Agreement  with Credit Suisse
and the  remaining  letters of credit  will be issued  when  required  under the
Project Contracts,  subject to conditions contained in such Letter of Credit and
Reimbursement Agreement. As of September 30, 2001, no drawings have been made on
any of these letters of credit. The Letter of Credit and Reimbursement Agreement
has a term of seven years  subject to extension at the  discretion  of the banks
party thereto.  In September 2001, Credit Suisse notified the Partnership of its
intention not to extend the term of these agreements, which are due to expire in
the fourth  quarter of 2002.  The  Partnership  expects to obtain a  replacement
letter of credit provider before the current letters of credit expire.  In 1996,
Credit  Suisse  merged with First Boston and is now known as Credit Suisse First
Boston ("CSFB").

12

The  Partnership  entered into a debt service  reserve letter of credit and
reimbursement agreement,  dated as of November 1, 1994, with Banque Nationale de
Paris ("BNP")  pursuant to which a debt service  reserve letter of credit in the
amount of  approximately  $60 million was issued.  This  agreement has a rolling
term of five years,  subject to extension at the  discretion  of the banks party
thereto.  Drawings on the debt service reserve letter of credit became available
on the  Commercial  Operation Date of the Facility to pay principal and interest
on the First Mortgage Bonds, the 1994 Tax Exempt Bonds and interest on any loans
created by  drawings on such debt  service  reserve  letter of credit.  Cash and
other  investments held in the debt service reserve account will be drawn on for
the Tax Exempt Bonds prior to any drawings on the debt service reserve letter of
credit. As of September 30, 2001, no drawings have been made on the debt service
reserve  letter of credit.  In April 2000, BNP merged with Banque Paribas and is
now known as BNP Paribas.

         

     In order to  provide  for the  Partnership's  working  capital  needs,  the
Partnership  entered  into a Revolving  Credit  Agreement  with CSFB dated as of
November 1, 1994.  This Agreement has a term of seven years subject to extension
at the discretion of the banks party thereto. The revolving credit agreement has
a maximum available amount of $15 million and may be drawn on by the Partnership
from time to time. The interest rate is based upon various short-term indices at
the Partnership's option and is determined  separately for each draw. During the
nine months ended September 30, 2001,  working capital loans were made under the
working  capital  facility.  All working  capital loans were timely  repaid.  In
September 2001,  CSFB properly  notified the Partnership of its intention not to
extend the term of the  agreement,  which  expires on  November  22,  2001.  The
Partnership   is  actively   engaging  in  discussions   with  other   financial
institutions  to  obtain  another  working  capital  facility.  The  Partnership
believes  that it has  adequate  cashflow  from  operations  to timely  fund all
working capital  requirements even if no replacement working capital facility is
obtained.PART IIOTHER INFORMATIONItem 1   LEGAL PROCEEDINGSDispute with FPL

         

     On March 19, 1999,  the  Partnership  filed a complaint  against FPL in the
United States  District  Court for the Middle  District of Florida.  The lawsuit
stems from a course of action pursued by FPL beginning in the Spring of 1997, in
which FPL purported to exercise its dispatch and control  rights under the Power
Purchase Agreement in a manner which the Partnership believes violated the terms
of the power sales  agreement.  In its complaint,  the Partnership  charges that
such conduct was  deliberately  calculated to cause the Partnership to be unable
to meet the  requirements  to maintain  the  Facility's  status as a  Qualifying
Facility under the Public Utility Regulatory Policies Act of 1978.

13

The  complaint  alleges that FPL took the position  that if the Facility is
off-line for any reason,  then FPL is under no  obligation to allow the Facility
to reconnect to FPL's system. The original complaint asserted, however, that the
Partnership  specifically and successfully negotiated for a contractual right to
operate  the  Facility  up to 100 MW  ("Minimum  Load") in order to enable it to
cogenerate  sufficient steam to maintain its Qualifying  Facility status.  While
FPL has not disputed that the Partnership  may maintain  Minimum Load operations
if the  Facility  is  delivering  power when FPL  requests  the  Partnership  to
decommit  the  Facility,  the  complaint  states that FPL has  claimed  absolute
discretion  to deny the  Partnership  permission  to reconnect the Facility with
FPL's system.

         

     Since the loss of  Qualifying  Facility  status  may  result in an event of
default  under the Power  Purchase  Agreement,  the  Partnership  took action to
address this matter.

         

     The complaint  asserted  causes of action for (i) FPL's breach of the Power
Purchase  Agreement,  (ii) FPL's anticipatory  repudiation of the Power Purchase
Agreement,  (iii) breach of the implied covenant of good faith, fair dealing and
commercial  reasonableness  and (iv) a declaratory  judgment by the court of the
rights of the parties under the Power Purchase Agreement.  The Partnership seeks
(a) a declaratory  ruling that FPL's actions constitute a breach of the terms of
the Power Purchase  Agreement and that the Partnership has the absolute right to
operate  the  Facility at Minimum  Load  (except for reasons of safety or system
security)  at the  rates  provided  for in the  Power  Purchase  Agreement,  (b)
injunctive  relief  preventing  FPL from further  violating  the Power  Purchase
Agreement,  (c) compensatory  damages and (d) other relief as the court may deem
appropriate.

         

     On April  14,  1999,  FPL  filed a  responsive  pleading  to the  complaint
including a motion to dismiss two of the four  counts  raised in the  complaint,
raising  certain  affirmative  defenses  and  seeking  declaration  that FPL has
unfettered dispatch rights under the Power Purchase Agreement.  On the same day,
FPL also filed an answer to the counts that were not challenged in the motion to
dismiss.  On April 23,  1999,  FPL filed  answer to the  counts,  which were not
challenged in the motion to dismiss.  On May 13, 1999, the Partnership filed its
response to FPL's motion to dismiss and request for  declaratory  judgement.  On
May 18, 1999,  the Court denied  FPL's  Motion to Dismiss in its  entirety.  The
Partnership  filed an amended  complaint that was accepted on June 17, 1999. The
amended  complaint simply  consolidated the  Partnership's  claims for breach of
contract  and breach of the implied  obligation  of good faith and fair  dealing
which was, in part, in response to a recent federal court decision. FPL moved to
dismiss the entire amended  complaint and the  Partnership  filed its opposition
papers  August 2, 1999.  The Court  granted  FPL's  motion to dismiss  only with
respect to the first count of the  complaint.  The  Partnership  has amended its
complaint  on March  21,  2000 to  address  issues  raised  by the  Court in its
decision to dismiss this count.

This summary of the Partnership's complaint against FPL is qualified in its
entirety  by  the   complaint,   which  was  filed  with  the  court  in  docket
99-317-CIV-ORL-19C.  This summary does not, nor does it purport to,  include all
of the  material  statements  and  claims  made in the  complaint,  and has been
provided solely for the reader's convenience. This summary is not intended to be
relied upon for any purpose without reference to the complaint.

         

     On December 19, 2000, FPL and the  Partnership  participated in a mediation
conference with respect to the pending litigations described herein. As a result
of this conference,  FPL and the Partnership executed two Settlement  Agreements
intended to resolve all pending  litigation.  Only the Settlement  Agreement for
the pending  federal  court  litigation  requires  amendment  of the power sales
agreement.  The  amendment  must  be  approved  by the  Florida  Public  Service
Commission,  and certain  conditions  set forth in the  Indenture for the Bonds,
including confirmation of the Bonds' investment grade rating, must be met for it
to become effective.

         

     An outline of the  business  terms set forth in this  Settlement  Agreement
provides that if the Facility is off-line for any reason,  the Partnership shall
have the right,  upon up to 6 hours notice and subject only to safety and system
reliability  issues,  to reconnect to FPL's system and produce up to 100 MW. The
Settlement  Agreement  provides that if this occurs when FPL has decommitted the
Facility,  the Partnership will be paid FPL's actual "as available" energy rates
for the  first 360 of such  hours  each year (in this  context,  "as  available"
energy costs  reflect  actual energy  production  costs avoided by FPL resulting
from the production or purchase of energy from the Facility and other  sources).
If fewer than 360 hours are used in any year, FPL may carry the balance forward,
not to  exceed  a total of 1440  hours in any  year.  If the  hours  accumulated
exercising this reconnection right exceed FPL's balance, the Partnership will be
paid for energy  produced during those hours at the energy rates set forth under
the power sales agreement.

         

     Management of the Partnership  believes that this  resolution  provides the
Partnership with the flexibility it requires to maintain its Qualifying Facility
status without materially adversely affecting the Project.

         

     On May 17, 2001, the Partnership and FPL executed an amendment to the power
purchase  agreement  to  implement  the  Settlement  Agreement  relating  to the
litigation pending in federal court. The amendment was filed for approval by the
Florida Public Service Commission  ("FPSC") on June 7, 2001. At a public meeting
on July 24, 2001,  the FPSC voted to approve the  amendment.  On August 8, 2001,
the FPSC  issued  its  order on  Proposed  Agency  Action  ("PAA"),  in which it
proposed to approve the amendment.  To avoid the possibility  that the PAA could
be misinterpreted, on August 29, 2001 the Partnership filed a motion in which it
asked the FPSC to modify  certain  language of the PAA. To satisfy the technical
requirements  of FPSC  procedures,  within the 21 day protest period provided by
the PAA the  Partnership  also filed a Petition  on  Proposed  Agency  Action to
prevent the PAA from becoming final while the FPSC considered the  Partnership's
request.  On  October  11,  the FPSC  issued  an order in which it  granted  the
Partnership's request and clarified the PAA, thereby rendering the Partnership's
separate petition moot. At that time, the FPSC's action was subject to an appeal
period, which will expire on November 12, 2001. In addition,  the conditions set
forth in the Indenture for the Bonds have been met.

14

On December 12, 2000, FPL filed a complaint  against the Partnership in the
Circuit Court of the 19th Judicial  District in and for Martin County,  Florida.
In its  complaint,  FPL alleged  that the  Partnership  breached the power sales
agreement by failing to include certain  payments from its coal supplier and its
coal  transporter in the  Partnership's  calculation of its fuel costs which are
included in the  calculation  of the actual  energy  costs under the power sales
agreement.  The power sales agreement  requires a sharing of actual energy costs
between FPL and the  Partnership  to the extent the actual costs differ  (either
upward or  downward)  from a formula  contained  in the  agreement.  FPL  sought
unspecified  damages  and  declaratory  relief  including  a  finding  that  the
Partnership  breached  the power sales  agreement.  A Settlement  Agreement  was
executed on October 17, 2001,  which provides that the Partnership  will include
in future calculations of its fuel costs all costs, credits, rebates, discounts,
and  allowances/concessions  from all past,  current or future  vendors of fuel,
ash, lime, and fuel transportation. The Partnership will make a one time payment
of $1,289,579 to FPL in November,  2001,  which  constitutes a settlement of all
issues and claims with respect thereto, and permanently closes, FPL's audits for
calendar years 1996, 1997, 1998, 1999, and 2000.

         


Item 5  OTHER INFORMATIONCoal Supplier Bankruptcy

          

     Indiantown  Cogeneration,  L.P. (Partnership) has a coal purchase agreement
(the "Coal Purchase  Agreement")  with Lodestar  Energy,  Inc. (LEI) pursuant to
which LEI supplies  all of the coal for the  Partnership's  330  megawatt  (net)
pulverized coal-fired  cogeneration facility located in Indiantown,  Florida and
disposes of ash produced at that  facility.  Power produced from the facility is
sold to Florida Power and Light under a long-term power purchase agreement.

         

     As previously reported,  on April 27, 2001, an order for relief was entered
in the  Involuntary  Petition  under Chapter 11 of the United States  Bankruptcy
Code with respect to LEI and its parent,  Lodestar  Holdings Inc.  (LHI), in the
U.S. Bankruptcy Court in Lexington,  Kentucky. Since that time, LHI and LEI have
been operating  their business as "debtors in  possession."  On October 3, 2001,
LEI filed a motion with the Bankruptcy Court seeking to reject the Coal Purchase
Agreement.  With the  goal of  avoiding  rejection,  the  Partnership  continued
negotiating  with LEI to modify the Coal Purchase  Agreement.  LEI requested and
was granted a deferral of the scheduled hearing date for its motion.

         

     The Partnership and LEI have subsequently  agreed to and executed Amendment
No.  3  to  the  Coal  Purchase  Agreement   effective  October  16,  2001  (the
"Amendment"),  which is subject to satisfaction of two  conditions.  First,  the
Partnership  must satisfy by December 12, 2001 indenture  covenants that require
the  Partnership  to certify that the  Amendment is not  reasonably  expected to
have, or to materially  increase the  likelihood of a future,  material  adverse
effect (as defined in the indentures) and second, thereafter the U.S. Bankruptcy
Court must  approve  the  Amendment.  The  covenant  further  provides  that the
Independent Engineer (as defined in the indentures) must not, within thirty days
of receiving the  Partnership's  certificate  to that effect,  disagree with the
Partnership's certification.

         

     The  principal  change  effected  in the  Coal  Purchase  Agreement  by the
Amendment  is an increase  from $26.632 to $34.00 per ton in the base coal price
for coal delivered after October 16, 2001, with a 2% additional  increase in the
base  coal  price   effective   October  16,  2002.   The   transportation   and
administrative  fees the  Partnership is required to pay remain  unchanged,  but
will continue to be subject to  adjustment  in accordance  with the terms of the
Coal Purchase  Agreement.  The Amendment  also  includes  market price  reopener
provisions, beginning October 16, 2003. In the event that the parties are unable
to agree at that time on a new  contract  price  for coal and  price  adjustment
mechanism,  either party will have the right in its sole  discretion and for any
reason to  terminate  the Coal  Purchase  Agreement.  LEI is  obligated  to make
deliveries on a specified schedule that will build a 30 day stockpile of coal by
February 28, 2002.

17

The  Amendment  includes  provisions  that shorten  payment terms for LEI's
invoices and give the Partnership  greater  flexibility on the amount of ash the
Partnership is required to send to LEI for disposal. In addition,  the Amendment
allows LEI to grant to third  parties a mortgage  and  security  interest in its
coal reserves that is not  subordinated  to the  Partnership's  rights under the
Coal  Purchase  Agreement.  But  LEI is  required  to  certify  annually  to the
Partnership  that  LEI  owns  or  controls   adequate  reserves  to  meet  LEI's
obligations under the Coal Purchase Agreement.

         

     The Partnership  believes the changes  effected by the Amendment are in the
best interests of the Project, the Senior Secured Parties and the holders of the
Partnership's senior secured bonds. Accordingly, the Partnership intends to take
action promptly to satisfy the applicable  indenture  covenants and to cooperate
with LEI in obtaining the required bankruptcy court approval.

         

     Other than with respect to developments  that may have a material impact on
the  Partnership  or its  business  operations,  the  Partnership  is  under  no
obligation  nor  does it  intend  to  continuously  provide  updates  of the LEI
bankruptcy  proceedings.  However,  copies  of  all  pleadings  filed  with  the
Bankruptcy  Court are available  from the office of the clerk of the  Bankruptcy
Court.Governmental Approvals

         

     The  Partnership  has  obtained  all  material  environmental  permits  and
approvals  required,  as of September 30, 2001, in order to continue  commercial
operation of the Facility. Certain of these permits and approvals are subject to
periodic renewal.  Certain  additional permits and approvals will be required in
the future for the continued  operation of the Facility.  The Partnership is not
aware of any  technical  circumstances  that would  prevent the issuance of such
permits  and  approvals  or  the  renewal  of  currently  issued  permits.   The
Partnership  timely  filed its  application  for a Title V air permit on May 24,
1996. The permit was issued on October 11, 1999.

         

     On November 10, 2000 the  Partnership  submitted to the DEP an  application
for modifications to the Site Certificate.  The proposed modifications include a
requested increase of the groundwater withdrawal,  clarification of authority to
allow   emergency   water   withdrawals,   changes  to  groundwater   monitoring
requirements  and programs,  and changing the address of the facility.  On March
14, 2001 the DEP approved and issued a final order  modifying the  Conditions of
Certification  related to South Florida Management  District ("SFWMD") authority
to  authorize  withdrawals  of ground or surface  water and a  modification  for
storage  pond  elevation  changes.  The  remaining  modifications  to  the  Site
Certificate for additional  wells in the Upper  Floridian  Aquifer and to revise
groundwater and surface water monitoring are presently on hold.  Pending further
review and  approval of the well issues with  SFWMD,  these  modifications  will
remain inactive with the DEP.

         

     On October  16,  2001 the  Partnership  submitted  to the DEP a request for
modifications  to the Site  Certification.  The proposed  modification  requests
authorization  for  modifications to the Facility's  water withdrawal  system to
withdraw surface water from Taylor Creek (L-63N) when the elevation of the creek
is at or above 16.5 feet National  Geodetic  Vertical Datun.  This request would
allow the Facility to withdraw  water at a lower  elevation  than had previously
been permitted. This request is currently under review by DEP.Debt Service Reserve Account

         

     As permitted by the  Partnership's  financing  arrangements,  on August 19,
1998, the  Partnership  requested  that the balance in the Debt Service  Reserve
Account be reduced  to the Debt  Service  Reserve  Account  Required  Balance by
reducing the Debt Service  Reserve  Letter of Credit.  On January 11, 1999,  the
reduction  was  approved.  The Debt  Service  Reserve  Account now  contains the
$29,609,840  Debt  Service  Reserve  Letter of Credit  and  $12,501,000  of cash
(available only as a debt service reserve for the Tax Exempt Bonds).


Item 6   EXHIBITS AND REPORTS ON FORM 8-K
          
        a) Reports on Form 8-K:

`The Partnership  filed a current report on Form 8-K on April 16, 2001,
          announcing Lodestar's bankruptcy.

          The Partnership filed a current report on Form 8-K on October 9, 2001,
          announcing  Lodestars  decision  to  reject  the  coal  purchase
          agreement. This report was amended by a report on Form 8-K/A, filed on
          October 12, 2001.

          The  Partnership  filed a current  report on Form 8-K on  October  22,
          2001,  announcing  the deferral of the hearing on the motion to reject
          the coal purchase agreement.

          The  Partnership  filed a current  report on Form 8-K on  November  9,
          2001,  announcing  Amendment No. 3 to the Coal  Purchase  Agreement on
          November 2, 2001.`

Item 7 MARKET RISK INFORMATION

          

     The only  material  market  risk to which the  Partnership  is  exposed  is
interest  rate risk.  The  Partnership's  exposure to market risk for changes in
interest rates relates  primarily to the  opportunity  costs of long-term  fixed
rate  obligations in a falling  interest rate  environment.  No material changes
have occurred since the Report on Form 10-K was filed on March 30, 2001.

19

`SIGNATURE

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



                                              INDIANTOWN COGENERATION, L.P.
                                              (Co-Registrant)


Date:  November 14, 2001                      ________________________
                                              John R. Cooper
                                              Vice President and
                                              Chief Financial Officer


                                              INDIANTOWN COGENERATION FUNDING
                                              CORPORATION
                                              (Co-Registrant)


Date:  November 14, 2001                      ________________________
                                              John R. Cooper
                                              Vice President and
                                              Chief Financial Officer`