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 June 30, 2001

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

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

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

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

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

Indicate by check mark whether the registrant (1) has filed all
reports  required to be filed by Section 13 or 15(d) of the Securities  Exchange
Act of 1934  during the  preceding  12 months (or for  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days. [ X ] Yes [  ] No Indiantown Cogeneration, L.P.
                   Indiantown Cogeneration Funding Corporation

PART I  FINANCIAL INFORMATION                                            Page No.

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

Item 2  Management's Discussion and Analysis of Financial
               Condition and Results of Operations...........................8

PART II OTHER INFORMATION

Item 1        Legal Proceedings.............................................12

Item 5       Other Information..............................................15

Item 6  Exhibits and Reports on Form 8K.....................................16

Signatures..................................................................17
PART I
                              FINANCIAL INFORMATION

                          Indiantown Cogeneration, L.P.
                           Consolidated Balance SheetsAs of June 30, 2001 and December 31, 2000June 30,                December 31,
                            ASSETS                                                  2001                      2000
---------------------------------------------------------------            -----------------------    ---------------------
                                                                                (Unaudited)
CURRENT ASSETS:
     Cash and cash equivalents                                              $           2,086,089      $           821,955
     Accounts receivable-trade                                                         13,739,502               13,853,485
     Inventories                                                                        1,804,847                2,116,636
     Prepaids                                                                           1,746,437                  800,238
     Deposits                                                                              44,450                   44,450
     Investments held by Trustee, including restricted funds
        of $2,241,550 and $2,694,068, respectively                                      3,582,600                2,980,292
                                                                           -----------------------    ---------------------
               Total current assets                                                    23,003,925               20,617,056
                                                                           -----------------------    ---------------------

INVESTMENTS HELD BY TRUSTEE,
     restricted funds                                                                  15,167,616               15,108,428

DEPOSITS                                                                                  165,435                  159,365

PROPERTY, PLANT & EQUIPMENT:
     Land                                                                               8,582,363                8,582,363
     Electric and steam generating facilities                                         700,813,106              700,310,050
     Less accumulated depreciation                                                   (88,085,352)             (80,537,655)
                                                                          -----------------------    ---------------------
               Net property, plant & equipment                                        621,310,117              628,354,758
                                                                           -----------------------    ---------------------

FUEL RESERVE                                                                            1,503,055                  922,254

DEFERRED FINANCING COSTS, net of accumulated amortization of
    $45,091,490 and $44,679,212, respectively
                                                                                       15,095,426               15,507,704
                                                                           -----------------------    ---------------------

               Total assets                                              $            676,245,574   $          680,669,565
                                                                           =======================    =====================



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


                                                                        1
Indiantown Cogeneration, L. P.
                                                      Consolidated Balance SheetsAs of June 30, 2001 and December 31, 2000
June 30,              December 31, 2000
LIABILITIES AND PARTNERS' CAPITAL                                         2001
--------------------------------------------------------------    ---------------------     ----------------------
                                                                      (Unaudited)
CURRENT LIABILITIES:
     Accrued payables/liabilities                                  $        12,980,057       $          9,325,173
     Accrued interest                                                        2,347,761                  2,370,686
     Current portion - First Mortgage Bonds                                 11,300,651                 11,140,896
     Current portion lease payable - railcars                                  343,815                    331,628
                                                                  ---------------------     ----------------------
               Total current liabilities                                    26,972,284                 23,168,383
                                                                  ---------------------     ----------------------
LONG TERM DEBT:
     First Mortgage Bonds                                                  437,837,766                443,567,969
     Tax Exempt Facility Revenue Bonds                                     125,010,000                125,010,000
     Lease payable - railcars                                                3,768,529                  3,943,538
                                                                  ---------------------     ----------------------
               Total long term debt                                        566,616,295                572,521,507


                                                                  ---------------------     ----------------------
               Total liabilities                                           593,588,579                595,689,890
--------------------------------------------------------------    ---------------------     ----------------------
PARTNERS' CAPITAL:
    Toyan Enterprises                                                       24,838,428                 25,536,395
    Palm Power Corporation                                                   8,265,699                  8,497,967
    Indiantown Project Investment Partnership                               16,490,070                 16,953,444
    Thaleia                                                                 33,062,798                 33,991,869
                                                                  ---------------------     ----------------------
               Total partners' capital                                      82,656,995                 84,979,675
                                                                  ---------------------     ----------------------
               Total liabilities and partners' capital            $        676,245,574       $        680,669,565
                                                                  =====================     ======================


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

                                                                                2
Indiantown Cogeneration, L.P.
                                                 Consolidated Statements of OperationsFor the Three Months and Six Months Ended June 30, 2001 and June 30, 2000Three Months Ended     Three Months Ended      Six Months Ended     Six Months Ended
                                                              June 30,             June 30, 2000            June 30,          June 30, 2000
                                                                2001                                          2001
                                                      ------------------------ ---------------------- -------------------- ---------------------
Operating Revenues:                                         (Unaudited)             (Unaudited)         (Unaudited)          (Unaudited)
     Electric capacity and capacity bonus revenue
                                                            $31,094,750              $30,920,890          $62,184,339           $61,902,210
     Electric energy revenue                                  14,083,618              11,638,221           29,301,115            24,743,970
     Steam revenue                                                41,973                  29,749              193,464                48,920
         Total operating revenues                             45,220,341              42,588,860           91,678,918            86,695,100
                                                            ------------             -----------          -----------           -----------

Cost of Sales:
     Fuel and ash                                             14,576,635              12,250,816           31,756,822            25,697,129
     Operating and maintenance                                 5,524,469               5,584,035            9,464,929             9,847,441
     Depreciation                                              3,795,635               3,789,164            7,584,872             7,574,455
         Total cost of sales                                  23,896,739              21,624,015           48,806,623            43,119,025

Gross Profit                                                  21,323,602              20,964,845           42,872,295            43,576,075

Other Operating Expenses:
     General and administrative                                  985,303               1,209,216            2,361,046             2,470,428
     Insurance and taxes                                       1,672,532               1,714,927            3,306,010             3,216,646
         Total other operating expenses                        2,657,835               2,924,143            5,667,056             5,687,074

Operating Income                                              18,665,767              18,040,702           37,205,239            37,889,001

Non-Operating Income (Expenses):
     Interest expense                                       (14,157,857)            (14,254,435)         (28,107,674)          (28,707,972)
     Interest/Other income (expense)                             593,150                 742,428              979,756             1,141,541
         Net non-operating expense                          (13,564,707)            (13,512,007)         (27,127,918)          (27,566,431)

Income before cumulative effect  of
         change in accounting principle                        5,101,060               4,528,695           10,077,321            10,322,570

Cumulative effect of change in accounting principle                    -                       -                    -               920,536
                                                            ------------             -----------          -----------           -----------
Net Income                                                   $5,101,060               $4,528,695        $10,077,321             $11,243,106
                                                            ------------             -----------          -----------           -----------
                                                            ------------             -----------          -----------           -----------


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

                                                                        3
Indiantown Cogeneration, L.P.
                                                 Consolidated Statements of Cash FlowsFor the Six Months Ended June 30, 2001 and 2000Six Months                Six Months
                                                                                  Ended                     Ended
                                                                                June 30,                  June 30,
                                                                                  2001                      2000
                                                                           --------------------     ----------------------
                                                                               (Unaudited)               (Unaudited)

    CASH FLOWS FROM OPERATING ACTIVITIES:
         Net income                                                        $        10,077,321       $       11,243,106
             Adjustments to reconcile net income to net
                cash provided by operating activities:
                   Depreciation and amortization                                     7,997,150                7,987,772
                   Loss on disposal of assets                                          203,032                        -
                   Decrease (increase) in accounts receivable                          113,983                (723,121)
                   Increase in inventories and fuel reserves                         (269,012)                (785,485)
                   Increase in deposits and prepaids                                 (952,269)                (426,160)
                   Increase in accounts payable, accrued liabilities
                       and accrued interest                                          3,631,959                4,425,934
                   Decrease  in major maintenance
                       reserve                                                               -                (920,536)
                   Decrease in lease payable                                         (162,822)                (151,483)
                                                                           --------------------     --------------------
                           Net cash provided by operating activities                20,639,342               20,650,027
                                                                           --------------------     ----------------------

    CASH FLOWS FROM INVESTING ACTIVITIES:
            Purchase of property, plant & equipment                                  (743,264)              (1,710,949)
            Increase in investment held by trustee                                   (661,496)                (313,005)
                                                                           --------------------     ----------------------
                           Net cash used in investing activities                   (1,404,760)              (2,023,954)
                                                                           --------------------     ----------------------

    CASH FLOWS FROM FINANCING ACTIVITIES:
            Payment of bonds                                                       (5,570,448)              (5,766,568)
            Capital distribution                                                  (12,400,000)             (15,300,000)

            Increase in working capital loan                                                 -                1,202,974
                                                                           --------------------     --------------------
                           Net cash used in financing activities                  (17,970,448)             (19,863,594)

    CHANGE IN CASH AND CASH EQUIVALENTS                                              1,264,134              (1,237,521)
    CASH and CASH EQUIVALENTS, beginning of year                                       821,955                2,416,997
                                                                           --------------------     --------------------

    CASH and CASH EQUIVALENTS, end of period                               $         2,086,089      $         1,179,476
                                                                           ====================     ====================

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

                                                                                4
Indiantown Cogeneration, L.P.
                             Notes to Consolidated Financial Statements
                                                     As of June 30, 2001
                                                    (Unaudited)
1.   ORGANIZATION AND BUSINESS:

         

     Indiantown  Cogeneration,  L.P. (the  "Partnership")  is a special  purpose
Delaware  limited  partnership  formed on October 4, 1991. The  Partnership  was
formed to develop,  construct,  and operate an approximately  330 megawatt (net)
pulverized  coal-fired  cogeneration  facility  (the  "Facility")  located on an
approximately 240 acre site in southwestern Martin County, Florida. The Facility
produces  electricity  for sale to Florida  Power & Light  Company  ("FPL")  and
supplies  steam to Caulkins  Indiantown  Citrus Co.  ("Caulkins")  for its plant
located near the Facility.

         

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

         

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

         

     On June 4, 1999,  Thaleia,  LLC ("Thaleia"),  a wholly-owned  subsidiary of
Palm and indirect  wholly-owned  subsidiary of  Cogentrix,  acquired from TIFD a
19.9%  limited  partner  interest in the  Partnership.  On  September  20, 1999,
Thaleia acquired another 20% limited  partnership  interest from TIFD and TIFD's
membership  on the Board of Control.  On November  24, 1999,  Thaleia  purchased
TIFD's remaining limited partner interest in the Partnership from TIFD.
5
The net profits and losses of the  Partnership  are currently  allocated to
Toyan,  Palm, TIFD, IPILP, and Thaleia  (collectively,  the "Partners") based on
the following ownership percentages:Toyan          30.05%
                        Palm           10%*
                        IPILP          19.95%**
                        TIFD           --
                        Thaleia        40%*
*Now beneficially owned by Cogentrix.
** PFT's beneficial ownership in the Partnership through IPILP was equal to 10% as of August 21, 1998, and 15% as of November 23,
1998.

         

     The   changes   in    ownership    were   the   subject   of   notices   of
self-recertification of Qualifying Facility status filed by the Partnership with
the Federal Energy Regulatory  Commission on August 21, 1998, November 16, 1998,
June 4, 1999, September 21, 1999, and November 24, 1999.

         

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

         

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

         

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

         

     Management   of  NEG  believes   that  NEG  and  its  direct  and  indirect
subsidiaries  as  described  above,  including  the  Partnership,  would  not be
substantively  consolidated  with PG&E  Corporation  or Pacific Gas and Electric
Company in any insolvency or bankruptcy proceeding involving PG&E Corporation.
6
2.   FINANCIAL STATEMENTS:

         

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

         

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

         

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

         

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

         

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

         

     The Partnership adopted SFAS No. 133 "Accounting for Derivative Instruments
and  Hedging  Activities",  as amended by SFAS Nos.  137 and 138,  on January 1,
2001. This standard  requires the Partnership to recognize all  derivatives,  as
defined in the  statements  listed  above,  on the balance  sheet at fair value.
Derivatives,  or any  portion  thereof,  that are not  effective  hedges must be
adjusted to fair value through  income.  If  derivatives  are effective  hedges,
depending on the nature of the hedges,  changes in the fair value of derivatives
either will offset the change in fair value of the hedged  assets,  liabilities,
or  firm  commitments   through  earnings,   or  will  be  recognized  in  other
comprehensive  income until the hedged  items are  recognized  in earnings.  The
Partnership has certain derivative commodity contracts for the physical delivery
of purchase and sale  quantities  transacted  in the normal  course of business.
These  derivatives  are exempt from the  requirements  of SFAS No. 133 under the
normal purchases and sales exception,  and thus are not reflected on the balance
sheet at fair  value.  The  impact  of  adopting  this  standard  did not have a
material  impact  on the  financial  statements  of the  Partnership,  since all
contracts are exempt as normal purchases and sales, as currently defined.
7

In June 2001, the Financial Accounting Standards Board ("FASB") approved an
interpretation  issued by the  Derivatives  Implementation  Group  ("DIG")  that
changes  the  definition  of  normal  purchases  and  sales  for  certain  power
contracts.  The FASB is currently  considering  another DIG interpretation  that
would change the  definition  of normal  purchases  and sales for certain  other
commodity contracts. Certain of our derivative commodity contracts may no longer
be exempt from the requirements of SFAS No. 133. We are evaluating the impact of
the implementation guidance on our financial statements, and will implement this
guidance, as applicable, on a prospective basis.3.   DEPOSITS:

         

     In 1991, in accordance with the Planned Unit  Development  Zoning Agreement
between the Partnership and Martin County, the Partnership  deposited $1,000,000
in trust  with the Board of County  Commissioners  of  Martin  County  (the "PUD
Trustee").  Income from this trust will be used solely for  projects  benefiting
the community of  Indiantown.  On July 23, 2025,  the PUD Trustee is required to
return the  deposit to the  Partnership.  As of June 30, 2001 and  December  31,
2000,  estimated  present  value of this  deposit  was  $165,435  and  $159,365,
respectively.  The remaining  balance has been included in property  plant,  and
equipment as part of total construction expenses.Item 2   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
             
CONDITION AND RESULTS OF OPERATIONS

         

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

         

     The  Partnership  is primarily  engaged in the ownership and operation of a
non-utility electric generating facility.  From its inception and until December
21, 1995,  the  Partnership  was in the  development  stage and had no operating
revenues or expenses.  On December 22, 1995 the  Facility  commenced  commercial
operation. As of June 30, 2001, the Partnership had approximately $621.3 million
of property,  plant and equipment (net of accumulated  depreciation)  consisting
primarily of purchased  equipment,  construction  related  labor and  materials,
interest  during   construction,   financing  cost,  and  other  costs  directly
associated with the construction of the Facility.  For the six months ended June
30, 2001, the Partnership had total operating  revenues of  approximately  $91.7
million,  total operating costs of  approximately  $54.5 million,  and total net
interest  expenses of  approximately  $27.1 million,  resulting in net income of
approximately $10.1 million.
8
The  Partnership  was engaged in  litigation  with FPL,  the  Partnership's
primary source of revenue. Under certain circumstances, an adverse ruling in the
litigation  could  have  had a  material  adverse  effect  on the  Partnership's
business and financial condition.  Please see Part II Item 1, Legal Proceedings,
for  a  description  of  the  litigation   and  the  pending   settlement.   The
Partnership's fuel supplier is in bankruptcy.  Please see Part II, Item 5, Other
Information,  for a description of the bankruptcy and the Partnership's  actions
in respect of the bankruptcy.

         

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

         

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

         

     For the six months ending June 30, 2001 and 2000, the Facility  achieved an
average Capacity Billing Factor of 98.91% and 99.06%, respectively.  For the six
months  ended June 30,  2001 and 2000,  respectively,  this  resulted in earning
monthly  capacity  payments  aggregating  $56.6  million  and $56.3  million and
bonuses  aggregating  $5.6 million in each period.  The Capacity  Billing Factor
measures the overall availability of the Facility, but gives a heavier weighting
to on-peak availability. During the six months ended June 30, 2001, the Facility
was  dispatched  by FPL  and  generated  1,259,288  megawatt-hours  compared  to
1,079,071 megawatt-hours during the same period in 2000. The increase was due to
higher oil and gas prices  incurred by FPL during the first and second  quarters
to generate energy from its facilities.  The monthly dispatch rate for the first
six months of 2001  ranged from 89% to 95%, as compared to a range of 62% to 96%
for the corresponding period in 2000.

         

     Net income for the six months ended June 30, 2001, was approximately  $10.1
million  compared  to the net  income of  approximately  $11.2  million  for the
corresponding  period in the prior year. The $1.1 million  decrease is primarily
attributable to an increase in net energy costs of $1.5 million primarily due to
natural gas usage and ash disposal, and an expense reversal of $0.9 million made
in 2000 for a  cumulative  change  in  accounting  principle  relating  to major
maintenance  costs. This is offset by a decrease in net  non-operating  costs of
$0.4 million, a decrease in operating and maintenance costs of $0.4 million,  an
increase of electric capacity and bonus revenue of $0.3 million, and an increase
in steam revenue of $0.2 million.
9
Electric Energy RevenuesFor the six months ended
                                            June 30, 2001        June 30, 2000
                                            -------------        -------------

Revenues                                    $ 91.7 million       $ 86.7 million
KWhs                                               1,259.3              1,079.1
Average Capacity Billing Factor                     98.91%               99.06%
Average Dispatch Rate                               91.38%               80.07%
For the six months ended June 30, 2001, the Partnership had total operating
revenues of  approximately  $91.7  million as compared to $86.7  million for the
corresponding  period in the prior year. The $5.0 million  increase in operating
revenue is primarily due to higher energy revenue resulting from higher dispatch
by FPL.

         

     Costs  of  revenues  for  the  six  months   ended  June  30,  2001,   were
approximately  $48.8  million on sales of  1,259,288  MWhs as  compared to $43.1
million on sales of  1,079,071  MWhs for the  corresponding  period in the prior
year.  This  increase is primarily a result of higher fuel and ash costs of $6.1
million  resulting from higher dispatch and the higher cost of fuel in the first
and second quarters of 2001, offset by a decrease in O&M costs of $0.4 million.

         

     Total other  operating  expenses for the six months ended June 30, 2001 and
2000, were approximately $5.7 million.

         

     Net  interest  expense  for  the six  months  ended  June  30,  2001,  were
approximately $27.1 million compared to $27.6 million for the same period in the
prior  year.  December  2000 and June 2001  payments  on Series A-9 of the first
mortgage bonds decreased interest expense by approximately $0.6 million.Liquidity and Capital Resources

         

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

         

     Certain proceeds from the issuance of the First Mortgage Bonds were used to
repay $421 million of the  Partnership's  indebtedness  and  financing  fees and
expenses  incurred in connection with the  development  and  construction of the
Facility and the balance of the proceeds  were  deposited in various  restricted
funds that are being administered by an independent  disbursement agent pursuant
to trust  indentures and a disbursement  agreement.  Funds  administered by such
disbursement agent are invested in specified  investments.  These funds together
with other funds  available to the  Partnership  were being used: (i) to finance
completion of construction, testing, and initial operation of the Facility; (ii)
to finance  construction  interest  and  contingency;  and (iii) to provide  for
initial working capital.
10
The  proceeds of the 1994 Tax Exempt Bonds were used to refund $113 million
principal  amount of  Industrial  Development  Revenue  Bonds  (Series 1992A and
Series  1992B)  previously  issued by the Martin County  Industrial  Development
Authority  for the  benefit of the  Partnership,  and to fund,  in part,  a debt
service reserve  account for the benefit of the holders of its tax-exempt  bonds
and to complete construction of certain portions of the Facility.

         

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

A-1                      $4,397,000                      June 15, 1996
A-2                       4,398,000                      December 15, 1996
A-3                       4,850,000                      June 15, 1997
A-4                       4,851,000                      December 15, 1997
A-5                       5,132,000                      June 15, 1998
A-6                       5,133,000                      December 15, 1998
A-7                       4,998,000                      June 15, 1999
A-8                       4,999,000                      December 15, 1999**
**Note the A-9 Series does not fully mature until December 15, 2010.

         

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

         

     The Partnership,  pursuant to certain of the Project Contracts, is required
to post letters of credit,  which, in the aggregate,  will have a face amount of
no more than $65  million.  Certain of these  letters of credit have been issued
pursuant to a Letter of Credit and  Reimbursement  Agreement  with Credit Suisse
and the  remaining  letters of credit  will be issued  when  required  under the
Project Contracts,  subject to conditions contained in such Letter of Credit and
Reimbursement  Agreement. As of June 30, 2001, no drawings have been made on any
of these letters of credit. The Letter of Credit and Reimbursement Agreement has
a term of seven years subject to extension at the  discretion of the banks party
thereto.  In 1996,  Credit  Suisse  merged with First Boston and is now known as
Credit Suisse First Boston.

         

     The  Partnership  entered into a debt service  reserve letter of credit and
reimbursement agreement,  dated as of November 1, 1994, with Banque Nationale de
Paris ("BNP")  pursuant to which a debt service  reserve letter of credit in the
amount of  approximately  $60 million was issued.  This  agreement has a rolling
term of five years,  subject to extension at the  discretion  of the banks party
thereto.  Drawings on the debt service reserve letter of credit became available
on the  Commercial  Operation Date of the Facility to pay principal and interest
on the First Mortgage Bonds, the 1994 Tax Exempt Bonds and interest on any loans
created by  drawings on such debt  service  reserve  letter of credit.  Cash and
other  investments held in the debt service reserve account will be drawn on for
the Tax Exempt Bonds prior to any drawings on the debt service reserve letter of
credit.  As of June 30,  2001,  no drawings  have been made on the debt  service
reserve  letter of credit.  In April 2000, BNP merged with Banque Paribas and is
now known as BNP Paribas.
11
In order to  provide  for the  Partnership's  working  capital  needs,  the
Partnership  entered into a Revolving  Credit Agreement with Credit Suisse First
Boston dated as of November 1, 1994.  This  Agreement  has a term of seven years
subject to extension at the discretion of the banks party thereto. The revolving
credit agreement has a maximum  available amount of $15 million and may be drawn
on by the Partnership from time to time. The interest rate is based upon various
short-term indices at the Partnership's option and is determined  separately for
each draw. During the six months ended June 30, 2001, working capital loans were
made under the working capital  facility.  All working capital loans were timely
repaid.PART II
                                OTHER INFORMATION
Item 1   LEGAL PROCEEDINGSDispute with FPL

         

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

         

     The  complaint  alleges that FPL took the position  that if the Facility is
off-line for any reason,  then FPL is under no  obligation to allow the Facility
to reconnect to FPL's system. The original complaint asserted, however, that the
Partnership  specifically and successfully negotiated for a contractual right to
operate  the  Facility  up to 100 MW  ("Minimum  Load") in order to enable it to
cogenerate  sufficient steam to maintain its Qualifying  Facility status.  While
FPL has not disputed that the Partnership  may maintain  Minimum Load operations
if the  Facility  is  delivering  power when FPL  requests  the  Partnership  to
decommit  the  Facility,  the  complaint  states that FPL has  claimed  absolute
discretion  to deny the  Partnership  permission  to reconnect the Facility with
FPL's system.
12
Since the loss of  Qualifying  Facility  status  may  result in an event of
default  under the Power  Purchase  Agreement,  the  Partnership  took action to
address this matter.

         

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

         

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

         

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

         

     On December 19, 2000, FPL and the  Partnership  participated in a mediation
conference with respect to the pending litigations described herein. As a result
of this conference,  FPL and the Partnership executed two Settlement  Agreements
intended to resolve all pending  litigation.  Only the Settlement  Agreement for
the pending  federal  court  litigation  requires  amendment  of the power sales
agreement.  The  amendment  must  be  approved  by the  Florida  Public  Service
Commission,  and certain  conditions  set forth in the  Indenture for the Bonds,
including confirmation of the Bonds' investment grade rating, must be met for it
to become effective.
13
An outline of the  business  terms set forth in this  Settlement  Agreement
provides that if the Facility is off-line for any reason,  the Partnership shall
have the right,  upon up to 6 hours notice and subject only to safety and system
reliability  issues,  to reconnect to FPL's system and produce up to 100 MW. The
Settlement  Agreement  provides that if this occurs when FPL has decommitted the
Facility,  the Partnership will be paid FPL's actual "as available" energy rates
for the  first 360 of such  hours  each year (in this  context,  "as  available"
energy costs  reflect  actual energy  production  costs avoided by FPL resulting
from the production or purchase of energy from the Facility and other  sources).
If fewer than 360 hours are used in any year, FPL may carry the balance forward,
not to  exceed  a total of 1440  hours in any  year.  If the  hours  accumulated
exercising this reconnection right exceed FPL's balance, the Partnership will be
paid for energy  produced during those hours at the energy rates set forth under
the power sales agreement.
         

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

         

     On May 17, 2001, the Partnership and FPL executed an amendment to the power
purchase  agreement  to  implement  the  Settlement  Agreement  relating  to the
litigation pending in federal court. The amendment was filed for approval by the
Florida Public Service Commission  ("FPSC") on June 7, 2001. At a public meeting
on July 24, 2001,  the FPSC voted to approve the  amendment.  On August 8, 2001,
the FPSC issued its order on Proposed Agency Plan ("PAA"),  in which it proposed
to approve the  amendment.  The PPA order  provides a 21-day  period in which an
affected party may protest the proposed  approval.  If no protest is filed,  the
FPSC's  approval  will  become  effective.  At  that  time,  the  FPSC's  action
potentially  may  be  subject  to a  30-day  appeal  period.  In  addition,  the
conditions set forth in the Indenture for the Bonds have been met.

         

     On December 12, 2000, FPL filed a complaint  against the Partnership in the
Circuit Court of the 19th Judicial  District in and for Martin County,  Florida.
In its  complaint,  FPL alleged  that the  Partnership  breached the power sales
agreement by failing to include certain  payments from its coal supplier and its
coal  transporter in the  Partnership's  calculation of its fuel costs which are
included in the  calculation  of the actual  energy  costs under the power sales
agreement.  The power sales agreement  requires a sharing of actual energy costs
between FPL and the  Partnership  to the extent the actual costs differ  (either
upward or  downward)  from a formula  contained  in the  agreement.  FPL  sought
unspecified  damages  and  declaratory  relief  including  a  finding  that  the
Partnership  breached  the  power  sales  agreement.  The  Settlement  Agreement
provides that the  Partnership  will include in future  calculations of its fuel
costs all costs, credits, rebates,  discounts, and  allowances/concessions  from
all past, current or future vendors of fuel, ash, lime, and fuel  transportation
subject to  execution  of a  definitive  agreement  embodying  the terms of this
Settlement  Agreement.  The Partnership will make a one time payment of $867,583
to FPL as  settlement  for  disputed  amounts  under fuel audits  performed  for
calendar years 1997 and 1998.
14
Item 5   OTHER INFORMATIONCoal Supplier Bankruptcy

         

     As previously reported, on April 6, 2001, Lodestar Holdings,  Inc. ("LHI"),
the parent company of the  Partnership's  coal supplier,  Lodestar Energy,  Inc.
("LEI")  announced  that on March 30,  2001,  certain  holders of a  substantial
majority of LHI's senior notes filed an  involuntary  bankruptcy  petition  (the
"Involuntary  Petition") against LHI in the U.S.  Bankruptcy Court in Lexington,
Kentucky (the "Bankruptcy Court").

         

     On April  26,  2001,  LEI and LHI  consented  to the  entry of an order for
relief as requested in the  Involuntary  Petition under Chapter 11 of the United
States Bankruptcy Code (the "Bankruptcy  Code"). On April 27, 2001, an order for
such relief was  entered by the  Bankruptcy  Court with  respect to both LHI and
LEI.  LHI and LEI expect to  continue  operating  their  business as "debtors in
possession."

         

     The  Partnership  has  a  coal  purchase   agreement  (the  "Coal  Purchase
Agreement") with LEI pursuant to which LEI supplies all of the coal needs of the
Partnership's 330 megawatt (net) pulverized coal-fired cogeneration facility and
disposes of ash produced at that facility. In the event that LEI were to default
under the Coal Purchase  Agreement or reject the agreement  under Section 365 of
the Bankruptcy Code, the Partnership may not be able to find alternative sources
of coal and options for ash  disposal on favorable  or  commercially  acceptable
terms.

         

     If it becomes necessary to secure  alternative  sources of coal and options
for ash disposal,  the  Partnership  may not be able to obtain such  alternative
sources  of  coal or ash  disposal  on  commercially  reasonable  terms.  If the
Partnership is unable to obtain such alternative  coal or ash disposal  services
or  there  is  a  delay  in  obtaining  them,  the  Partnership  may  experience
significant   business   interruption.   If  the  Partnership  can  obtain  such
alternative sources of coal or ash disposal only on commercially  adverse terms,
the Partnership may experience increased fuel costs and waste handling expenses.
Any such  interruption  or  increased  costs or  expenses  could have a material
adverse impact on the Partnership's financial condition.

         

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

         

     The  Partnership  has  obtained  all  material  environmental  permits  and
approvals  required,  as of June  30,  2001,  in order  to  continue  commercial
operation of the Facility. Certain of these permits and approvals are subject to
periodic renewal.  Certain  additional permits and approvals will be required in
the future for the continued  operation of the Facility.  The Partnership is not
aware of any  technical  circumstances  that would  prevent the issuance of such
permits  and  approvals  or  the  renewal  of  currently  issued  permits.   The
Partnership  timely  filed its  application  for a Title V air permit on May 24,
1996. The permit was issued on October 11, 1999.
15
On November 10, 2000 the  Partnership  submitted to the DEP an  application
for modifications to the Site Certificate.  The proposed modifications include a
requested increase of the groundwater withdrawal,  clarification of authority to
allow   emergency   water   withdrawals,   changes  to  groundwater   monitoring
requirements  and programs,  and changing the address of the facility.  On March
14, 2001 the DEP approved and issued a final order  modifying the  Conditions of
Certification  related to South Florida Management  District ("SFWMD") authority
to  authorize  withdrawals  of ground or surface  water and a  modification  for
storage  pond  elevation  changes.  The  remaining  modifications  to  the  Site
Certificate for additional  wells in the Upper  Floridian  Aquifer and to revise
groundwater and surface water monitoring are presently on hold.  Pending further
review and  approval of the well issues with  SFWMD,  these  modifications  will
remain inactive with the DEP.Debt Service Reserve Account

         

     As permitted by the  Partnership's  financing  arrangements,  on August 19,
1998, the  Partnership  requested  that the balance in the Debt Service  Reserve
Account be reduced  to the Debt  Service  Reserve  Account  Required  Balance by
reducing the Debt Service  Reserve  Letter of Credit.  On January 11, 1999,  the
reduction  was  approved.  The Debt  Service  Reserve  Account now  contains the
$29,609,840  Debt  Service  Reserve  Letter of Credit  and  $12,501,000  of cash
(available only as a debt service reserve for the Tax Exempt Bonds).Item 6   EXHIBITS AND REPORTS ON FORM 8-K

         

        a)   Reports on Form 8-K:

             
     

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

         

     Pursuant to the  requirements  of the Securities  Exchange Act of 1934, the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorizedINDIANTOWN COGENERATION, L.P.
                                               (Co-Registrant)


Date:  August 14, 2001                          _______________________________
                                                John R. Cooper
                                                Vice President and
                                                Chief Financial Officer


                                                INDIANTOWN COGENERATION FUNDING
                                                CORPORATION
                                                (Co-Registrant)


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



                                       17