<PAGE>







                       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, 1999

                         Commission File Number 33-82034


                          INDIANTOWN 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 Floor
                          Bethesda, Maryland 20814-6161
              (Registrants' address of principal executive offices)


                                 (301)-718-6800
              (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


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                                 Keep this page!

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                          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, 1999
          (Unaudited) and December 31, 1998.................................1
        Consolidated Statements of Operations for the
          Nine Months Ended September 30, 1999
          (Unaudited) and September 30, 1998 (Unaudited)....................3
        Consolidated Statements of Cash Flows for the
          Nine Months Ended September 30, 1999
          (Unaudited) and September 30, 1998

          (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..................................................16

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

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

Signatures.................................................................21


<PAGE>

<TABLE>
<CAPTION>


                                     PART I
                              FINANCIAL INFORMATION

                          Indiantown Cogeneration, L.P.
                           Consolidated Balance Sheets
                 As of September 30, 1999 and December 31, 1998

<S>                                                                      <C>                        <C>
                                                                             September 30,                December 31,
                           ASSETS                                                 1999                        1998
--------------------------------------------------------------             -------------------        ---------------------
                                                                              (Unaudited)
CURRENT ASSETS:
     Cash and cash equivalents                                           $          1,739,648       $            2,419,089
     Accounts receivable-trade                                                     14,737,540                   12,369,594
     Inventories                                                                      226,043                      940,125
    Prepaids                                                                          926,878                      736,700
     Deposits                                                                          44,450                       44,000
    Investments held by Trustee, including restricted funds
        of $18,965,565 and $2,718,549, respectively                                27,604,266                    2,770,774
                                                                           -------------------        ---------------------
               Total current assets                                                45,278,825                   19,280,282

INVESTMENTS HELD BY TRUSTEE,
     restricted funds                                                              14,181,081                   14,001,428

DEPOSITS                                                                               75,000                       75,000

PROPERTY, PLANT & EQUIPMENT:
     Land                                                                           8,582,363                    8,582,363
     Electric and steam generating facilities                                     697,335,209                  695,929,380
     Less accumulated depreciation                                               (61,765,618)                 (50,323,285)
                                                                           -------------------       ---------------------
               Net property, plant & equipment                                    644,131,954                  654,188,458

FUEL RESERVE                                                                        1,062,458                    3,428,403

DEFERRED FINANCING COSTS, net of accumulated amortization of
    $43,647,347 and $43,020,796, respectively                                      16,539,569                   17,166,120
                                                                           -------------------        ---------------------

               Total assets                                                     $ 721,268,887                 $708,139,691
                                                                           ===================        =====================


</TABLE>

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

                                       1
<PAGE>


<TABLE>
<CAPTION>

                         Indiantown Cogeneration, L. P.
                           Consolidated Balance Sheets
                 As of September 30, 1999 and December 31, 1998


<S>                                                         <C>                        <C>


                                                                 September 30,            December 31, 1998
LIABILITIES AND PARTNERS' CAPITAL                                    1999
--------------------------------------------------------    ---------------------     ----------------------
                                                                 (Unaudited)
CURRENT LIABILITIES:
     Accrued payables/liabilities                          $          11,100,176      $           7,405,610
     Accrued interest                                                 15,992,035                  2,302,048
     Current portion - First Mortgage Bonds                           10,765,567                  9,997,000
     Current portion lease payable - railcars                            303,015                    287,048
                                                            ---------------------     ----------------------
               Total current liabilities                              38,160,793                 19,991,706

LONG TERM DEBT:
     First Mortgage Bonds                                            460,475,433                466,242,000
     Tax Exempt Facility Revenue Bonds                               125,010,000                125,010,000
     Lease payable - railcars                                          4,354,400                  4,583,699
                                                            ---------------------     ----------------------
               Total long term debt                                  589,839,833                595,835,699

      Reserve-Major Maintenance                                          818,341                    511,756
                                                            ---------------------     ----------------------
               Total liabilities                                     628,818,967                616,339,161
                                                            ---------------------     ----------------------

PARTNERS' CAPITAL:
    Toyan Enterprises                                                 27,781,202                 27,586,061
    Palm Power Corporation                                             9,244,991                  9,180,052
    TIFD III-Y, Inc.                                                     211,778                 36,720,212
     Indiantown Project Investment Partnership                        18,443,759                 18,314,205
    Thaleia                                                           36,768,190                          0
                                                            ---------------------     ----------------------
                                                            ---------------------     ----------------------
               Total partners' capital                                92,449,920                 91,800,530
                                                            ---------------------     ----------------------

               Total liabilities and partners'
               capital                                              $721,268,887               $708,139,691
                                                            =====================     ======================


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

</TABLE>
                                       2
<PAGE>
<TABLE>
<CAPTION>





                          Indiantown Cogeneration, L.P.
                      Consolidated Statements of Operations
       For the Nine Months Ended September 30, 1999 and September 30, 1998

<S>                                                          <C>

                                                                 Nine Months Ended             Nine Months Ended
                                                                 September 30, 1999            September 30, 1998
                                                              -------------------------     -------------------------
Operating Revenues:                                                 (Unaudited)                    (Unaudited)
     Electric capacity and capacity bonus revenue                      $92,722,266                   $92,577,872
     Electric energy revenue                                            28,992,289                    29,188,679
     Steam revenue                                                          93,420                       139,476
                                                                       -----------                   -----------
         Total operating revenues                                      121,807,975                   121,906,027
                                                                       -----------                   -----------

Cost of Sales:
     Fuel and ash                                                       29,428,041                    29,563,460
     Operating and maintenance                                          13,674,954                    13,370,864
     Depreciation                                                       11,458,853                    11,321,461
                                                                        ----------                    ----------
         Total cost of sales                                            54,561,848                    54,255,785
                                                                        ----------                    ----------

Gross Profit                                                            67,246,127                    67,650,242
                                                                        ----------                    ----------

Other Operating Expenses:
     General and administrative                                          3,185,472                     2,538,779
     Insurance and taxes                                                 4,871,790                     5,063,310
                                                                         ---------                     ---------
         Total other operating expenses                                  8,057,262                     7,602,089
                                                                         ---------                     ---------

Operating Income                                                        59,188,865                    60,048,153
                                                                        ----------                    ----------

Non-Operating Income (Expenses):
     Interest expense                                                 (43,158,654)                  (44,233,638)
     Interest/Other income                                               1,389,179                     1,817,987
                                                                         ---------                     ---------
         Net non-operating expense                                    (41,769,475)                  (42,415,651)
                                                                      ------------                  ------------

Net Income                                                             $17,419,390                   $17,632,502
                                                                       ===========                   ===========




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


</TABLE>

                                       3
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<TABLE>
<CAPTION>





             Indiantown Cogeneration, L.P.
         Consolidated Statements of Cash Flows
 For the Nine Months Ended September 30, 1999 and 1998

<S>                                                                      <C>                     <C>


                                                                            Nine Months               Nine Months
                                                                               Ended                     Ended
                                                                           September 30,             September 30,
                                                                               1999                      1998
                                                                        --------------------     ----------------------
                                                                            (Unaudited)               (Unaudited)

    CASH FLOWS FROM OPERATING ACTIVITIES:
         Net income                                                        $    17,419,390,      $          17,632,502
             Adjustments to reconcile net income to net
                Cash provided by operating activities:
                   Depreciation and amortization                                 12,068,885                 11,824,181
                   (Increase)Decrease in accounts receivable                    (2,367,946)                    748,670
                   Decrease (Increase) in inventories and fuel reserves           3,080,027                (1,021,404)
                   (Increase) Decrease in deposits and prepaids                   (190,628)                    564,014
                   Increase in accounts payable, accrued liabilities and         17,384,553                 16,434,130
                       accrued interest
                   Increase in major maintenance reserve                            306,585                    136,358
                   (Decrease) in lease payable                                    (213,332)                  (198,476)
                                                                          ------------------     ----------------------
                           Net cash provided by operating activities             47,487,534                 46,119,975
                                                                          ------------------     ----------------------

    CASH FLOWS FROM INVESTING ACTIVITIES:
            Purchase of property, plant & equipment                             (1,385,831)                (1,511,955)
            Increase in investment held by trustee                             (25,013,144)               (14,558,348)
                                                                          ------------------     ----------------------
                           Net cash used in investing activities               (26,398,975)               (16,070,303)
                                                                          ------------------     ----------------------

    CASH FLOWS FROM FINANCING ACTIVITIES:
            Payment of bonds                                                    (4,998,000)                (5,132,000)
            Capital distributions                                              (16,770,000)               (26,480,000)
                                                                          ------------------     ----------------------
                           Net cash used in financing activities               (21,768,000)               (31,612,000)
                                                                          ------------------     ----------------------

    CHANGE IN CASH AND CASH EQUIVALENTS                                           (679,441)                (1,562,328)
    CASH and CASH EQUIVALENTS, beginning of year                                  2,419,089                  3,234,379
                                                                          ------------------     ----------------------
    CASH and CASH EQUIVALENTS, end of period                              $       1,739,648      $           1,672,051
                                                                         ===================     ======================

</TABLE>

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

                                       4
<PAGE>





                          Indiantown Cogeneration, L.P.

                   Notes to Consolidated Financial Statements
                             As of September 30,1999
                                   (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.

        The  original  general  partners  were Toyan  Enterprises  ("Toyan"),  a
California corporation and a wholly-owned special purpose indirect subsidiary of
PG&E Generating  Company,  LLC 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.

        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 20.0% limited partnership  interest from TIFD and
TIFD's  membership  on the Board of  Control.  Thaleia  has  agreed,  subject to
certain conditions  precedent and certain termination rights of both Thaleia and
TIFD, to purchase TIFD's  remaining  limited partner interest in the Partnership
from TIFD.

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

                                       5

             As of           As of          As of         As of       As of
          September 20,    August 21,     October 20,    June 4,   September 20,
              1997           1998            1998         1999        1999
              ----           ----            ----         -----       ----
Toyan          50%          30.05%           30.05%       30.05%      30.05%
Palm           10%             10%             10%*          10%         10%
IPILP          --           19.95%**        19.95%**      19.95%      19.95%
TIFD           40%             40%             40%         20.1%         .1%
Thaleia        --              --              --          19.9%       39.9%

     * 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.

        The   changes   in   ownership   were  the   subject   of   notices   of
self-recertification of Qualifying Facility status filed by the Partnership with
the Federal Energy Regulatory  Commission on August 20, 1998, November 16, 1998,
June 4, 1999, and September 21, 1999.  Another filing will be made in connection
with the transfer of the final 0.1% interest.


        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  Generating  Company  ("PG&E Gen"),
formerly known as U.S.  Generating  Company,  pursuant to a Management  Services
Agreement  (the  "MSA").  The  Facility is operated by PG&E  Operating  Services
Company  ("PG&E  OSC"),  formerly  known  as U.S.  Operating  Services  Company,
pursuant to an Operation and Maintenance  Agreement (the "O&M Agreement").  PG&E
Gen and PG&E OSC are general  partnerships  originally formed between affiliates
of PG&E  Enterprises and Bechtel  Enterprises,  Inc. On September 19, 1997, PG&E
Gen and PG&E OSC each separately redeemed Bechtel Enterprises,  Inc.'s interests
in PG&E Gen and PG&E OSC so that PG&E  Generating  Company,  LLC now  indirectly
owns all of the  interests  in PG&E Gen and PG&E OSC.  This will not affect PG&E
Gen's  obligations  under  the  MSA or  PG&E  OSC's  obligations  under  the O&M
Agreement. Also on September 19, 1997, Toyan purchased 16.67% of Palm's interest
in the Partnership, which represents a 2% ownership in the Partnership.

        The Partnership was in the development  stage through  December 21, 1995
and  commenced  commercial  operations  on December  22,  1995 (the  "Commercial
Operation  Date").  The  original  partners  contributed,  pursuant to an equity
commitment  agreement,  approximately  $140,000,000  of equity  when  commercial
operation  of  the  Facility  commenced  in  December  1995.  The  Partnership's
continued  existence is dependent on the ability of the  Partnership  to sustain
successful operations.  Management of the Partnership is of the opinion that the
assets of the Partnership are realizable at their current carrying value.

                                       6
<PAGE>

2.      FINANCIAL STATEMENTS:


        The  consolidated  balance  sheets as of  September  30,  1999,  and the
consolidated  statements of operations  and cash flows for the nine months ended
September  30, 1999 and 1998,  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, 1999,  and the results of  operations  and cash flows for the nine
months ended September 30, 1999 and 1998.

        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, 1998.


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  approximately  $1.7
million 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.


3.  DEPOSITS:


        In 1991,  in  accordance  with a contract  between the  Partnership  and
Martin County, the Partnership provided Martin County with a security deposit in
the amount of  $149,357  to secure  installation  and  maintenance  of  required
landscaping  materials.  In January 1998, the  Partnership  received a refund of
funds  in  excess  of the  required  deposit  as  security  for the  first  year
maintenance  as set forth in the  contract  between the  Partnership  and Martin
County.  The remaining  deposit in the amount of $39,804 was included in current
assets in the  consolidated  balance sheet as of December 31, 1997.  These funds
were returned in September 1998 when the

                                       7
<PAGE>


Partnership  submitted a surety bond for the refund amount. In July 1999, Martin
County Growth Management  Environmental Division authorized release of the funds
securing the landscaping.

        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, 1999 and
December 31, 1998,  estimated  present  values of this deposit was $75,000.  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, 1999, the  Partnership  had  approximately  $644
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, 1999,  the  Partnership  had total  operating  revenues of
approximately $ 121.8 million, total operating costs of $62.6 million, and total
net interest expenses of approximately  $41.8 million resulting in net income of
approximately $17.4 million.


        The  Partnership  is engaged in litigation  with FPL, the  Partnership's
primary source of revenue. Under certain circumstances, an adverse ruling in the
litigation  could have a material adverse effect on the  Partnership's  business
and  financial  condition.  Please see Part I Item I, Legal  Proceedings,  for a
description of the  litigation,  and Part II, Item 5, Other  Information,  for a
description  of the  Partnership's  options  to  mitigate  the risk  posed by an
adverse ruling in such litigation.

Results of Operations


        For the nine months  ending  September  30, 1999 and 1998,  the Facility
achieved  an  average   Capacity   Billing   Factor  of  100.72%  and   101.21%,
respectively.  This resulted in earning monthly  capacity  payments  aggregating
$84.3  million and $84.2  million and bonuses  aggregating  $8.4 million for the
nine months  ended  September  30, 1999 and 1998.  The Capacity  Billing  Factor
measures the overall availability of the Facility, but gives a heavier weighting
to

                                       8

<PAGE>


on-peak  availability.  During the nine months ended  September  30,  1999,  the
Facility was dispatched by FPL and generated 1,248,743  megawatt-hours  compared
to 1,206,349 megawatt-hours during the same period in 1998. The increase was due
to higher oil and gas prices and an FPL unit  offline for  refueling  during the
third  quarter.  The  monthly  dispatch  rate for the first nine  months of 1999
ranged  from  18% to  88%,  as  compared  to a  range  of 35%  to  82%  for  the
corresponding period in 1998.

        Net  income  for  the  nine  months  ended   September  30,  1999,   was
approximately  $17.4 million compared to the net income of  approximately  $17.6
million  for the  corresponding  period  in the  prior  year.  The $0.2  million
decrease is primarily  attributable  to an increase in gas  consumption  of $0.3
million and to higher general and  administrative  and other  operating costs of
$0.5 million for addressing the Year 2000 system issues, for operations support,
and for legal fees for the FPL litigation.  This is offset by lower net interest
expense of $ 0.6 million.


Electric Energy Revenues


                                             For the nine months ended
                                   September 30, 1999       September 30, 1998
                                   ------------------       ------------------

Revenues                           $   121.8 million        $   121.9  million
KWhs                                   1,248.7                  1,206.3
Average Capacity Billing Factor        100.72%                  101.21%
Average Dispatch Rate                  60.88%                   57.27%

        For the nine months ended  September 30, 1999, the Partnership had total
operating revenues of approximately $121.8 million as compared to $121.9 million
for the  corresponding  period in the prior year.  The $0.1 million  decrease in
operating  revenue is primarily  due to lower energy  revenue  resulting  from a
decrease in unit energy costs per megawatt.

        Costs of revenues for the nine months  ended  September  30, 1999,  were
approximately  $54.6  million on sales of  1,248,743  MWhs as  compared to $54.3
million on sales of  1,206,349  MWhs for the  corresponding  period in the prior
year.  This  increase of $0.3 is a result of higher  dispatch  and  depreciation
offset by a decrease in ash  disposal  costs  resulting  from savings on the ash
disposal agreement.

        Total other  operating  expenses for the nine months ended September 30,
1999,  were  approximately  $8.1  million  compared to the $7.6 million of total
other  operating  expenses for the  corresponding  period in the prior year. The
$0.5 million  increase is due to higher general and  administrative  expenses to
address the year 2000 system issues, additional corporate support for operations
and legal expenses for the FPL litigation.

        Net interest  expense for the nine months ended  September  30, 1999, of
approximately  $41.8 million  compared to $42.4 million of net interest  expense
for the same period in the prior year. The $0.6 million decrease was caused by a
decrease  in interest  expense due to the  maturity of Series A-5 and A-6 of the
First  Mortgage  Bonds and from lower fees  resulting  from the reduction in the
debt service letter of credit.


                                       9
<PAGE>

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."

        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 1999
were $769  million.  The equity loan of $139  million was repaid on December 26,
1995. As of September 30, 1999,  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



                                       10
<PAGE>

The weighted  average  interest rate paid by the Partnership on its debt for the
nine  months  ended  September  30,  1999  and  1998,  was  9.177%  and  9.171%,
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, 1999, 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.

        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 pursuant to which a debt service reserve letter of credit in the amount of
approximately $60 million was issued.  Such 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, 1999, no drawings have been made on the debt service
reserve letter of credit.

        In order to provide for the  Partnership's  working  capital needs,  the
Partnership  entered into a Revolving  Credit Agreement with Credit Suisse dated
as of  November 1, 1994.  Such  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. As of September 30, 1999,  eleven working capital loans had been made
to the Partnership under the working capital loan facility.  All working capital
loans were repaid.

Year 2000

        The  Partnership  is,  with the  assistance  of PG&E  OSC and PG&E  Gen,
conducting a review of its computer  systems to identify,  test where necessary,
and remediate the systems that could be affected by the new millennium. The year
2000 may pose problems in software  applications  because many computer  systems
and applications currently use two-digit date fields to designate a year. As the
century date occurs,  date sensitive systems may recognize the year 2000 as 1900
or not at all. This potential  inability to recognize or properly treat the year
2000  may  cause  systems  to  process  financial  or  operational   information
incorrectly.  Management  has  inventoried  those  systems  which it  reasonably
believes may be adversely  affected and prioritized  them based on the extent of
any potential disruption in operations and the resulting potential impact on the
Partnership's ability to generate and deliver electricity or steam.

                                       11
<PAGE>

        To date, the Partnership has inventoried ninety-one potentially affected
systems,  of which  forty-eight  have  been  classified  as having  the  highest
priority  based  upon  likelihood  and extent of impact.  Among  these  priority
systems is the  Facility's  Distributed  Control  System  ("DCS"),  which is the
primary  computerized  control system for the Facility.  The manufacturer of the
Facility's   DCS  is   Westinghouse   Electric   Corporation   ("Westinghouse").
Westinghouse  visited  the  Facility  to  determine  what  remediation  would be
required for the DCS to be insulated from  disruptions  due to the year 2000 and
installed hardware and software code as required to address the year 2000 issue.
On October 17, 1998, the  Partnership  conducted a year 2000 test on the DCS by,
among other things,  manually  resetting the internal calendar to experience the
transition  from  December  31, 1999 to January 1, 2000.  The DCS  handled  this
simulated  transition with no significant  interruptions  in power production or
ordinary  operation.  Other systems that have been  remediated  include the HART
communicators and the Continuous Emissions  Monitoring System. In addition,  the
Partnership is utilizing a network test environment developed by the Partnership
with support from PG&E Gen to test other information  technology  systems.  This
testing is conducted on an integrated and unit basis. The integrated system test
is intended to replicate the Partnership's typical business processes.  The unit
tests supplement the integrated test to evaluate remaining  functions which were
not part of the integrated  test. The Partnership has either retired or upgraded
all of its computer servers and the computer for the Turbine Vibration  Analysis
System has been replaced. The telephone system was successfully tested.

        Through September 30, 1999, the Partnership spent approximately $460,000
on year 2000 related  projects.  The  Partnership  currently  estimates that the
completion of its year 2000 efforts will cost approximately  $472,000 (including
amounts spent to date),  encompassing  remediation  and replacement of equipment
(including  the DCS  described  above),  the  performance  of Facility  testing,
communication  with and evaluation of third party  readiness and the development
of required  contingency  plans.  This estimate is based solely upon information
currently  available to the Partnership  and may be revised as more  information
becomes  available.  The  Partnership  has no employees  and has been  utilizing
employees of PG&E Gen provided  pursuant to the MSA. Such costs are  principally
the related payroll costs for PG&E Gen employees and the costs of payments under
independent  consulting  contracts  by  PG&E  Gen,  which  are  charged  to  the
Partnership under the MSA.


        In  addition,  the  Partnership  recognizes  that it is  dependent  upon
numerous   third  parties  in  the  conduct  of  its  business.   A  significant
interruption in services or resources  provided by such third parties could have
material adverse financial consequences on the Partnership.  These third parties
include those  supplying fuel and other operating  supplies,  as well as FPL and
its  ability to continue to accept the output of the  Facility.  Therefore,  the
Partnership  has sent out 187  inquiries to vendors,  suppliers,  customers  and
other businesses seeking information on the status of such companies'  equipment
and  year  2000  remediation   efforts.  The  Partnership  believes  that  FPL's
preparedness  to perform  under the PPA is the most  important  status of any of
these parties.  The  Partnership  has sent FPL two inquiries with respect to its
year 2000 preparedness but has not yet received a response.  The Partnership has
also reviewed FPL's internet and securities  filings  disclosure on this matter,
which have been insufficient for the Partnership to evaluate FPL's readiness for
the  year  2000.  However,  FPL has  reported  to the  North  American  Electric
Reliability  Council  ("NERC") that it meets NERC's Year 2000 Ready criterion as
set forth in NERC's  report dated August 3, 1999. To date,  the other  responses
and  disclosures  from parties other than FPL have not  identified any year 2000
issues of which the  Partnership  had
                                       12
<PAGE>

been  unaware.  However,  the  responses  and  disclosures  have  also  not been
sufficient  to ensure  that there will be no  impacts  on the  Partnership  as a
result of the year 2000 affecting  parties doing business with the  Partnership.
To the extent that the Partnership is not able to gain such adequate assurances,
the Partnership is completing  contingency plans to mitigate the consequences of
potential disruptions.


        These contingency plans are also required because testing, by its nature
cannot comprehensively address all future combinations of dates and events. Some
uncertainty  will  remain  after  testing  as to the  ability of code to process
future  dates,  as well  as the  ability  of  remediated  systems  to work in an
integrated fashion with other systems. In addition,  until the year 2000 occurs,
no certainty  can be assured with respect to external  party  preparedness.  The
Partnership's  contingency  plans  will take into  account  the  possibility  of
multiple  system  failures,  both internal and  external,  due to the year 2000.
These  contingency  plans  will  build  upon  existing  emergency  and  business
restoration  plans.  Although no definitive  list of scenarios for this planning
has yet been  developed,  the events that the  Partnership  is  considering  for
planning purposes include  increased  frequency and duration of interruptions of
the power, computing,  financial and communications  infrastructure.  Due to the
speculative  nature  of  contingency  planning,  it  is  uncertain  whether  the
Partnership's  contingency  plans to  address  failure  of  external  parties or
internal  systems will be sufficient  to reduce the risk of material  impacts on
the  Partnership's  operations  due  to  year  2000  problems.  The  Partnership
completed risk assessment and contingency planning in the third quarter of 1999.


        The   Partnership  is  concerned   about  isolated   failures  of  FPL's
transmission system. FPL is important to the Partnership because it provides the
Partnership  with the  Partnership's  only access to the  electric  transmission
system.  Because FPL has provided  insufficient  responses to the  Partnership's
inquiries,  the  Partnership  is compelled to rely on FPL's report to NERC which
the Partnership cannot independently  verify.  However,  nothing has come to the
attention of the  Partnership  that would lead the  Partnership to conclude that
the  failures of FPL's  transmission  system are  reasonably  likely.  While the
Partnership's  revenues  will not be  adversely  affected by FPL's  inability to
accept the  Facility's  output,  it could be affected by lack of start-up  power
from FPL which would prevent the Partnership  from restarting the Facility after
an outage.  Therefore,  the Partnership has a contingency plan pursuant to which
it will rent a diesel  generator to enable the Facility to start without  regard
to the  availability  of power of FPL.  The only  reasonably  likely  worst case
scenario  identified by the Partnership is localized  telephone  problems due to
congestion. The Partnership's contingency plans call for availability of two-way
radios  as well as  additional  personnel  for  face to face  communication,  if
required.


        Notwithstanding the Partnership's efforts, management of the Partnership
is unable to determine whether or not, as a result of the year 2000, disruptions
will occur or whether such disruptions, if they do occur, will materially impair
the ability of the Partnership to conduct its business.





                                       13
<PAGE>

                                     PART II
                                OTHER INFORMATION

Item 1  LEGAL PROCEEDINGS


Dispute 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 since March 10, 1999, in which FPL
has  purported  to exercise  its  dispatch  and control  rights  under the Power
Purchase Agreement in a manner which the Partnership believes violates the terms
of the power sales  agreement.  In its complaint,  the Partnership  charges that
such conduct is 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.

        The  complaint  alleges  that FPL has  taken  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 complaint asserts,  however, that
the Partnership specifically and successfully negotiated for a contractual right
to operate  the  Facility  at 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.

        Because the loss of Qualifying Facility status may result in an event of
default under the Power Purchase Agreement,  the Partnership must take action to
address this matter.  The Partnership is investigating  various  alternatives to
mitigate its QF risk.
These are described under "QF Mitigation Options" in Item 5 below.

        The complaint asserts 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) Power Purchase  Agreement 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.

        Subsequent to the filing of the complaint,  FPL reconnected the Facility
to FPL's  system on  Sunday,  March 28,  1999.  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 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 which was accepted on June 17, 1999. The
amended  complaint simply  consolidated the  Partnership's  claims for breach of
contract

                                       14
<PAGE>

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 has moved to
dismiss the entire amended  complaint and the  Partnership  filed its opposition
papers an August 2, 1999.  The Court has also  ordered a mediation  session.  In
addition, a trial period has been established by the Court in April 2001.

        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.


Item 5  OTHER INFORMATION

QF Mitigation Options

         If the court rules against the  Partnership in the litigation with FPL,
the  Facility  could  lose its QF  status,  unless  the  Partnership  is able to
implement  mitigating  action.  Loss of QF  status  would  result in an event of
default  under the Power  Purchase  Agreement  and the  indenture for the Bonds.
Unless cured, such events of default would have a material adverse effect on the
Partnership's business, results of operation and financial condition.

        To  mitigate  the risk of a possible  adverse  ruling by the court,  the
Partnership  is analyzing  the  feasibility  of various  options.  The analyses,
several of which are only in the preliminary stage, include the following:

o    providing steam to Caulkins for refrigeration
o    constructing a liquid carbon dioxide production facility to which the
      Facility would supply steam
o    installing distilled water production equipment to which the Facility
      would supply steam
o    providing steam for a facility to dry chicken manure at a nearby farm for
      use as a fertilizer
o    providing steam to Caulkins to dry orange peels for use in cattle feed
o    providing steam to Caulkins for wash-water cooling
o    providing steam or chilled water for water temperature control at a nearby
      fish farm
o    constructing a cold storage food distribution center to which the Facility
     would supply chilled water
o    providing chilled water to a nearby chicken house for cooling
o    constructing a lumber kiln to dry wood using steam provided by the
      Facility
o    providing chilled water to a nearby flour mill for temperature control

     The options being analyzed are subject to further  analysis and completion.
This  includes  an  evaluation  as to whether  or not the steam  usage for these
alternatives  would  qualify for QF purposes and inclusion on this list does not
imply that an  affirmative  conclusion  on this matter has been  reached.  Other
options may be considered in addition to the foregoing.  Before the  Partnership
can  determine  whether or not to  implement  an option,  if any option is to be
implemented,  the  Partnership  needs to determine  each option's  feasibility -
whether  the option can  increase  steam  production  on a  schedule,  which may
include  regulatory  approval,  that would assure maintenance of QF status at an
acceptable cost to the Partnership. The Partnership may defer a decision whether
or

                                       15
<PAGE>

not to implement any option until a judgment is made in the litigation with FPL.
If any option is implemented,  the Partnership expects,  subject to the terms of
the  indenture  for the Bonds,  to finance such option with senior  secured debt
ranking pari passu with the Bonds.

     No assurance  can be given that the analysis  will be  completed,  that the
completion of the analysis will result in the implementation of any option, that
any option  under  consideration  or any other option will be  determined  to be
feasible or that,  even if one or more  options are  determined  to be feasible,
that  such  option(s)  will  be  implemented  or will  result  in  assuring  the
maintenance of QF status.

Governmental Approvals

     The  Partnership  has  obtained  all  material  environmental  permits  and
approvals  required,  as of September 30, 1999, 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.  A draft  permit was issued by the  Florida  Department  of  Environmental
Protection for comments by Federal Environmental  Protection Agency. The EPA has
responded with questions to which the  Partnership is preparing  answers.  Based
upon the  extent  of  EPA's  inquiries,  the  Partnership  does  not  anticipate
difficulties in obtaining a final Title V air permit.

Energy Prices

     In October 1999, FPL filed with the Florida  Public Service  Commission its
projections for its 1997-1999 "as available" energy costs (in this context,  "as
available"  energy costs reflect actual energy  production  costs avoided by FPL
resulting  from the purchase of energy from the  Facility  and other  Qualifying
Facilities). The projections filed by FPL are lower for certain periods than the
energy prices  specified in the Power  Purchase  Agreement  for energy  actually
delivered by the Facility.  At other times,  the  projections  exceed the energy
prices  specified in the Power Purchase  Agreement.  Should FPL's "as available"
energy cost projections  prove to reflect actual rates, FPL may elect,  pursuant
to its  dispatch  and control  rights over the  Facility  set forth in the Power
Purchase  Agreement,  to run the Facility less frequently or at lower loads than
if the Facility's energy prices were lower than the cost of other energy sources
available to FPL. Because capacity  payments under the Power Purchase  Agreement
are not affected by FPL's dispatch of the Facility and because capacity payments
are expected by the Partnership to cover all of the  Partnership's  fixed costs,
including debt service,  the  Partnership  currently  expects that, if the filed
projections prove to reflect actual rates, such rates and the resulting dispatch
of the Facility  will not have a material  adverse  effect on the  Partnership's
ability to service its debt.  To the extent the  Facility is not operated by FPL
during Caulkins' processing season (November to June), the Partnership may elect
to run the  Facility  at a  minimum  load  or shut  down  the  Facility  and run
auxiliary  boilers to produce steam for Caulkins in amounts  required  under the
Partnership's  steam  agreement  with  Caulkins.  The  Partnership  has  filed a
complaint  against FPL with respect to the  interpretation of a provision of the
Power   Purchase   Agreement   related  to  this   matter.   Please  see  "Legal
Proceedings"above.  Such operations may result in decreased net operating income
for such periods. The Partnership expects that the decrease, if any, will not be
material.  For the nine months ended  September  30,  1999,  FPL  requested  the
Partnership  to  decommit  the  Facility  numerous  times  and  the  Partnership
typically  exercised  its rights to operate at minimum load (100MW)  during such
decommit requests. The Partnership's election to operate at minimum load has not
had a material  impact on the  Partnership

                                       16
<PAGE>


or its financial  condition  although energy delivered during such operations is
sold at reduced prices.  Based upon FPL's projections,  the Partnership does not
expect  that,  if the filed  projections  prove to  reflect  actual  rates,  its
dispatch  rate  will  change  materially  during  the  period  covered  by  such
projections.

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  $12,500,000  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 Reports on Form 8-K on March 22, March 29,
               June 11, and September 21, 1999  regarding the FPL litigation and
               changes in ownership.

        b) Exhibits:

               Exhibit 27 - Financial Data Schedule (electronic filing only)









                                       17



<PAGE>




                                    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 15, 1999                        ________________________
                                                John R. Cooper
                                                Vice President and
                                                Chief Financial Officer


                                                INDIANTOWN COGENERATION FUNDING
                                                CORPORATION
                                                (Co-Registrant)


Date:  November 15, 1999                        ________________________
                                                John R. Cooper
                                                Vice President and
                                                Chief Financial Officer







<PAGE>