##### 



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 March 31, 2003

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)  |  |                                        

7600 Wisconsin Avenue(Mailing Address: 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

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act) [   ] Yes    [ X ] No





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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 March 31, 2003 (Unaudited) and |                                                            |    |          |   
|                              |                                                                  | December 31, 2002                                          |    |          | 1  | 
|                              | Consolidated Statements of Operations for the Three Months Ended |                                                            |    |          |   
|                              |                                                                  | March 31, 2003 (Unaudited) and March 31, 2002 (Unaudited)  |    |          | 3  | 
|                              | Consolidated Statements of Cash Flows for the Three Months Ended |                                                            |    |          |   
|                              |                                                                  | March 31, 2003 (Unaudited) and March 31, 2002 (Unaudited)  |    |          | 4  | 
|                              | Notes to Consolidated Financial Statements (Unaudited)           |                                                            |    | 5        |   
|                              |                                                                  |                                                            |    |          |    |  |  | 
|Item 2                        |                                                                  | Management's Discussion and Analysis of Financial          |    |          |    | 
|                              |                                                                  | Condition and Results of Operations                        |    |          | 9  | 
|                              |                                                                  |                                                            |    |          |    |  |  | 
|Item 3                        |                                                                  | Qualitative and Quantitative Disclosures About Market Risk |    |          | 18 | 
|                              |                                                                  |                                                            |    |          |    |  |  | 
|Item 4                        |                                                                  | Controls and Procedures                                    |    |          | 18 | 
|                              |                                                                  |                                                            |    |          |    |  |  | 
|PART II                       |                                                                  | OTHER INFORMATION                                          |    |          |    | 
|                              |                                                                  |                                                            |    |          |    |  |  | 
|Item 5                        |                                                                  | Other Information                                          |    |          | 18 | 
|                              |                                                                  |                                                            |    |          |    |  |  | 
|Item 6                        |                                                                  | Exhibits and Reports on Form 8K                            |    |          | 21 | 
|                              |                                                                  |                                                            |    |          |    |  |  | 
|Signatures and Certifications |                                                                  |                                                            | 22 |         





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##### 



PART I
FINANCIAL INFORMATION

Indiantown Cogeneration, L.P. and Subsidiary
Consolidated Balance SheetsAs of March 31, 2003 and December 31, 2002

|                                                                                                       |                                                                                                     |                      |             |             |             |              |             |            |             | 
|------------------------------------------------------------------------------------------------------ | --------------------------------------------------------------------------------------------------- | -------------------- | ----------- | ----------- | ----------- | ------------ | ----------- | ---------- | ----------- | 
|                                                                                                       |                                                                                                     |                      |             | March 31,   |             | December 31,
|ASSETS                                                                                                 |                                                                                                     | 2003                 |             | 2002       
|                                                                                                       |                                                                                                     |                      |             |            
|                                                                                                       |                                                                                                     |                      |             | (Unaudited) |             |              |             |           
|CURRENT ASSETS:                                                                                        |                                                                                                     |                      |             |             |             |              |             |           
|                                                                                                       | Cash and cash equivalents                                                                           |                      | $           | 278,713     |             |              | $           | 289,738    |            
|                                                                                                       | Restricted cash                                                                                     |                      |             | 1,700,000   |             |              |             | 1,700,000  |            
|                                                                                                       | Accounts receivable-trade                                                                           |                      |             | 16,581,628  |             |              |             | 17,512,867 |            
|                                                                                                       | Inventories                                                                                         |                      |             | 1,018,436   |             |              |             | 740,981    |            
|                                                                                                       | Prepaids                                                                                            |                      |             | 645,955     |             |              |             | 927,771    |            
|                                                                                                       | Deposits                                                                                            |                      |             | 64,500      |             |              |             | 44,000     |            
|                                                                                                       | Investments held by Trustee, including
restricted funds of $22,033,315 and
$5,568,725, respectively |                      |             | 31,536,339  |             |              |             | 14,913,265 |            
|                                                                                                       |                                                                                                     |                      |             |             |             |              |             |           
|                                                                                                       |                                                                                                     | Total current assets |             |             | 51,825,571  |              |             |            | 36,128,622  | 
|                                                                                                       |                                                                                                     |                      |             |             |             |              |             |           
|                                                                                                       |                                                                                                     |                      |             |             |             |              |             |            |             | 
|INVESTMENTS HELD BY TRUSTEE,
restricted funds                                                          |                                                                                                     |                      | 26,004,529  |             |             |              | 26,001,000  |           
|                                                                                                       |                                                                                                     |                      |             |             |             |              |             |            |             | 
|DEPOSITS                                                                                               |                                                                                                     |                      | 188,561     |             |             |              | 185,069     |           
|                                                                                                       |                                                                                                     |                      |             |             |             |              |             |            |             | 
|NET PROPERTY, PLANT & EQUIPMENT                                                                        |                                                                                                     |                      | 596,181,671 |             |             |              | 599,925,139 |           
|                                                                                                       |                                                                                                     |                      |             |             |             |              |             |            |             | 
|FUEL RESERVE                                                                                           |                                                                                                     |                      | 5,219,527   |             |             |              | 3,565,050   |           
|                                                                                                       |                                                                                                     |                      |             |             |             |              |             |            |             | 
|DEFERRED FINANCING COSTS, net of
accumulated amortization of $46,729,261 and
$46,497,413, respectively |                                                                                                     |                      | 13,457,655  |             |             |              | 13,689,503  |           
|                                                                                                       |                                                                                                     |                      |             |             |             |              |             |           
|                                                                                                       |                                                                                                     |                      |             |             |             |              |             |            |             | 
|                                                                                                       |                                                                                                     | Total assets         |             | $           | 692,877,514 |              |             | $          | 679,494,383 | 
|                                                                                                       |                                                                                                     |                      |             |             |             |              |             |           

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

1



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##### 



Indiantown Cogeneration, L. P. and Subsidiary
Consolidated Balance SheetsAs of March 31, 2003 and December 31, 2002

|                                  |                   |                   |                                           |                                         |            |             |             |              |            |             |             | 
|--------------------------------- | ----------------- | ----------------- | ----------------------------------------- | --------------------------------------- | ---------- | ----------- | ----------- | ------------ | ---------- | ----------- | ----------- | 
|                                  |                   |                   |                                           |                                         |            | March 31,   |             | December 31,
|LIABILITIES AND PARTNERS' CAPITAL |                   | 2003              |                                           | 2002                                   
|                                  |                   |                   |                                           |                                        
|                                  |                   |                   |                                           |                                         |            | (Unaudited) |             |              |            |            
|CURRENT LIABILITIES:              |                   |                   |                                           |                                         |            |             |             |             
|                                  |                   |                   | Accounts payable and accrued liabilities  |                                         | $          | 8,554,037   |             |              | $          | 12,611,828  |            
|                                  |                   |                   | Accrued interest                          |                                         |            | 15,174,295  |             |              |            | 2,321,651   |            
|                                  |                   |                   | Current portion  First Mortgage Bonds    |                                         |            | 14,566,087  |             |              |            | 14,566,087  |            
|                                  |                   |                   | Current portion lease payable  railcars  |                                         |            | 390,108     |             |              |            | 383,131     |            
|                                  |                   |                   | Current portion of term loans             |                                         |            | 1,431,607   |             |              |            | 1,431,607   |            
|                                  |                   |                   |                                           |                                         |            |             |             |             
|                                  |                   |                   |                                           | Total current liabilities               |            |             | 40,116,134  |              |            |             | 31,314,304  | 
|                                  |                   |                   |                                           |                                         |            |             |             |             
|LONG TERM DEBT:                   |                   |                   |                                           |                                         |            |             |             |             
|                                  |                   |                   | First Mortgage Bonds                      |                                         |            | 417,541,475 |             |              |            | 417,541,475 |            
|                                  |                   |                   | Tax Exempt Facility Revenue Bonds         |                                         |            | 125,010,000 |             |              |            | 125,010,000 |            
|                                  |                   |                   | Lease payable  railcars                  |                                         |            | 3,103,774   |             |              |            | 3,203,957   |            
|                                  |                   |                   | Term loans                                |                                         |            | 10,162,581  |             |              |            | 10,162,581  |            
|                                  |                   |                   |                                           |                                         |            |             |             |             
|                                  |                   |                   |                                           | Total long term debt                    |            |             | 555,817,830 |              |            |             | 555,918,013 | 
|OTHER LONG TERM LIABILITIES       |                   |                   | 85,901                                    |                                         |            |             |            |             
|                                  |                   |                   |                                           | Total liabilities                       |            |             | 596,019,865 |              |            |             | 587,232,317 | 
|                                  |                   |                   |                                           |                                         |            |             |             |             
|PARTNERS CAPITAL:                |                   |                   |                                           |                                         |            |             |             |             
|                                  | General Partners: |                   |                                           |                                         |            |             |             |              |           
|                                  |                   |                   | Palm Power Corporation                    |                                         |            | 9,685,764   |             |              |            | 9,226,206   |            
|                                  |                   |                   | Indiantown Project Investment Partnership |                                         |            | 19,323,101  |             |              |            | 18,406,281  |            
|                                  | Limited Partners: |                   |                                           |                                         |            |             |             |              |           
|                                  |                   | Toyan Enterprises |                                           |                                         | 29,105,725 |             |             |              | 27,724,753 |            
|                                  |                   | Thaleia, LLC      |                                           |                                         | 38,743,059 |             |             |              | 36,904,826 |            
|                                  |                   |                   |                                           |                                         |            |             |             |             
|                                  |                   |                   |                                           | Total partners capital                 |            |             | 96,857,649  |              |            |             | 92,262,066  | 
|                                  |                   |                   |                                           |                                         |            |             |             |             
|                                  |                   |                   |                                           | Total liabilities and partners capital |            | $           | 692,877,514 |              |            | $           | 679,494,383 | 
|                                  |                   |                   |                                           |                                         |            |             |             |             

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

2



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##### 



Indiantown Cogeneration, L.P. and Subsidiary
Consolidated Statements of OperationsFor the Three Months Ended March 31, 2003 and March 31, 2002

|                                                                                     |                                              |                                |            |                |             |                |            |             |             |  
|------------------------------------------------------------------------------------ | -------------------------------------------- | ------------------------------ | ---------- | -------------- | ----------- | -------------- | ---------- | ----------- | ----------- | -
|                                                                                     |                                              |                                |            | Three Months   |             | Three Months  
|                                                                                     |                                              |                                |            | Ended          |             | Ended         
|                                                                                     |                                              |                                |            | March 31, 2003 |             | March 31, 2002
|                                                                                     |                                              |                                |            |                |             |               
|Operating Revenues:                                                                  |                                              | (Unaudited)                    |            | (Unaudited)   
|                                                                                     | Electric capacity and capacity
bonus revenue |                                | $          | 31,194,232     |             |                | $          | 28,343,076  |            
|                                                                                     | Electric energy revenue                      |                                |            | 13,588,359     |             |                |            | 13,888,554  |            
|                                                                                     | Steam revenue                                |                                |            | 69,090         |             |                |            | 85,412      |            
|                                                                                     |                                              |                                |            |                |             |                |            |            
|                                                                                     |                                              | Total operating revenues       |            |                | 44,851,681  |                |            |             | 42,317,042  |  
|                                                                                     |                                              |                                |            |                |             |                |            |            
|Cost of Sales:                                                                       |                                              |                                |            |                |             |                |            |            
|                                                                                     | Fuel and ash                                 |                                |            | 16,874,251     |             |                |            | 17,059,864  |            
|                                                                                     | Operating and maintenance                    |                                |            | 3,641,371      |             |                |            | 3,710,050   |            
|                                                                                     | Depreciation                                 |                                |            | 3,796,770      |             |                |            | 3,803,271   |            
|                                                                                     |                                              |                                |            |                |             |                |            |            
|                                                                                     |                                              | Total cost of sales            |            |                | 24,312,392  |                |            |             | 24,573,185  |  
|                                                                                     |                                              |                                |            |                |             |                |            |            
|Gross Profit                                                                         |                                              |                                | 20,539,289 |                |             |                | 17,743,857 |            
|                                                                                     |                                              |                                |            |                |             |                |            |            
|Other Operating Expenses:                                                            |                                              |                                |            |                |             |                |            |            
|                                                                                     | General and administrative                   |                                |            | 1,054,867      |             |                |            | 760,143     |            
|                                                                                     | Insurance and taxes                          |                                |            | 1,601,021      |             |                |            | 1,720,778   |            
|                                                                                     |                                              |                                |            |                |             |                |            |            
|                                                                                     |                                              | Total other operating expenses |            |                | 2,655,888   |                |            |             | 2,480,921   |  
|                                                                                     |                                              |                                |            |                |             |                |            |            
|Operating Income                                                                     |                                              |                                | 17,883,401 |                |             |                | 15,262,936 |            
|                                                                                     |                                              |                                |            |                |             |                |            |            
|Non-Operating Income (Expenses):                                                     |                                              |                                |            |                |             |                |            |            
|                                                                                     | Interest expense                             |                                |            | (13,467,785    | )           |                |            | (13,669,241 | )          
|                                                                                     | Interest/Other income (expense)              |                                |            | 228,930        |             |                |            | 275,386     |            
|                                                                                     |                                              |                                |            |                |             |                |            |            
|                                                                                     |                                              | Net non-operating expense      |            |                | (13,238,855 | )              |            |             | (13,393,855 | )
|                                                                                     |                                              |                                |            |                |             |                |            |            
|Income before cumulative effect of change
in accounting principle                    |                                              |                                | 4,644,546  |                |             |                | 1,869,081  |            
|                                                                                     |                                              |                                |            |                |             |                |            |             |             |  
|Cumulative effect of change in accounting
principle for asset retirement
obligations |                                              |                                | (48,963    | )              |             |                |           |            
|                                                                                     |                                              |                                |            |                |             |                |            |            
|Net Income                                                                           |                                              | $                              | 4,595,583  |                |             | $              | 1,869,081  |            
|                                                                                     |                                              |                                |            |                |             |                |            |            

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

3



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##### 



Indiantown Cogeneration, L.P. and Subsidiary
Consolidated Statements of Cash FlowsFor the Three Months Ended March 31, 2003 and 2002

|                                             |            |                                                                                   |                                                                        |                                           |             |              |             |              |             |            |             |  
|-------------------------------------------- | ---------- | --------------------------------------------------------------------------------- | ---------------------------------------------------------------------- | ----------------------------------------- | ----------- | ------------ | ----------- | ------------ | ----------- | ---------- | ----------- | -
|                                             |            |                                                                                   |                                                                        |                                           |             | Three Months |             | Three Months
|                                             |            |                                                                                   |                                                                        |                                           |             | Ended        |             | Ended       
|                                             |            |                                                                                   |                                                                        |                                           |             | March 31,    |             | March 31,   
|                                             |            |                                                                                   |                                                                        |                                           |             | 2003         |             | 2002        
|                                             |            |                                                                                   |                                                                        |                                           |             |              |             |             
|                                             |            |                                                                                   |                                                                        |                                           |             | (Unaudited)  |             | (Unaudited) 
|CASH FLOWS FROM OPERATING ACTIVITIES:        |            |                                                                                   |                                                                        |                                           |             |              |             |             
|                                             | Net income |                                                                                   | $                                                                      | 4,595,583                                 |             |              | $           | 1,869,081    |            
|                                             |            | Adjustments to reconcile net income to net
cash provided by operating activities: |                                                                        |                                           |             |              |             |              |             |           
|                                             |            |                                                                                   | Cumulative effect of a change in accounting
principle                  |                                           |             | 48,963       |             |              |             |           |            
|                                             |            |                                                                                   | Depreciation, amortization and accretion                               |                                           |             | 4,030,670    |             |              |             | 4,009,320  |            
|                                             |            |                                                                                   | Decrease in accounts receivable                                        |                                           |             | 931,239      |             |              |             | 3,825      |            
|                                             |            |                                                                                   | Increase in inventories and fuel reserves                              |                                           |             | (1,931,931   | )           |              |             | (2,139,022 | )          
|                                             |            |                                                                                   | Decrease (increase) in deposits and prepaids                           |                                           |             | 261,315      |             |              |             | (1,790     | )          
|                                             |            |                                                                                   | Increase in accounts payable, accrued
liabilities and accrued interest |                                           |             | 8,794,853    |             |              |             | 8,880,327  |            
|                                             |            |                                                                                   |                                                                        |                                           |             |              |             |             
|                                             |            |                                                                                   |                                                                        | Net cash provided by operating activities |             |              | 16,730,692  |              |             |            | 12,621,741  |  
|                                             |            |                                                                                   |                                                                        |                                           |             |              |             |             
|CASH FLOWS FROM INVESTING ACTIVITIES:        |            |                                                                                   |                                                                        |                                           |             |              |             |             
|                                             |            | Purchase of property, plant & equipment                                           |                                                                        |                                           | (21,907     | )            |             |              | (43,700     | )         
|                                             |            | Increase in investment held by trustee                                            |                                                                        |                                           | (16,626,604 | )            |             |              | (12,498,965 | )         
|                                             |            |                                                                                   |                                                                        |                                           |             |              |             |             
|                                             |            |                                                                                   |                                                                        | Net cash used in investing activities     |             |              | (16,648,511 | )            |             |            | (12,542,665 | )
|                                             |            |                                                                                   |                                                                        |                                           |             |              |             |             
|CASH FLOWS FROM FINANCING ACTIVITIES:        |            |                                                                                   |                                                                        |                                           |             |              |             |             
|                                             |            | Decrease in lease payable                                                         |                                                                        |                                           | (93,206     | )            |             |              | (86,370     | )         
|                                             |            |                                                                                   |                                                                        |                                           |             |              |             |             
|                                             |            |                                                                                   |                                                                        | Net cash used in financing activities     |             |              | (93,206     | )            |             |            | (86,370     | )
|                                             |            |                                                                                   |                                                                        |                                           |             |              |             |             
|CHANGE IN CASH AND CASH EQUIVALENTS          |            |                                                                                   | (11,025                                                                | )                                         |             |              | (7,294      | )           
|CASH and CASH EQUIVALENTS, beginning of year |            |                                                                                   | 289,738                                                                |                                           |             |              | 331,956     |             
|                                             |            |                                                                                   |                                                                        |                                           |             |              |             |             
|CASH and CASH EQUIVALENTS, end of period     |            | $                                                                                 | 278,713                                                                |                                           |             | $            | 324,662     |             
|                                             |            |                                                                                   |                                                                        |                                           |             |              |             |             

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

4



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Indiantown Cogeneration, L.P. and Subsidiary
Notes to Consolidated Financial Statements
As of March 31, 2003
(Unaudited)



|1. |  | ORGANIZATION AND BASIS OF PRESENTATION:
|-- |  | ---------------------------------------

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, own 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 Louis Dreyfus Citrus, Inc. (LDC), successor to Caulkins
Indiantown Citrus Co.

The accompanying unaudited consolidated financial statements have been
prepared in accordance with the instructions to Form 10-Q and do not include
all the information and notes required by accounting principles generally
accepted in the United States for complete statements. Management believes
that the accompanying unaudited consolidated financial statements, which have
been prepared in accordance with interim reporting requirements, reflect all
adjustments that are necessary to present a fair statement of the consolidated
financial position and results of operations for the interim periods for
Indiantown Cogeneration, L.P. and Indiantown Cogeneration Funding Corporation.
All material adjustments are of a normal recurring nature unless otherwise
disclosed in this report on Form 10-Q. Results of operations for interim
periods are not necessarily indicative of results to be expected for a full
year.

This quarterly report should be read in conjunction with the Partnerships
consolidated financial statements and notes to consolidated financial
statements included in its 2002 Annual Report on Form 10-K and its other
reports filed with the Securities and Exchange Commission (SEC) since the
2002 Annual Report on Form 10-K was filed.



|2. |  | RELATIONSHIP WITH PG&E CORPORATION AND PG&E NATIONAL ENERGY GROUP, INC:
|-- |  | -----------------------------------------------------------------------

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.

In December 2000, and in January and February 2001, PG&E Corporation and
NEG, Inc. completed a corporate restructuring that involved the use or creation
of limited liability companies (LLCs) as intermediate owners between a parent
company and its subsidiaries. One of these LLCs is PG&E National Energy Group,
LLC, which owns 100% of the stock of NEG.

5



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##### 



On April 6, 2001, Pacific Gas and Electric Company (the Utility),
another subsidiary of PG&E Corporation, filed a voluntary petition for relief
under the provisions of Chapter 11 of the U.S. Bankruptcy Code. Pursuant to
Chapter 11 of the U.S. Bankruptcy Code, the Utility retains control of its
assets and is authorized to operate its business as a debtor-in-possession
while being subject to the jurisdiction of the Bankruptcy Court. The Utility
and PG&E Corporation jointly filed a plan of reorganization that entails
separating the Utility into four distinct businesses. The plan of
reorganization does not directly affect NEG, Inc. or any of its subsidiaries.
NEG Inc.s management 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 in any insolvency or
bankruptcy proceeding involving PG&E Corporation or the Utility.

As result of the sustained downturn in the power industry, NEG, Inc. and
certain of its consolidated affiliates have experienced a financial downturn
which caused the major credit rating agencies to downgrade NEG, Inc. and
certain of its consolidated affiliates credit ratings to below investment
grade. The credit rating agency action has had no material impact on the
financial condition or results of operations of the Partnership.

On October 8, 2002, Moodys stated that in conjunction with the downgrade
of NEG, Inc. it had placed the Partnerships debt under review for possible
downgrade. On October 15, 2002, S&P stated that the recent downgrade of NEG,
Inc. will not have an effect on the rating of the Partnerships debt at this
time. S&Ps rating of the Partnerships debt is BBB-. On November 5, 2002,
Moodys issued an opinion update changing the rating outlook of the
Partnerships debt to under review for possible downgrade from negative
outlook. Moodys rating of the Partnerships debt is Baa3. On December 12,
2002, Fitch Ratings removed the Rating Watch Negative from its BBB- rating
on the Partnerships debt for the satisfactory completion of the permanent
generator repairs during the 2002 scheduled fall outage. There are no minimum
credit rating requirements in the Partnerships financing agreements.

NEG, Inc. and certain affiliates, excluding Toyan and IPILP, are currently
in default under various debt agreements and guaranteed equity commitments.
NEG, Inc., its subsidiaries and their lenders have been engaged in
discussions to restructure NEG, Inc.s and its
subsidiaries debt obligations and other commitments since
October 2002. No agreement has been reached yet and there can be no
assurance that an agreement will be reached. Any restructuring
agreement that may be reached would be implemented through a
reorganization proceeding under Chapter 11 of the U.S. Bankruptcy
Code. The Partnership is not a party to such debt agreements and guaranteed
equity commitments or participants in such discussions.

Although NEG, Inc., and its subsidiaries are continuing their efforts to
maximize cash and reduce liabilities, such efforts are not expected to restore
the financial condition of NEG, Inc. and its subsidiaries. Absent a negotiated
agreement, the lenders may exercise their default remedies or force NEG, Inc.
and certain of its subsidiaries into an involuntary proceeding under the U.S.
Bankruptcy Code. Notwithstanding the status of current negotiations, NEG, Inc.
and certain of its subsidiaries also may elect to voluntarily seek protection
under the U.S. Bankruptcy Code as early as the second quarter 2003.

6



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NEG, Inc. owns an indirect interest in the Partnership, and through its
wholly owned subsidiaries NEG and PG&E OSC manages and operates the Project.
The Partnership cannot be certain that an insolvency or bankruptcy involving
NEG, Inc. or any of its subsidiaries would not affect NEG Inc.s ownership
arrangement with respect to the Partnership or the ability of NEG and PG&E OSC
to manage and operate the Project.



|3. |  | SIGNIFICANT ACCOUNTING POLICIES:
|-- |  | --------------------------------

Except as disclosed, the Partnership is following the same accounting
principles discussed in the Partnerships December 31, 2002 Annual Report on
Form 10-K.

Adoption of New Accounting Pronouncements

On January 1, 2003, the Partnership adopted Statement of Financial
Accounting Standards (SFAS) No. 143, Accounting for Asset Retirement
Obligations. SFAS No. 143 provides accounting requirements for costs
associated with legal obligations to retire tangible, long-lived assets. The
statement requires that an asset retirement obligation be recorded at fair
value in the period in which it is incurred, if a reasonable estimate of fair
value can be made. In the same period, the associated asset retirement costs
are capitalized as part of the carrying amount of the related long-lived asset.
In each subsequent period, the liability is accreted to its present value and
the capitalized cost is depreciated over the useful life of the long-lived
asset.

The Partnership has a legal obligation to perform certain clean-up and
security procedures. As such the Partnership has assessed the probability of
when this will occur and the related cost. Upon implementation of this
statement, the Partnership recorded $43,607 of property, plant and equipment to
reflect the fair value of the asset retirement costs as of the date the
obligation was incurred, $8,721 of accumulated depreciation through December
31, 2002 and an asset retirement obligation of $83,849. The cumulative effect
of the change in accounting principle as a result of adopting this statement
was a loss of $48,963.

If this statement had been adopted on January 1, 2002, the pro forma
effects on earnings of the accounting change for the three months ended March
31, 2002 would not have been material.

In June 2002, the Financial Accounting Standards Board (FASB) issued
SFAS No. 146, Accounting for Costs Associated with Exit or Disposal Activities,
which is effective for exit and deposal activities initiated after December 31,
2002. In November 2002, the FASB issued Interpretation No. 45, Guarantors
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others. This interpretation establishes new
disclosure requirements for all guarantees, but the measurement criteria are
applicable to guarantees issued and modified after December 31, 2002. This
statement and interpretation was adopted on January 1, 2003 and did not have an
impact on the Partnerships consolidated financial statements.

Accounting Principles Issued But Not Yet Adopted

In January 2003, the FASB Issued Interpretation No. 46, Consolidation of
Variable Interest Entities. This interpretation applies to variable interest
entities created after January 31, 2003, and to variable interest entities in
which an enterprise obtains an interest after that date. For variable interest
entities in which an enterprise holds a variable interest that it acquired
before February 1, 2003, application begins in the first fiscal year or interim
period beginning after June 15, 2003. The Partnership does not expect that
implementation of this interpretation will have a significant impact on its
consolidated financial statements.

In April 2003, the FASB issued Statement No. 149, Amendment of Statement
133 on Derivative Instruments and Hedging Activities(SFAS No. 149). SFAS No.
149 amends and clarifies the accounting and reporting for derivative
instruments, including certain derivative instruments embedded in other
contracts, and for hedging activities under SFAS No. 133. The amendments set
forth in SFAS No. 149 require that contracts with comparable characteristics be
accounted for similarly. In particular, this statement clarifies under what
circumstances a contract with an initial net investment meets the
characteristics of a derivative according to SFAS No. 133 and when a derivative
contains a financing component that warrants special reporting in the statement
of cash flows.

The requirements of SFAS No. 149 are effective for contracts entered into
or modified after June 30, 2003 and for hedging relationships designated after
June 30, 2003. The provisions of the statement that relate to previous FASB
guidance issued in the form of SFAS No. 133 Implementation Issues that have
been effective for fiscal quarters that began prior to June 15, 2003, should
continue to be applied in accordance with their respective effective dates.
The Partnership is currently evaluating the impacts, if any, of SFAS No. 149 on
its consolidated financial statements.

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|4. |  | RELATED PARTY TRANSACTIONS:
|-- |  | ---------------------------

The Partnership has a Management Services Agreement with NEG, Inc. for the
day-to-day management and administration of the Partnerships business relating
to the Facility. The agreement commenced on September 30, 1992 and will
continue through August 31, 2026. The cost of services is included in general
and administrative expenses in the accompanying consolidated statements of
operations. The total amount due to NEG, Inc. for these services for the three
months ended March 31, 2003 is $194,474, all of which is subordinated pursuant
to the Disbursement Agreement.

The Partnership has an Operation and Maintenance Agreement with PG&E OSC,
for the operations and maintenance of the Facility for a period of 30 years
(starting September 30, 1992). Compensation to PG&E OSC under the agreement
includes an annual base fee of which a portion is subordinate to debt service
and certain other costs. The base fee is included in operating and maintenance
expenses in the accompanying consolidated statements of operations. The total
amount due to PG&E OSC for these services for the three months ended March 31,
2003 is $451,644, none of which is subordinated pursuant to the Disbursement
Agreement.



|5. |  | LETTERS OF CREDIT:
|-- |  | ------------------

The Partnership entered into a debt service reserve letter of credit and
reimbursement agreement, dated as of November 1, 1994, with BNP Paribas
(formerly known as Banque Nationale de Paris). Pursuant to the terms of the
Disbursement Agreement, since the agreement will expire on November 22, 2005,
available cash flows are required to be deposited on a monthly basis beginning
on May 22, 2002 into the Debt Service Reserve Account or the Tax Exempt Debt
Service Reserve Account, as the case may be, until the required Debt Service
Reserve Account Maximum Balance is achieved, which is $29,925,906. No cash
flows have been available to make such deposits and therefore no funds have
been deposited as of March 31, 2003. The Partnership began to make deposits
in the second quarter of 2003 and expects to have the required balance fully
funded by the end of the first quarter of 2005.

The Partnership, pursuant to certain of the contracts, is required to post
letters of credit, which, in the aggregate, had a face amount of no more than
$65 million. Certain of these letters of credit had been issued pursuant to a
Letter of Credit and Reimbursement Agreement with Credit Suisse/First Boston.
Prior to the expiration of the Letter of Credit and Reimbursement Agreement,
letters of credit were drawn by LDC on November 14, 2002 and by FPL on December
16, 2002 for $10,000,000 and $1,700,000, respectively. The principal amount of
these seven year term loans is payable in fourteen semi-annual installments
with a prepayment provision of any outstanding loan amount before cash would be
available for distribution to the Partners.

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|6. |  | NEW COAL PURCHASE AND ASH DISPOSAL AGREEMENTS:
|-- |  | ----------------------------------------------

A Back-up Coal Purchase Agreement was executed on February 5, 2003 between
the Partnership and Massey Coal Sales, Inc. (Massey) and became effective on
April 1, 2003. Under the Back-up Coal Agreement, Massey will provide coal
under substantially similar terms to the Coal Supply Agreement, which the
Partnership had with Lodestar Energy, Inc. prior to the termination of the
agreement on March 31, 2003. The base coal price is $33.75 per ton with a
market price reopener provision beginning in October 2003. The Partnership
cannot predict the outcome of the future negotiations to adjust the coal price.

A new Ash Disposal Agreement was executed on February 1, 2003 between the
Partnership and VFL Technology Corporation (VFL) and has a term of four years
with an option for two additional years. This agreement, combined with other
ash disposal agreements, allows the Partnership to dispose of all the
Facilitys ash without relying on Lodestar Energy, Inc.



|7. |  | CONCENTRATIONS OF CREDIT RISK:
|-- |  | ------------------------------

Credit risk is the risk of loss the Partnership would incur if
counterparties fail to perform their contractual obligations (accounts
receivable). The Partnerships credit risk is primarily concentrated with
FPL, who provides more than 99% of the Partnership revenues and is considered
to be of investment grade.

|       |  |                                                  
|------ |  | -------------------------------------------------
|Item 2 |  | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
|       |  | CONDITION AND RESULTS OF OPERATIONS              

This Managements Discussion and Analysis of Financial Condition and
Results of Operations should be read in conjunction with the consolidated
financial statements of the Partnership and the notes to the consolidated
financial statements included herein. Further, this Quarterly Report on Form
10-Q should be read in conjunction with the Partnerships 2002 Annual Report on
Form 10-K.

Cautionary Statement Regarding Forward-Looking Statements

The information in this Quarterly Report on Form 10-Q includes
forward-looking statements about the future that are necessarily subject to
various risks and uncertainties. Use of words like anticipate, estimate,
intend, project, plan, expect, will, believe, could, and similar
expressions help identify forward-looking statements. These statements are
based on current expectations and assumptions which the Partnership believes
are reasonable and on information currently available to the Partnership.
Actual results could differ materially from those contemplated by the
forward-looking statements. Although the Partnership believes that the
expectations reflected in the forward-looking statements are reasonable, future
results, events, levels of activity, performance or achievements cannot be
guaranteed. Although the Partnership is not able to predict all the factors
that may affect

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future results, some of the factors that could cause future results to
differ materially from those expressed or implied by the forward-looking
statements include:

Operational Risks

The Partnerships future results of operations and financial condition
will be affected by the performance of equipment, levels of dispatch, the
receipt of certain capacity and other fixed payments, electricity prices, fuel
deliveries and prices, whether PG&E National Energy Group, Inc.
(NEG, Inc.) or certain of
it subsidiaries seek protection under the U.S. Bankruptcy Code, or are forced
into a proceeding under the U.S. Bankruptcy Code, and the outcome of the
outstanding release not yet exchanged with respect to the termination of the
Coal Purchase Agreement (see Replacement of Coal Supplier, included in Part
II, Item 5, Other Information below).

Actions of Florida Power & Light and Other Counterparties

The Partnerships future results of operations and financial condition may
be affected by the extent to which counterparties require additional assurances
in the form of letters of credit or cash collateral and the potential future
failure of the Partnership to maintain the qualifying facility status, which
failure could cause a default under the Power Purchase Agreement.

Accounting and Risk Management

The Partnerships future results of operations and financial condition may
be affected by the effect of new accounting pronouncements, changes in critical
accounting policies or estimates, the effectiveness of the Partnerships risk
management policies and procedures, the ability of the Partnerships
counterparties to satisfy their financial commitments to the Partnership and
the impact of counterparties nonperformance on the Partnerships liquidity
position and heightened rating agency criteria and the impact of changes in the
Partnerships credit ratings.

Legislative and Regulatory Matters

The Partnerships business may be affected by legislative or regulatory
changes affecting the electric and natural gas industries in the United States,
including the pace and extent of efforts to restructure the electric and
natural gas industries; heightened regulatory and enforcement agency focus on
the energy business with the potential for changes in industry regulations and
in the treatment of the Partnership by state and federal agencies; and changes
in or application of federal, state, and local laws and regulations to which
the Partnership is subject.

Litigation and Environmental Matters

The Partnerships future results of operations and financial condition may
be affected by compliance with existing and future environmental and safety
laws, regulations, and policies,

10



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the cost of which could be significant, and the outcome of any potential
future litigation and environmental matters.

Overview

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. Revenues are derived primarily from capacity and bonus payments,
measured by the Capacity Billing Factor (CBF), and sales of electricity. The
Facility is dispatched for electric energy by FPL on an economic basis. In the
2003 agreement year the Facility is entitled to four weeks of outages to
perform scheduled maintenance. Differences in the timing and scope of
scheduled maintenance can have a significant impact on the revenues and
operational costs.

The Partnership replaced its fuel supplier effective April 1, 2003.
Please see Part II, Item 5, Other Information, for a description of the
Partnerships actions with respect to the replacement of the coal supplier.

The Partnership has obtained all material environmental permits and
approvals required as of March 31, 2003, 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.

Relationship with PG&E Corporation and NEG, Inc.

In December 2000, and in January and February 2001, PG&E Corporation and
NEG, Inc. completed a corporate restructuring that involved the use or creation
of limited liability companies (LLCs) as intermediate owners between a parent
company and its subsidiaries. One of these LLCs is PG&E National Energy Group,
LLC, which owns 100% of the stock of NEG.

On April 6, 2001, Pacific Gas and Electric Company (the Utility),
another subsidiary of PG&E Corporation, filed a voluntary petition for relief
under the provisions of Chapter 11 of the U.S. Bankruptcy Code. Pursuant to
Chapter 11 of the U.S. Bankruptcy Code, the Utility retains control of its
assets and is authorized to operate its business as a debtor-in-possession
while being subject to the jurisdiction of the Bankruptcy Court. The Utility
and PG&E Corporation jointly filed a plan of reorganization that entails
separating the Utility into four distinct businesses. The plan of
reorganization does not directly affect NEG, Inc. or any of its subsidiaries.
NEG Inc.s management believes that NEG, Inc. and its direct and indirect
subsidiaries as described above, including the Partnership, would not be
substantively

11



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consolidated with PG&E Corporation in any insolvency or bankruptcy
proceeding involving PG&E Corporation or the Utility.

As result of the sustained downturn in the power industry, NEG, Inc. and
certain of its consolidated affiliates have experienced a financial downturn
which caused the major credit rating agencies to downgrade NEG, Inc. and
certain of its consolidated affiliates credit ratings to below investment
grade. The credit rating agency action has had no material impact on the
financial condition or results of operations of the Partnership.

On October 8, 2002, Moodys stated that in conjunction with the downgrade
of NEG, Inc. it had placed the Partnerships debt under review for possible
downgrade. On October 15, 2002, S&P stated that the recent downgrade of NEG,
Inc. will not have an effect on the rating of the Partnerships debt at this
time. S&Ps rating of the Partnerships debt is BBB-. On November 5, 2002,
Moodys issued an opinion update changing the rating outlook of the
Partnerships debt to under review for possible downgrade from negative
outlook. Moodys rating of the Partnerships debt is Baa3. On December 12,
2002, Fitch Ratings removed the Rating Watch Negative from its BBB- rating
on the Partnerships debt for the satisfactory completion of the permanent
generator repairs during the 2002 scheduled fall outage. There are no minimum
credit rating requirements in the Partnerships financing agreements.

NEG, Inc. and certain affiliates, excluding Toyan and IPILP, are currently
in default under various debt agreements and guaranteed equity commitments.
NEG, Inc., its subsidiaries and their lenders have been engaged in
discussions to restructure NEG, Inc.s and its subsidiaries
debt obligations and other commitments since October 2002. No
agreement has been reached yet and there can be no assurance that an
agreement will be reached. Any restructuring agreement that may be
reached would be implemented through a reorganization proceeding
under Chapter 11 of the U.S. Bankruptcy Code. The Partnership is not
a party to such debt agreements and guaranteed equity commitments or
participants in such discussions.

Although NEG, Inc., and its subsidiaries are continuing their efforts to
maximize cash and reduce liabilities, such efforts are not expected to restore
the financial condition of NEG, Inc. and its subsidiaries. Absent a negotiated
agreement, the lenders may exercise their default remedies or force NEG, Inc.
and certain of its subsidiaries into an involuntary proceeding under the U.S.
Bankruptcy Code. Notwithstanding the status of current negotiations, NEG, Inc.
and certain of its subsidiaries also may elect to voluntarily seek protection
under the U.S. Bankruptcy Code as early as the second quarter 2003.

NEG, Inc. owns an indirect interest in the Partnership, and through its
wholly owned subsidiaries NEG and PG&E OSC manages and operates the Project.
The Partnership cannot be certain that an insolvency or bankruptcy involving
NEG, Inc. or any of its subsidiaries would not affect NEG Inc.s ownership
arrangement with respect to the Partnership or the ability of NEG and PG&E OSC
to manage and operate the Project.

12



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Results of Operations

For the three months ended March 31, 2003 and 2002, the Facility achieved
an average Capacity Billing Factor (CBF) of 96.09% and 89.49%, respectively.
The CBF measures the overall availability of the Facility, but gives a heavier
weighting to on-peak availability. The lower CBF in 2002 (which is the rolling
average of the prior 365 days) resulted from decreased availability in the fall
of 2001 primarily caused by boiler tube leaks and repairs to the generator,
which required the Facility to be out of service for eleven days. For the
three months ended March 31, 2003 and 2002, respectively, this resulted in
earning monthly capacity payments aggregating $28.4 million and $28.3 million.
In addition to the monthly capacity payments, the Partnership is entitled to
capacity bonus payments if the CBF, at the end of each month, exceeds certain
levels. The Partnership earned capacity bonuses of $2.8 million for the three
months ended March 31, 2003. No capacity bonus was received for the three
months ended March 31, 2002, since the CBF was below these levels due to the
decreased availability in the fall of 2001.

During the three months ended March 31, 2003, the Facility was dispatched
by FPL and generated 590,650 megawatt-hours compared to 629,608 megawatt-hours
during the same period in 2002. The decrease in 2003 was due to a forced
outage to repair superheater division wall tube leaks and due to a unit derate
to repair a boiler feedpump motor. The monthly dispatch rate for the first
three months of 2003 ranged from 79% to 88%, as compared to a range of 82% to
93% for the corresponding period in 2002.

Net income for the three months ended March 31, 2003, was approximately
$4.6 million compared to the net income of approximately $1.9 million for the
corresponding period in the prior year. The $2.7 million increase is primarily
attributable to the receipt of $2.8 million in monthly capacity bonus payments
in 2003 as compared to no receipt of bonus payments in 2002, due to the lower
CBF resulting from decreased availability in the fall of 2001. Insurance and
taxes decreased in 2003 by $0.1 million and net-non operating expenses
decreased by $0.2 million, which is offset by an increase in general and
administrative costs of $0.3 million due to an increase in legal costs
associated with the termination and replacement of the Coal Purchase and
Transportation Agreement (see Part II, Item 5, Replacement of Coal Supplier).

Operating Revenues

|                                |  |                            |             |                |  |  |             | 
|------------------------------- |  | -------------------------- | ----------- | -------------- |  |  | ----------- | 
|                                |  | For the three months ended
|                                |  | March 31, 2003             |             | March 31, 2002
|                                |  |                            |             |               
|Revenues                        |  | $44.9 million              |             | $42.3 million 
|KWhs                            |  |                            | 590,650,000 |                |  |  | 629,608,000 | 
|Average Capacity Billing Factor |  |                            | 96.09%      |                |  |  | 89.83%      | 
|Average Dispatch Rate           |  |                            | 82.86%      |                |  |  | 88.33%      | 

13



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For the three months ended March 31, 2003, the Partnership had total
operating revenues of approximately $44.9 million as compared to $42.3 million
for the corresponding period in the prior year. The $2.6 million increase in
operating revenue is primarily due to increased capacity bonus payments of $2.8
million due to the higher CBF, offset by lower energy revenue of $0.3 million
resulting from the decrease in the megawatt generation.

Cost of Sales

Costs of sales for the three months ended March 31, 2003, were
approximately $24.3 million on sales of 590,650 megawatt hours as compared to
$24.6 million on sales of 629,608 megawatt hours for the corresponding period
in the prior year. The overall cost of fuel and ash decreased $0.2 million due
to lower dispatch causing lower fuel consumption. There was also a decrease in
operating and maintenance costs in 2003 of $0.1 million primarily due to a
decrease in chemical consumption.

Non-Operating Income (Expense)

Net interest expense for the three months ended March 31, 2003, was
approximately $13.2 million compared to $13.4 million for the same period in
the prior year. June 2002 and December 2002 principal payments of Series A-9
of the first mortgage bonds decreased interest expense by approximately $0.3
million. This was offset by an increase in interest expense of $0.1 million
due to the conversion of the FPL Termination Fee and the LDC letters of credit
into term loans.

Liquidity and Capital Resources

Net cash provided by operating activities for the three months ended March
31, 2003 was approximately $16.8 million as compared to $12.5 million for the
corresponding period in 2002. The increase is primarily driven by the increase
in net income and a decrease in 2003 in accounts receivable for a payment of a
2002 reconciliation of unit energy costs calculations under the Power Purchase
Agreement.

Net cash used in investing activities for the three months ended March 31,
2003 was approximately $16.7 million primarily due to an increase in
investments held by the trustee. This compares to an increase in net cash used
for investing activities for the three months ended March 31, 2002 of
approximately $12.5 million primarily driven by an increase in investments held
by the trustee.

Net cash used in financing activities for the three months ended March 31,
2003 and 2002 was $0.1 million primarily driven from the payment on outstanding
lease payable.

Credit Ratings

On October 8, 2002, Moodys stated that in conjunction with the downgrade
of NEG it had placed the Partnerships debt under review for possible
downgrade. On October 15, 2002, S&P stated that the recent downgrade of NEG
will not have an effect on the rating of the

14



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Partnerships debt at this time. S&Ps rating of the Partnerships debt
is BBB-. On November 5, 2002, Moodys issued an opinion update changing the
rating outlook of the Partnerships debt to under review for possible
downgrade from negative outlook. Moodys rating of the Partnerships debt
is Baa3. On December 12, 2002, Fitch Ratings removed the Rating Watch
Negative from its BBB- rating on the Partnerships debt for the
satisfactory completion of the permanent generator repairs during the 2002
scheduled fall outage. There are no credit rating requirements in the
Partnerships financing agreements.

Bonds

The Partnerships total borrowings from inception through March 31, 2003
were $769 million. An equity loan of $139 million was repaid on December 26,
1995. As of March 31, 2003, the borrowings included $125 million from the 1994
Tax Exempt Bonds and all of the available First Mortgage Bond proceeds.

The weighted average interest rate paid by the Partnership on its debt for
the three months ended March 31, 2003 and 2002, was 9.201% and 9.202%,
respectively.

Credit Agreements

The Partnership, pursuant to certain of the contracts, is required to post
letters of credit, which, in the aggregate, had a face amount of no more than
$65 million. Certain of these letters of credit had been issued pursuant to a
Letter of Credit and Reimbursement Agreement with Credit Suisse/First Boston.
Prior to the expiration of the Letter of Credit and Reimbursement Agreement,
letters of credit were drawn by LDC on November 14, 2002 and by FPL on December
16, 2002 for $10,000,000 and $1,700,000, respectively. The principal amount of
these seven year term loans is payable in fourteen semi-annual installments
with a prepayment provision of any outstanding loan amount before cash would be
available for distribution to the Partners.

The Partnership entered into a debt service reserve letter of credit and
reimbursement agreement, dated as of November 1, 1994, with BNP Paribas
(formerly known as Banque Nationale de Paris). Pursuant to the terms of the
Disbursement Agreement, since the agreement will expire on November 22, 2005
available cash flows are required to be deposited on a monthly basis beginning
on May 22, 2002 into the Debt Service Reserve Account or the Tax Exempt Debt
Service Reserve Account, as the case may be, until the required Debt Service
Reserve Account Maximum Balance is achieved, which is $29,925,906. No cash
flows have been available to make such deposits and therefore no funds have
been deposited as of March 31, 2003. The Partnership began to make deposits
in the second quarter of 2003 and expects to have the required balance fully
funded by the end of the first quarter of 2005.

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. In

15



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September 2001, Credit Suisse notified the Partnership of its intention not to
extend the term of the agreement, which expired on November 22, 2001.

The Partnership is actively engaging in discussions with financial
institutions to obtain replacement letters of credit and a working capital
facility; however, the Partnership cannot give assurances that it will be
successful in obtaining replacement letters of credit and a working capital
facility.

The Partnership believes that it will have adequate cash flows from
operations in 2003 to timely fund all future working capital, capital
expenditures, major maintenance requirements and cover debt repayment
obligations.

Market Risk

Market risk is the risk that changes in market conditions will adversely
affect earnings or cash flow. The Partnership categorizes its market risks as
interest rate risk and energy commodity price risk. Immediately below are
detailed descriptions of the market risks and explanations as to how each of
these risks is managed.

Interest Rate Risk

Interest rate risk is the risk that changes in interest rates could
adversely affect earnings or cash flows. The Partnerships cash and restricted
cash are sensitive to changes in interest rates. Interest rate changes would
result in a change in interest income due to the difference between the current
interest rates on cash and restricted cash and the variable rate that these
financial instruments may adjust to in the future. Interest rate risk
sensitivity analysis is used to measure interest rate risk by computing
estimated changes in cash flows as a result of assumed changes in market
interest rates. As of March 31, 2003, a 10% decrease in interest rates would
be immaterial to the Partnerships consolidated financial statements.

The Partnerships Bonds have fixed interest rates. Changes in the current
market rates for the Bonds would not result in a change in interest expense due
to the fixed coupon rate of the Bonds.

Energy Commodity Price Risk

The Partnership seeks to reduce its exposure to market risk associated
with energy commodities such as electric power and coal fuel through the use of
long-term purchase and sale contracts. Currently, the energy price paid by FPL
for the coal cost component of the energy payment is not matched to the price
of base coal in the amended coal purchase agreement. A provision in the Power
Purchase Agreement allows FPL and the Partnership to meet and adjust annually
the energy payment with the objective of minimizing the difference in the
actual energy costs and the energy payments, if the difference is more than 4%.
FPL

16



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recently began to conduct its audit of the 2002 documentation provided by
the Partnership of actual energy costs to determine if the difference is more
than 4%.

Critical Accounting Policies

The Partnership is following the same accounting principles discussed in
the Partnerships December 31, 2002 Annual Report on Form 10-K.

Accounting Principles Issued But Not Yet Adopted

In January 2003, the FASB Issued Interpretation No. 46, Consolidation of
Variable Interest Entities. This interpretation applies to variable interest
entities created after January 31, 2003, and to variable interest entities in
which an enterprise obtains an interest after that date. For variable interest
entities in which an enterprise holds a variable interest that it acquired
before February 1, 2003, application begins in the first fiscal year or interim
period beginning after June 15, 2003. The Partnership does not expect that
implementation of this interpretation will have a significant impact on its
consolidated financial statements.

In April 2003, the FASB issued Statement No. 149, Amendment of Statement
133 on Derivative Instruments and Hedging Activities(SFAS No. 149). SFAS No.
149 amends and clarifies the accounting and reporting for derivative
instruments, including certain derivative instruments embedded in other
contracts, and for hedging activities under SFAS No. 133. The amendments set
forth in SFAS No. 149 require that contracts with comparable characteristics be
accounted for similarly. In particular, this statement clarifies under what
circumstances a contract with an initial net investment meets the
characteristics of a derivative according to SFAS No. 133 and when a derivative
contains a financing component that warrants special reporting in the statement
of cash flows.

The requirements of SFAS No. 149 are effective for contracts entered into
or modified after June 30, 2003 and for hedging relationships designated after
June 30, 2003. The provisions of the statement that relate to previous FASB
guidance issued in the form of SFAS No. 133 Implementation Issues that have
been effective for fiscal quarters that began prior to June 15, 2003,
should continue to be applied in accordance with their respective effective
dates. The Partnership is currently evaluating the impacts, if any, of SFAS
No. 149 on its consolidated financial statements.

Legal Matters

The Partnership is currently not involved in any legal proceedings.

Regulations and Environmental Matters

17



---



##### 



The Partnership has obtained all material environmental permits and
approvals required, as of March 31, 2003, in order to continue commercial
operation of the Facility. Certain of these permits and approvals are subject
to periodic renewal. 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.



|Item 3 |  | QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK
|------ |  | ----------------------------------------------------------

The Partnership is exposed to market risk from changes in interest rates
and energy commodity prices which could affect its future results of operations
and financial condition. The Partnership manages its exposure to these risks
through its regular operating and financing activities. (See Market Risk,
included in Item 2, Managements Discussion and Analysis of Financial Condition
and Results of Operations above).



|Item 4 |  | CONTROLS AND PROCEDURES
|------ |  | -----------------------

Evaluation of Disclosure Controls and Procedures

Based on an evaluation of the Partnerships disclosure controls and
procedures conducted on May 2, 2003, the Partnerships principal executive
officer and principal financial officer of Indiantown Cogeneration, L.P. and
Indiantown Cogeneration Funding Corporation have concluded that such controls
and procedures effectively ensure that information required to be disclosed by
the Partnership in reports the Partnership files or submits under the
Securities and Exchange Act of 1934 is recorded, processed, summarized, and
reported, within the time periods specified in the Securities and Exchange
Commission (SEC) rules and forms.

Changes in Internal Controls

There were no significant changes in internal controls or in other factors
that could significantly affect these controls subsequent to the date of their
evaluation.

PART II
OTHER INFORMATION



|Item 5 |  | OTHER INFORMATION
|------ |  | -----------------

Replacement of Coal Supplier

The Partnership had a coal purchase agreement (the Coal Purchase
Agreement) with Lodestar Energy, Inc. (LEI) pursuant to which LEI supplies all
of the coal for the facility.

18



---



##### 



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.
The Partnership and LEI agreed to and executed Amendment No. 3 to the Coal
Purchase Agreement effective October 16, 2001 (the Amendment). 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 agreement also reduced the amount of ash the
Partnership is required to provide to LEI. The transportation and
administrative fees the Partnership is required to pay remain unchanged, but
will continue to adjust in accordance with the terms of the Coal Purchase
Agreement. The Amendment also includes market price reopener provisions,
beginning October 16, 2003.

In December 2002, an order by the U.S. Bankruptcy Court was issued
authorizing LEI to sell its property at auction, which occurred on January 30,
2003. The Coal Purchase and Transportation Agreement was included in the
property auctioned. A bid was made for the property, including the agreement
with the Partnership. At a court hearing to certify the auction, the highest
bidder rescinded their bid, claiming information was withheld during their due
diligence before the auction. Since most of the officers and directors of LEI
resigned prior to the court hearing, the judge appointed a trustee for LEI who
was to advise the court on the next course of action to pursue.

LEI had failed to perform certain of its obligations under the Coal
Purchase Agreement related to ash disposal, and on January 28, 2003, the
Partnership delivered a notice of an event of default to LEI. In the event the
contract was terminated as a result of such default, by LEI or otherwise, the
Partnership had entered into a backup coal supply agreement and alternate ash
disposal agreements.

A new Ash Disposal Agreement was executed on February 1, 2003 between the
Partnership and VFL Technology Corp. (VFL) and has a term of four years with
an option for an additional two years. The agreement calls for the nominal
removal of 1,000 to 1,500 tons of dry fly ash per week, which is approximately
50% of the fly ash produced each week, and allows for the removal of up to 100%
of the fly ash produced by the Facility. The disposal fee is $21.85 per ton
and is adjusted quarterly beginning on May 1, 2003 in accordance with a
Producer Price Index, which includes labor to load trucks, the transportation
vehicles, transportation costs and disposal fee. This agreement, combined with
other current ash disposal agreements, allows the Partnership to dispose of all
of the Partnerships ash without relying on Lodestar. The Partnership has
satisfied the applicable conditions precedent set forth in the Partnerships
financing documents relating to the entering into of the Ash Disposal
Agreement.

19



---



##### 



The Back-up Coal Agreement was executed on February 5, 2003 between the
Partnership and Massey Coal Sales, Inc. (Massey). Under the Back-up Coal
Agreement, Massey will provide coal under substantially similar terms to the
Coal Supply Agreement should the Coal Supply Agreement with Lodestar be
terminated. The base coal price is $33.75 per ton with a market price reopener
provision beginning in October 2003. The Partnership cannot predict the
outcome of the future negotiations to adjust the coal price. The Partnership
has satisfied the applicable conditions precedent set forth in the
Partnerships financing documents relating to the entering into of the Back-up
Coal Agreement.

On March 20, 2003, the Partnership and the court appointed trustee
negotiated a settlement which effectively terminated the Coal Purchase
Agreement as of March 31, 2003. A motion for an order approving the settlement
was filed in the U.S. Bankruptcy Court on March 21, 2003. An order approving
the settlement was entered by the Bankruptcy Court on April 4, 2003. At
closing, the Partnership made a settlement payment to the court appointed
trustee, on behalf of LEI, in the amount of $805,000 and general releases in
form and substance mutually acceptable were exchanged between the Partnership
and LEI. One outstanding release has not yet been exchanged regarding the
Transportation Agreement and monies owed to the rail transporter, CSX
Transportation (CSX), from LEI. Until such a release is obtained, $195,000
will be placed into an escrow account until the Partnership receives a release
of its potential liability to CSX. Once the order approving the settlement was
entered, the Back-up Coal Agreement became effective retroactively to the date
of termination of the Coal Purchase Agreement specified in the settlement.
Upon the receipt of the release, the Transportation Agreement will revert to
the Partnership. The Partnership has satisfied the applicable conditions
precedent set forth in the Partnerships financing documents relating to the
entering into of this settlement.

The Partnership and CSX have had initial discussions related to the
Transportation Agreement and CSX has taken a position that approximately $1.1
million in pre-petition and gap debt owed to CSX from LEI must be paid by the
Partnership before the Transportation Agreement can be implemented. Both CSX
and the Partnership are working to resolve this issue expeditiously. Until the
issue is resolved, CSX is delivering coal pursuant to their tariff, and will
continue to transport coal to the Facility at published tariff rates that are
approximately $10.00 per ton higher than the Transportation Agreement rates.
The Partnership does not expect this issue to have a material impact on its
current financial position or operations.

20



---



##### 





|Item 6 |  | EXHIBITS AND REPORTS ON FORM 8-K
|------ |  | --------------------------------

a) Exhibits:

|        |  |                                                                                                                                                                                                                          
|------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                                                                          
|No.     |  | Description                                                                                                                                                                                                              
|        |  |                                                                                                                                                                                                                          
|10      |  | Settlement and Termination Agreement between Indiantown Cogeneration, L.P.
and Lodestar Energy, Inc. dated April 14, 2003.                                                                                               
|        |  |                                                                                                                                                                                                                          
|99.1    |  | Certification of P. Chrisman Iribe, President of Indiantown
Cogeneration, L.P., pursuant to Section 906 of the Sarbanes - Oxley
Act of 2002 dated May 14, 2003                                                           
|        |  |                                                                                                                                                                                                                          
|99.2    |  | Certification of P. Chrisman Iribe, President of Indiantown
Cogeneration Funding Corporation, pursuant to Section 906 of the
Sarbanes - Oxley Act of 2002 dated May 14, 2003                                             
|        |  |                                                                                                                                                                                                                          
|99.3    |  | Certification of Thomas E. Legro, Vice President, Controller
and Chief Accounting Officer of Indiantown Cogeneration, L.P.,
pursuant to Section 906 of the Sarbanes - Oxley Act of 2002 dated May
14, 2003               
|        |  |                                                                                                                                                                                                                          
|99.4    |  | Certification of Thomas E. Legro, Vice President, Controller,
and Chief Accounting Officer of Indiantown Cogeneration Funding
Corporation, pursuant to Section 906 of the Sarbanes - Oxley Act of
2002 dated May 14, 2003

b) Reports on Form 8-K:



| |     
| | ----
| | None

21



---



##### 



SIGNATURES

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: May 14, 2003 |  | /s/ THOMAS E. LEGRO                 
|                   |  |                                     
|                   |  | Thomas E. Legro                     
|                   |  | Vice President, Controller and Chief
|                   |  | Accounting Officer                  



| | INDIANTOWN COGENERATION FUNDING
CORPORATION
(Co-Registrant)
| | -----------------------------------------------------------

|                   |  |                                      
|------------------ |  | -------------------------------------
|Date: May 14, 2003 |  | /s/ THOMAS E. LEGRO                  
|                   |  |                                      
|                   |  | Thomas E. Legro                      
|                   |  | Vice President, Controller, and Chief
|                   |  | Accounting Officer                   

22



---



##### 



I, P. Chrisman Iribe, certify that:



|1. |  | I have reviewed this quarterly report on Form 10-Q of Indiantown
Cogeneration, L.P.;                                                                                                                                                                                                                                          
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
|  
|3. |  | Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;                   
|  
|4. |  | The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
have:                                                                                                     



| | a) |  | designed such disclosure controls and procedures to ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
quarterly report is being prepared;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | evaluated the effectiveness of the registrants disclosure
controls and procedures within 90 days prior to the filing date of
this quarterly report (the Evaluation Date); and                                                                                                               
|
| | c) |  | presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;                                                                                                                        



|5. |  | The registrants other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons performing the
equivalent function):
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) |  | all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrants
ability to record, process, summarize and report financial data and
have identified for the registrants auditors any material
weaknesses in internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | any fraud, whether or not material, that involves management
or other employees who have a significant role in the registrants
internal controls; and                                                                                                                                        



|6. |  | The registrants other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Date: May 14, 2003



| | /s/ P. CHRISMAN IRIBE
P. Chrisman Iribe
President
Indiantown Cogeneration, L.P.
| | -------------------------------------------------------------------------------





---



##### 



I, Thomas E. Legro, certify that:



|1. |  | I have reviewed this quarterly report on Form 10-Q of Indiantown
Cogeneration, L.P.;                                                                                                                                                                                                                                          
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
|  
|3. |  | Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;                   
|  
|4. |  | The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
have:                                                                                                     



| | a) |  | designed such disclosure controls and procedures to ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
quarterly report is being prepared;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | evaluated the effectiveness of the registrants disclosure
controls and procedures within 90 days prior to the filing date of
this quarterly report (the Evaluation Date); and                                                                                                               
|
| | c) |  | presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;                                                                                                                        



|5. |  | The registrants other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons performing the
equivalent function):
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) |  | all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrants
ability to record, process, summarize and report financial data and
have identified for the registrants auditors any material
weaknesses in internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | any fraud, whether or not material, that involves management
or other employees who have a significant role in the registrants
internal controls; and                                                                                                                                        



|6. |  | The registrants other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Date: May 14, 2003



| | /s/ THOMAS E. LEGRO
Thomas E. Legro
Vice President, Controller and Chief Accounting
Officer
Indiantown Cogeneration, L.P.
| | -------------------------------------------------------------------------------------------------------------------------





---



##### 



I, P. Chrisman Iribe, certify that:



|1. |  | I have reviewed this quarterly report on Form 10-Q of Indiantown
Cogeneration Funding Corporation;                                                                                                                                                                                                                            
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
|  
|3. |  | Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;                   
|  
|4. |  | The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
have:                                                                                                     



| | a) |  | designed such disclosure controls and procedures to ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
quarterly report is being prepared;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | evaluated the effectiveness of the registrants disclosure
controls and procedures within 90 days prior to the filing date of
this quarterly report (the Evaluation Date); and                                                                                                               
|
| | c) |  | presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;                                                                                                                        



|5. |  | The registrants other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons performing the
equivalent function):
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) |  | all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrants ability to
record, process, summarize and report financial data and have
identified for the registrants auditors any material weaknesses in
internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrants
internal controls; and                                                                                                                                        



|6. |  | The registrants other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Date: May 14, 2003



| | /s/ P. CHRISMAN IRIBE
P. Chrisman Iribe
President
Indiantown Cogeneration Funding Corporation
| | ---------------------------------------------------------------------------------------------





---



##### 



I, Thomas E. Legro, certify that:



|1. |  | I have reviewed this quarterly report on Form 10-Q of Indiantown
Cogeneration Funding Corporation;                                                                                                                                                                                                                            
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
|  
|3. |  | Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;                   
|  
|4. |  | The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
have:                                                                                                     



| | a) |  | designed such disclosure controls and procedures to ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
quarterly report is being prepared;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | evaluated the effectiveness of the registrants disclosure
controls and procedures within 90 days prior to the filing date of
this quarterly report (the Evaluation Date); and                                                                                                               
|
| | c) |  | presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;                                                                                                                        



|5. |  | The registrants other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons performing the
equivalent function):
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) |  | all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrants ability to
record, process, summarize and report financial data and have
identified for the registrants auditors any material weaknesses in
internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrants
internal controls; and                                                                                                                                        



|6. |  | The registrants other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Date: May 14, 2003



| | /s/ THOMAS E. LEGRO
Thomas E. Legro
Vice President, Controller and Chief Accounting
Officer
Indiantown Cogeneration Funding Corporation
| | ---------------------------------------------------------------------------------------------------------------------------------------





---



##### 



EXHIBIT INDEX

|        |  |                                                                                                                                                                                                                          
|------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                                                                          
|No.     |  | Description                                                                                                                                                                                                              
|        |  |                                                                                                                                                                                                                          
|10      |  | Settlement and Termination Agreement between Indiantown Cogeneration, L.P.
and Lodestar Energy, Inc. dated April 14, 2003.                                                                                               
|        |  |                                                                                                                                                                                                                          
|99.1    |  | Certification of P. Chrisman Iribe, President of Indiantown
Cogeneration, L.P., pursuant to Section 906 of the Sarbanes - Oxley
Act of 2002 dated May 14, 2003                                                           
|        |  |                                                                                                                                                                                                                          
|99.2    |  | Certification of P. Chrisman Iribe, President of Indiantown
Cogeneration Funding Corporation, pursuant to Section 906 of the
Sarbanes - Oxley Act of 2002 dated May 14, 2003                                             
|        |  |                                                                                                                                                                                                                          
|99.3    |  | Certification of Thomas E. Legro, Vice President, Controller
and Chief Accounting Officer of Indiantown Cogeneration, L.P.,
pursuant to Section 906 of the Sarbanes - Oxley Act of 2002 dated May
14, 2003               
|        |  |                                                                                                                                                                                                                          
|99.4    |  | Certification of Thomas E. Legro, Vice President, Controller,
and Chief Accounting Officer of Indiantown Cogeneration Funding
Corporation, pursuant to Section 906 of the Sarbanes - Oxley Act of
2002 dated May 14, 2003