##### 



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, 2004 Commission File Number 33-82034 INDIANTOWN COGENERATION, L.P.  Delaware
    
    52-1722490(State or other jurisdiction of
incorporation or organization)
    
    (I.R.S. Employer Identification Number)
 INDIANTOWN COGENERATION FUNDING CORPORATION
(Exact name of co-registrant as specified in its charter) Delaware
    
    52-1889595(State or other jurisdiction of
incorporation or organization)
    
    (I.R.S. Employer Identification Number)
 7600 Wisconsin Avenue  Bethesda, Maryland
20814-6161
   (301)-280-6800   Indicate by check mark whether the co-registrants (1) have filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
co-registrants were required to file such reports), and (2) have been subject
to such filing requirements for the past
90 days.     [X]  Yes     [   ]  No Indicate by check mark whether the co-registrants are accelerated filers (as
defined in Rule 12b-2 of the Exchange
Act)     [   ]  Yes     [X]  No As of August 12, 2004, there were 100 shares of common stock of Indiantown
Cogeneration Funding Corporation, $1 par value, outstanding.




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Indiantown Cogeneration, L.P.
Indiantown Cogeneration Funding Corporation Page No.PART I FINANCIAL INFORMATIONItem 1 Financial Statements:Condensed Consolidated Balance Sheets as of June 30, 2004 (Unaudited) and
December 31, 2003
    
    
    1Consolidated Statements of Operations for the Three Months and Six Months
Ended June 30, 2004 (Unaudited) and June 30, 2003 (Unaudited)
    
    
    3Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2004 (Unaudited) and
June 30, 2003 (Unaudited)
    
    
    4Notes to Consolidated Financial Statements (Unaudited)
    
    
    5Item 2 Managements Discussion and Analysis of Financial
Condition and Results of Operations
    
    
    9Item 3 Quantitative and Qualitative Disclosures About Market Risk
    
    
    19Item 4 Controls and Procedures
    
    
    19PART II OTHER INFORMATIONItem 4 Submission of Matters to a Vote of Security Holders
    
    
    20Item 5 Other Information
    
    
    20Item 6 Exhibits and Reports on Form 8-K
    
    
    22Signatures
    
    
    23




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PART I
FINANCIAL INFORMATION Indiantown Cogeneration, L.P. and Subsidiary
Condensed Consolidated Balance Sheets
(in thousands) June 30,
    
    December 31,ASSETS
    
    2004
    
    2003(Unaudited)CURRENT ASSETS:Cash and cash equivalents
    
    $
    1,032
    
    
    $
    1,517Accounts receivable-trade
    
    
    16,308
    
    
    
    16,104Inventories
    
    
    898
    
    
    
    793Prepaids
    
    
    975
    
    
    
    1,088Investments held by trustee, including
restricted funds of $5,558 and $5,557,
respectively
    
    
    7,309
    
    
    
    8,107Total current assets
    
    
    26,522
    
    
    
    27,609INVESTMENTS HELD BY TRUSTEE,
restricted funds
    
    
    12,509
    
    
    
    16,501DEPOSITS
    
    
    273
    
    
    
    243NET PROPERTY, PLANT & EQUIPMENT
    
    
    577,389
    
    
    
    584,828FUEL RESERVE
    
    
    2,292
    
    
    
    1,991DEFERRED FINANCING COSTS, net of accumulated
amortization of $49,433 and $48,353,
respectively
    
    
    12,983
    
    
    
    14,063Total assets
    
    $
    631,968
    
    
    $
    645,235
 The accompanying notes are an integral part of these consolidated financial statements. 1




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Indiantown Cogeneration, L. P. and Subsidiary
Condensed Consolidated Balance Sheets
(in thousands) June 30,
    
    December 31,LIABILITIES AND PARTNERS CAPITAL
    
    2004
    
    2003(Unaudited)CURRENT LIABILITIES:Accounts payable and accrued liabilities
    
    $
    6,530
    
    
    $
    9,407Accounts payable and accrued liabilities to related
parties (Note 4)
    
    
    1,277
    
    
    
    1,809Accrued interest
    
    
    2,183
    
    
    
    2,218Current portion  First Mortgage Bonds
    
    
    16,521
    
    
    
    16,785Current portion lease payable  railcars
    
    
    427
    
    
    
    412Total current liabilities
    
    
    26,938
    
    
    
    30,631LONG TERM DEBT:First Mortgage Bonds
    
    
    392,628
    
    
    
    400,757Tax Exempt Facility Revenue Bonds
    
    
    125,010
    
    
    
    125,010Lease payable  railcars
    
    
    2,575
    
    
    
    2,792Total long term debt
    
    
    520,213
    
    
    
    528,559ASSET RETIREMENT OBLIGATION
    
    
    96
    
    
    
    92Total liabilities
    
    
    547,247
    
    
    
    559,282PARTNERS CAPITAL:General Partners:Palm Power Corporation
    
    
    8,472
    
    
    
    8,595Indiantown Project Investment Partnership
    
    
    16,902
    
    
    
    17,147Limited Partners:Toyan Enterprises
    
    
    25,459
    
    
    
    25,829Thaleia, LLC
    
    
    33,888
    
    
    
    34,382Total partners capital
    
    
    84,721
    
    
    
    85,953Total liabilities and partners capital
    
    $
    631,968
    
    
    $
    645,235
 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 Operations
(in thousands) Three Months
    
    Three Months
    
    Six Months
    
    Six MonthsEnded
    
    Ended
    
    Ended
    
    EndedJune 30, 2004
    
    June 30, 2003
    
    June 30, 2004
    
    June 30, 2003(Unaudited)
    
    (Unaudited)
    
    (Unaudited)
    
    (Unaudited)Operating Revenues:Electric capacity and capacity
bonus revenue
    
    $
    31,408
    
    
    $
    31,282
    
    
    $
    62,800
    
    
    $
    62,476Electric energy revenue
    
    
    13,409
    
    
    
    13,436
    
    
    
    28,412
    
    
    
    27,025Steam revenue
    
    
    66
    
    
    
    62
    
    
    
    164
    
    
    
    131Total operating revenues
    
    
    44,883
    
    
    
    44,780
    
    
    
    91,376
    
    
    
    89,632Cost of Sales:Fuel and ash
    
    
    15,912
    
    
    
    17,843
    
    
    
    33,510
    
    
    
    34,717Operating and maintenance
    
    
    6,429
    
    
    
    7,788
    
    
    
    10,851
    
    
    
    11,429Depreciation
    
    
    3,819
    
    
    
    3,797
    
    
    
    7,615
    
    
    
    7,594Loss on sale of assets
    
    
    
    
    
    
    
    
    
    
    7
    
    
    
    Total cost of sales
    
    
    26,160
    
    
    
    29,428
    
    
    
    51,983
    
    
    
    53,740Gross Profit
    
    
    18,723
    
    
    
    15,352
    
    
    
    39,393
    
    
    
    35,892Other Operating Expenses:General and administrative
    
    
    772
    
    
    
    1,015
    
    
    
    1,441
    
    
    
    2,070Insurance and taxes
    
    
    1,726
    
    
    
    1,806
    
    
    
    3,381
    
    
    
    3,407Total other operating expenses
    
    
    2,498
    
    
    
    2,821
    
    
    
    4,822
    
    
    
    5,477Operating Income
    
    
    16,225
    
    
    
    12,531
    
    
    
    34,571
    
    
    
    30,415Non-Operating Income (Expense):Interest expense
    
    
    (13,303
    )
    
    
    (13,865
    )
    
    
    (26,639
    )
    
    
    (27,333
    )Interest/other income
    
    
    289
    
    
    
    312
    
    
    
    536
    
    
    
    541Net non-operating expense
    
    
    (13,014
    )
    
    
    (13,553
    )
    
    
    (26,103
    )
    
    
    (26,792
    )Income (Loss) Before Cumulative Effect of
Change in Accounting Principle
    
    
    3,211
    
    
    
    (1,022
    )
    
    
    8,468
    
    
    
    3,623Cumulative Effect of Change in
Accounting Principle
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (49
    )Net Income (Loss)
    
    $
    3,211
    
    
    ($
    1,022
    )
    
    $
    8,468
    
    
    $
    3,574
 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 Flows
(in thousands) Six Months
    
    Six MonthsEnded
    
    EndedJune 30,
    
    June 30,2004
    
    2003(Unaudited)
    
    (Unaudited)CASH FLOWS FROM OPERATING ACTIVITIES:Net income
    
    $
    8,468
    
    
    $
    3,574Adjustments to reconcile net income to net
cash provided by operating activities:Cumulative effect of a change in accounting
principle
    
    
    
    
    
    
    49Depreciation, amortization and accretion
    
    
    8,699
    
    
    
    8,478Loss on disposal of assets
    
    
    7
    
    
    
    (Increase) decrease in accounts receivable
    
    
    (204
    )
    
    
    224Increase in inventories and fuel reserves
    
    
    (406
    )
    
    
    (134
    )Decrease (increase) in deposits and prepaids
    
    
    91
    
    
    
    (901
    )Decrease in accounts payable, accrued
liabilities and accrued interest
    
    
    (3,444
    )
    
    
    (208
    )Net cash provided by operating activities
    
    
    13,211
    
    
    
    11,082CASH FLOWS FROM INVESTING ACTIVITIES:Purchase of property, plant & equipment
    
    
    (200
    )
    
    
    (32
    )Proceeds from sale of assets
    
    
    9
    
    
    
    Decrease (increase) in investment held by trustee
    
    
    4,790
    
    
    
    (2,766
    )Net cash provided by (used in) investing
activities
    
    
    4,599
    
    
    
    (2,798
    )CASH FLOWS FROM FINANCING ACTIVITIES:Payment on capital lease obligation  railcars
    
    
    (202
    )
    
    
    (187
    )Repayment under letter of credit agreement
    
    
    
    
    
    
    (702
    )Payment of First Mortgage Bonds
    
    
    (8,393
    )
    
    
    (7,283
    )Capital distributions
    
    
    (9,700
    )
    
    
    Net cash used in financing activities
    
    
    (18,295
    )
    
    
    (8,172
    )CHANGE IN CASH AND CASH EQUIVALENTS
    
    
    (485
    )
    
    
    112CASH and CASH EQUIVALENTS, beginning of year
    
    
    1,517
    
    
    
    290CASH and CASH EQUIVALENTS, end of period
    
    $
    1,032
    
    
    $
    402
 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 June 30, 2004
(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)
under a Power Purchase Agreement (PPA) and supplies steam to Louis Dreyfus
Citrus, Inc. (LDC), successor to Caulkins Indiantown Citrus Co., under an
Energy Services Agreement (ESA). In July 1994, the Partnership formed a
wholly owned subsidiary, Indiantown Cogeneration Funding Corporation, solely
for the purpose of issuing debt securities in connection with the financing of
the Facility. 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 December 31, 2003 Annual Report on Form 10-K filed
with the Securities and Exchange Commission (SEC). 2. RELATIONSHIP WITH NATIONAL ENERGY & GAS TRANSMISSION, INC.: The Partnership is managed by Power Services Company (PSC, formerly known as
PG&E National Energy Group Company), pursuant to a Management Services
Agreement (the MSA). The Facility is operated by U.S. Operating Services
Company (OSC, formerly known as PG&E Operating Services Company),pursuant to
an Operation and Maintenance Agreement (the O&M Agreement). PSC and OSC are
general partnerships indirectly wholly owned by National Energy & Gas
Transmission, Inc. (NEGT, formerly known as PG&E National Energy Group,
Inc.). NEGT is an indirect subsidiary of PG&E Corporation. 5




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On July 8, 2003, NEGT and certain subsidiaries voluntarily filed petitions for
relief under the provisions of Chapter 11 of the U.S. Bankruptcy Code
(collectively, the NEGT Bankruptcy) in
the Greenbelt Division of the United States Bankruptcy Court for the District
of Maryland (the Bankruptcy Court). Neither the Partnership nor any of its NEGT affiliated partners, including
Toyan Enterprises (Toyan) and Indiantown Project Investment, L.P. (IPILP),
or PSC and OSC, are parties to the filings by NEGT or other affiliates for
protection under the NEGT Bankruptcy. The Partnership believes that it will
not be substantively consolidated with NEGT in any bankruptcy proceeding
involving NEGT and the NEGT Bankruptcy does not result in an event of default
under the principal project contracts or the principal financing documents of
the Facility. On February 26, 2004, NEGT filed with the Bankruptcy Court its Third Amended
Plan of Reorganization and the related Disclosure Statement. A Modified Third
Amended Plan of Reorganization (POR) was confirmed by order of the Bankruptcy
Court on May 3, 2004. The POR contemplates that NEGT will retain and continue
to operate its power generation and pipeline businesses unless they are sold
(as described in the POR), separate from PG&E Corporation, and issue new debt
securities and common stock. On July 23, 2004, NEGT entered into a definitive agreement with Denali Power,
LLC, a company formed by affiliates of ArcLight Capital Partners, LLC and
Caithness Energy, LLC, (the Denali Agreement) to acquire NEGTs equity
interests in 12 power plants and a natural gas pipeline, including NEGTs
indirect interests in the Partnership. The Denali Agreement will be subject to
Bankruptcy Court approval, and contemplates a court-sanctioned auction process
in accordance with customary bidding procedures approved by the Bankruptcy
Court. On August 10, 2004, the Bankruptcy Court issued an order approving the
bidding procedures. In the court-sanctioned auction, NEGT will seek offers
that are higher or otherwise better than that which has been negotiated with
Denali Power, LLC. The transaction is expected to close in the first quarter
of 2005 and is subject to regulatory and third party approvals. NEGTs indirect ownership interest in the Partnership is included within the
Denali Agreement. The Partnership cannot predict whether a sale by NEGT of its
interest in the Partnership, whether pursuant to the Denali Agreement or
otherwise (a NEGT Interest Sale), will be completed. As presently
contemplated, the NEGT Interest Sale is not expected to affect the MSA and the
O&M Agreement with the Partnership. On August 4, 2004, Standard and Poors (S&P) issued a press release, which
stated that the announcement by NEGT of its agreement to sell National Energy
Power Company, LLC, through which NEGT holds interest in the Partnership, to
Denali Power, LLC will not affect the rating on the Partnership. S&P further
stated that it believes the management and operations functions will continue
to be performed by PSC and OSC, respectively, after the sale is consummated.
S&Ps rating on the senior secured debt of Indiantown Cogeneration Funding
Corporation remains at BBB- with a credit watch negative. 3. SIGNIFICANT ACCOUNTING POLICIES: Except as disclosed herein, the Partnership is following the same accounting
principles discussed in the Partnerships December 31, 2003 Annual Report on
Form 10-K. 6




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Adoption of New Accounting Pronouncements On January 1, 2003, the Partnership adopted 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. Upon implementation of this statement, the Partnership recorded approximately
$44,000 in property, plant and equipment to reflect the fair value of the asset
retirement costs as of the date the obligation was incurred, approximately
$9,000 of accumulated depreciation through December 31, 2002 and an asset
retirement obligation of approximately $84,000. The cumulative effect of the
change in accounting principle as a result of adopting this statement was a
loss of approximately $49,000. The Partnership recognized accretion of $4,000
in the six month period ended June 30, 2004 and $8,000 in the year ended
December 31, 2003. 4. RELATED PARTY TRANSACTIONS: The Partnership has an MSA with PSC for the day-to-day management and
administration of the Partnerships business relating to the Facility. The
agreement commenced on September 30, 1992, was amended and restated on November
1, 1994, and will continue through October 31, 2028. The cost of services is
included in general and administrative expenses in the accompanying
consolidated statements of operations. The total expense incurred for these
services for each of the six months ended June 30, 2004 and 2003 was $389,000. The Partnership has an O&M Agreement with OSC for the operation and maintenance
of the Facility for a period of 30 years (starting September 30, 1992).
Compensation to 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 expense incurred for these
services for the six months ended June 30, 2004 and 2003 was $921,000 and
$904,000, respectively. 5. LETTERS OF CREDIT: As previously reported, on October 10, 2003, the Partnership closed a
transaction with Calyon New York Branch (Calyon, formerly known as Credit
Lyonnais New York Branch), as agent and arranger, to replace certain letters of
credit. The facilities include a Debt Service Reserve Letter of Credit up to
$29.9 million, which has a term of seven years; Performance Letters of
Credit up to $15.0 million, which have a term of five years; and a Working
Capital Revolving Facility up to $10.0 million, which has a term of three years
and is presently capped at $3.0 million. Under the Performance Letters of
Credit, the ESA Letter of Credit for $10.0 million was issued in favor of LDC. 7




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On June 11, 2004, under the Performance Letters of Credit, a Qualifying
Facility (QF) Letter of Credit was issued in favor of FPL for an aggregate
amount of $4.0 million, which is to be increased from time to time up to $5.0
million. Amounts previously deposited into a cash reserve account of $4.0
million held in lieu of a letter of credit were released and deposited in
accordance with the terms set forth in the Amended and Restated Disbursement
Agreement. 6. COMMITMENTS AND CONTINGENCIES: In 2003, a long-term interruption of the delivery of Appalachian coal to St.
Johns River Power Park (SJRPP) meeting the criteria contained in the PPA
occurred. As a result of the interruption, the PPA requires that the
Partnership and FPL agree upon a comparable replacement index (the Replacement
Index) to escalate the coal cost component of the Unit Energy Cost (UEC)
paid by FPL to the Partnership. A Letter Agreement, dated as of July 29, 2004,
was entered into by the Partnership and FPL to fulfill the mutual obligation to
develop a Replacement Index. The Replacement Index, which will be used to
calculate the coal cost component of the UEC beginning with the first calendar
quarter of 2004, is based on the weighted-average of Appalachian coal delivered
by rail to Florida utilities and municipalities. The Replacement Index will
comprise data meeting the same coal specifications as the SJRPP coal data used
in the original index. The Letter Agreement provides for reversion to the
original index should qualified Appalachian coal deliveries resume to SJRPP in
sufficient quantities as specified in the Letter Agreement. FPL will file a letter in August, 2004 to the Florida Public Service Commission
(FPSC) to inform the Division of Economic Regulation that, as explicitly
contemplated by the terms of the PPA, the original index has been replaced with
the Replacement Index and falls within the rule that states an application for
approval is not required if the modification was explicitly contemplated by the
terms of the contract. Although the Partnership agrees with the position of
FPL that the Replacement Index does not require formal approval by the FPSC,
the Partnership will file a petition for a declaratory statement from the FPSC,
requesting the FPSC to confirm this position. The effectiveness of the Letter
Agreement is contingent upon an order of the FPSC finding that no approval of
the Letter Agreement is necessary. No adjustment has been made to electric
energy revenues in 2004 relating to the Replacement Index. The Partnership has included its coal supplier, Massey Coal Sales Company, Inc.
(Massey), in the process to achieve a similar index, as contemplated in the
First Amendment to the Coal Purchase and Sales Agreement. To date the parties
have been unable to agree on pricing terms consistent with the Replacement
Index. Discussions are continuing. The Partnership cannot predict whether
such an agreement will be reached in the future. 7. RECLASSIFICATIONS: Certain prior year amounts have been reclassified to conform with the current
year presentation. 8




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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 accompanying consolidated
financial statements included herein. Further, this Quarterly Report on Form
10-Q should be read in conjunction with the Partnerships December 31, 2003
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 and constitute
forward-looking statements under the Private Securities Litigation Reform Act
of 1995. 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 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 may be
affected by the performance of equipment, levels of dispatch, the receipt of
certain capacity and other fixed payments, electricity prices, fuel deliveries
and fuel prices and any mismatch between the actual energy costs and the energy
revenue reimbursement of those costs; unanticipated changes in operating
expenses or capital expenditures or other maintenance activities; variations in
weather and natural disasters; and the potential impacts of threatened or
actual terrorism and war. Currently, coal supply and transportation demands
and constraints in the eastern region of the United States have resulted in a
general decline in fuel inventories at power stations, including the Facility.
CSX Transportation, Inc. (CSX) has communicated to the Partnership that, for
an unspecified period of time, CSX may not meet all expected schedules for fuel
deliveries. The Partnership believes that CSX has provided similar
communication to all eastern region customers. CSX has stated that it will
maintain service such that the Facility will be able to maintain minimum fuel
inventories and that operations at the Facility will not be impacted due to
shortages of fuel. The Partnership normally maintains
approximately thirty days in fuel supply on site. As of August 12, 2004,
on-site fuel inventory was approximately ten days. Although the Partnership
has not had to interrupt operations due to restricted fuel supplies, the
Partnership cannot predict whether in the future it will suffer any
interruptions of operations due to fuel supply constraints. The Partnership
continues to closely monitor this situation and conducts necessary
communications with CSX and Massey Coal Sales Company, Inc. (Massey) to
address the needs of the Facility. 9




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##### 



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 qualifying facility status, which
failure could cause a default under PPA. 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 including changes in corporate governance and
securities laws requirements. 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, the cost of which could be significant, and the
outcome of any potential future litigation and environmental matters. Business Description 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. Each agreement year the facility is entitled to four weeks of
outages to perform scheduled maintenance, and each fifth agreement year, a
total of ten weeks of outage time to perform major maintenance. Differences in
the timing and scope of scheduled and major maintenance can have a significant
impact on the revenues and operational costs. 10




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##### 



Executive Summary During the quarter ended June 30, 2004, the Facilitys operating performance
continued to be strong in a challenging business environment. The Partnership
received the maximum amount for its capacity bonus payments from FPL. The
electric energy payments received in the quarter ended June 30, 2004 were not
sufficient to cover the Partnerships variable costs of electric energy
production, since the energy price paid by FPL for the coal cost component of
the energy payment was less than the price of base coal in the amended coal
purchase agreement. The PPA provides for a quarterly indexing of the coal component of the energy
price. This indexing involved the computation each quarter of the percent
change in St. Johns River Power Parks (SJRPP) domestic Appalachian coal
purchases, contract and spot, as reported to the Florida Public Service
Commission (FPSC). In 2003, a long-term interruption of the delivery of
coal to SJRPP meeting the criteria contained in the PPA occurred. A Letter
Agreement, dated as of July 29, 2004, was entered into by the Partnership and
FPL to fulfill the mutual obligation to develop a comparable replacement index
(the Replacement Index). The Replacement Index, which will be used to
calculate the coal cost component of the UEC beginning with the first calendar
quarter of 2004, is based on the weighted-average of Appalachian coal delivered
by rail to Florida utilities and municipalities. The effectiveness of the
Letter Agreement is contingent upon an order of the FPSC finding that no
approval of the Letter Agreement is necessary. No adjustment has been made to
electric energy revenues in 2004 relating to the Replacement Index. The Partnership has included its coal supplier, Massey Coal Sales Company, Inc.
(Massey), in the process to achieve a similar index, as contemplated in the
First Amendment to the Coal Purchase and Sales Agreement. To date the parties
have been unable to agree on pricing terms consistent with the Replacement
Index. Discussions are continuing. The Partnership cannot predict whether
such an agreement will be reached in the future. In accordance with the terms of the PPA, the Partnership has scheduled the
Facility for four weeks of maintenance outages during 2004, which is for the
same duration experienced during 2003. Since the scope and duration of the
scheduled maintenance outages for 2004 is comparable to those experienced
during 2003, the Partnership expects maintenance expenses to be approximately
the same in 2004 as compared to 2003. The Partnership has obtained all material environmental permits and approvals
required as of June 30, 2004, 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. 11




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##### 



Relationship with NEGT On July 8, 2003, NEGT and certain subsidiaries voluntarily filed petitions for
relief under the provisions of Chapter 11 of the U.S. Bankruptcy Code
(collectively, the NEGT Bankruptcy) in the Greenbelt Division of the United
States Bankruptcy Court for the District of Maryland (the Bankruptcy Court). Neither the Partnership nor any of its NEGT affiliated partners, Toyan and
IPILP, or PSC and OSC, are parties to the NEGT Bankruptcy. The Partnership
believes that it will not be substantively consolidated with NEGT in any
bankruptcy proceeding involving NEGT and the NEGT Bankruptcy does not result in
an event of default under the principal project contracts or the principal
financing documents of the Facility. On February 26, 2004, NEGT filed with the Bankruptcy Court its Third Amended
Plan of Reorganization and the related Disclosure Statement. A Modified Third
Amended Plan of Reorganization (POR) was confirmed by order of the Bankruptcy
Court on May 3, 2004. The POR contemplates that NEGT will retain and continue
to operate its power generation and pipeline businesses unless they are sold
(as described in the POR), separate from PG&E Corporation, and issue new debt
securities and common stock. On July 23, 2004, NEGT entered into a definitive agreement with Denali Power,
LLC, a company formed by affiliates of ArcLight Capital Partners, LLC and
Caithness Energy, LLC, (the Denali Agreement) to acquire NEGTs equity
interests in 12 power plants and a natural gas pipeline, including NEGTs
indirect interests in the Partnership. The Denali Agreement will be subject to
Bankruptcy Court approval, and contemplates a court-sanctioned auction process
in accordance with customary bidding procedures approved by the Bankruptcy
Court. On August 10, 2004, the Bankruptcy Court issued an order approving the
bidding procedures. In the court-sanctioned auction, NEGT will seek offers
that are higher or otherwise better than that which has been negotiated with
Denali Power, LLC. The transaction is expected to close in the first quarter
of 2005 and is subject to regulatory and third party approvals. NEGTs indirect ownership interest in the Partnership is included within the
Denali Agreement. The Partnership cannot predict whether a sale by NEGT of its
interest in the Partnership, whether pursuant to the Denali Agreement or
otherwise (a NEGT Interest Sale), will be completed. As presently
contemplated, the NEGT Interest Sale is not expected to affect the MSA and the
O&M Agreement with the Partnership. On August 4, 2004, Standard and Poors (S&P) issued a press release, which
stated that the announcement by NEGT of its agreement to sell National Energy
Power Company, LLC, through which NEGT holds interest in the Partnership, to
Denali Power, LLC will not affect the rating on the Partnership. S&P further
stated that it believes the management and operations functions will continue
to be performed by PSC and OSC, respectively, after the sale is
consummated. S&Ps rating on the senior secured debt of Indiantown
Cogeneration Funding Corporation remains at BBB- with a credit watch negative. 12




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##### 



Results of Operations The following table sets forth operating revenue and related data for the three
months and six months ended June 30, 2004 and 2003 (dollars and volumes in
millions). For the three months ended June 30,2004
    
    2003Factor
    
    FactorAverage Capacity Billing Factor
    
    
    101.12
    %
    
    
    97.06
    %Average Dispatch Rate
    
    
    89.72
    %
    
    
    93.01
    %
 Volume
    
    Dollars
    
    Volume
    
    DollarsOperating Revenues:Capacity and bonus
    
    
    
    
    
    $
    31.4
    
    
    
    
    
    
    $
    31.3Electric (Kwh)
    
    
    540.0
    
    
    
    13.4
    
    
    
    567.2
    
    
    
    13.4Steam (lbs)
    
    
    264.8
    
    
    
    0.1
    
    
    
    224.6
    
    
    
    0.1Total operating revenues
    
    
    
    
    
    $
    44.9
    
    
    
    
    
    
    $
    44.8
 For the six months ended June 30,2004
    
    2003Factor
    
    FactorAverage Capacity Billing Factor
    
    
    100.32
    %
    
    
    96.54
    %Average Dispatch Rate
    
    
    88.22
    %
    
    
    87.48
    %
 Volume
    
    Dollars
    
    Volume
    
    DollarsOperating Revenues:Capacity and bonus
    
    
    
    
    
    $
    62.8
    
    
    
    
    
    
    $
    62.5Electric (Kwh)
    
    
    1,166.8
    
    
    
    28.4
    
    
    
    1,157.8
    
    
    
    27.0Steam (lbs)
    
    
    528.5
    
    
    
    0.2
    
    
    
    455.9
    
    
    
    0.1Total operating revenues
    
    
    
    
    
    $
    91.4
    
    
    
    
    
    
    $
    89.6
 The Average Capacity Billing Factor (CBF) measures the overall availability
of the Facility, but gives a heavier weighting to on-peak availability. The Average Dispatch Rate is the amount of electric energy produced in a given
period expressed as a percentage of the total contract capability amount of
potential electric energy production in that time period. 13




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##### 



Three Months Ended June 30, 2004 Compared to the Three Months Ended June 30,
2003 Overall Results Net income for the three months ended June 30, 2004 was approximately $3.2
million compared to the net loss of approximately $1.0 million for the
corresponding period in the prior year. Operating Revenues For the three months ended June 30, 2004, the Partnership had total operating
revenues of approximately $44.9 million as compared to $44.8 million for the
corresponding period in the prior year. The $0.1 million increase in operating
revenue is primarily due to increased capacity payments of $0.1 million
resulting from the escalation of the fixed operation and maintenance component
of the capacity payment from FPL. Cost of Sales Costs of sales for the three months ended June 30, 2004 were approximately
$26.2 million as compared to $29.4 million for the corresponding period in the
prior year. The overall cost of fuel and ash decreased $1.9 million resulting
primarily from the decrease in coal transportation costs. In the three months
ended June 30, 2003 the Partnership paid Lodestar Energy, Inc. $0.8 million to
terminate the coal purchase agreement and paid an additional $1.6 million to
CSX Transportation (CSX) based on the then current tariff rates for delivered
coal, which were approximately 30% higher than system car rates. The tariff
rates were in effect until the Partnership and CSX entered into a Coal
Transportation Agreement on August 6, 2003. The difference between the tariff
rates and the system car rates for all coal shipments for the period from April
1, 2003 through the effective date of the Coal Transportation Agreement was
subsequently reimbursed to the Partnership in the third quarter of 2003.
Offsetting are lime costs that increased by $0.4 million primarily due to an
increase in usage resulting from an increase in the sulfur content of coal and
reduced lime quality. Ash costs increased by $0.1 million for the three months
ended June 30, 2004. Operating and maintenance costs have decreased by $1.4 million. In the three
months ended June 30, 2003 the Partnership incurred additional costs for tube
leak repairs in the main boiler, as well as repairs to one auxiliary boiler and
to the pulverizers. Other Operating Expenses Other operating expenses decreased by $0.3 million primarily due to the absence
of legal and consulting costs incurred in the second quarter of 2003 associated
with the termination of the Coal Purchase Agreement with Lodestar Energy, Inc.
and the execution of the replacement Coal Purchase and Sales Agreement with
Massey. Non-Operating Income (Expense) Net interest expense for the three months ended June 30, 2004 and 2003 was
approximately $13.3 million and $13.9 million, respectively. June 2003 and
December 2003 principal payments on Series A-9 of the first mortgage bonds
decreased interest expense by approximately $0.3 million. For the three months
ended June 30, 2003, interest on letter of credit loans and subordinated debt
amounted to $0.3 million. 14




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##### 



Six Months Ended June 30, 2004 Compared to the Six Months Ended June 30, 2003 Overall Results Net income for the six months ended June 30, 2004 was approximately $8.5
million compared to net income of approximately $3.6 million for the
corresponding period in the prior year. Operating Revenues For the six months ended June 30, 2004, the Partnership had total operating
revenues of approximately $91.4 million as compared to $89.6 million for the
corresponding period in the prior year. The $1.7 million increase in operating
revenues is primarily due to an increase in energy revenues of $1.4 million
resulting from the escalations in the quarterly unit energy costs in 2004 and
due to an increase in capacity payments of $0.3 million resulting from the
escalation of the fixed operation and maintenance component of the capacity
payment from FPL in 2004. Cost of Sales Costs of sales for the six months ended June 30, 2004 were approximately $52.0
million as compared to $53.7 million for the corresponding period in the prior
year. The overall cost of fuel and ash decreased $1.2 million resulting
primarily from the decrease in coal transportation costs. In the three months
ended June 30, 2003 the Partnership paid Lodestar Energy, Inc. $0.8 million to
terminate the coal purchase agreement and paid an additional $1.6 million to
CSX Transportation (CSX) based on the then current tariff rates for delivered
coal, which were approximately 30% higher than system car rates. The tariff
rates were in effect until the Partnership and CSX entered into a Coal
Transportation Agreement on August 6, 2003. The difference between the tariff
rates and the system car rates for all coal shipments for the period from April
1, 2003 through the effective date of the Coal Transportation Agreement was
subsequently reimbursed to the Partnership in the third quarter of 2003. The
cost of natural gas used to stabilize the plant when responding to dispatch
requests from FPL decreased in 2004 by $0.3 million due to a decrease in gas
utilized compared to the same period in 2003. Offsetting are lime costs that
increased by a total of $0.9 million primarily due to a temporary interruption
of deliveries in March 2004 from the supplier, Chemical Lime, caused by the
shut-down of their processing facility for a two-week maintenance outage. This
resulted in a higher transportation price paid by the Partnership for
replacement lime. Also, an increase in lime usage resulted from an increase in
the sulfur content of coal reduced lime quality. Ash disposal costs
increased by $0.6 million due to an alternate method of pugging, which is a
process of adding water to the ash to make it transportable by truck. Operating and maintenance costs have decreased by $0.5 million. In the six
months ended June 30, 2003 the Partnership incurred additional costs for tube
leak repairs in the main boiler, as well as repairs to one auxiliary boiler. 15




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##### 



Other Operating Expenses Other operating expenses decreased by $0.7 million primarily due to the absence
of legal and consulting costs incurred in the six months ended June 30, 2003
associated with the termination of the Coal Purchase Agreement with Lodestar
Energy, Inc. and the execution of the replacement Coal Purchase and Sales
Agreement with Massey. Non-Operating Income (Expense) Net interest expense for the six months ended June 30, 2004 and 2003 was
approximately $26.6 million and $27.3 million, respectively. June 2003 and
December 2003 principal payments of Series A-9 of the first mortgage bonds
decreased interest expense by approximately $0.7 million. For the six months
ended June 30, 2003 interest on letter of credit loans and subordinated debt
amounted to $0.5 million. This was offset by an increase in letter of credit
fees for the six months ended June 30, 2004 of $0.5 million. Liquidity and Capital Resources Net cash provided by operating activities for the six months ended June 30,
2004 was approximately $13.2 million as compared to $11.1 million for the
corresponding period in 2003. Net cash provided by operating activities
represents net income, adjusted by non-cash expenses and income, which
primarily consist of depreciation, amortization and accretion, plus the net
effect of changes within the Partnerships operating assets and liability
accounts. Net income for the six months ended June 30, 2004 increased by $4.9
million from the corresponding period in 2003. Depreciation, amortization and
accretion increased in 2004 by $0.2 million from 2003 due to the deferred
financing costs for the replacement letters of credit. Inventories and fuel
reserves increased in 2004 by $0.4 million from 2003 due to the timing of coal
shipments. Accounts receivable increased in 2004 by $0.2 million from 2003
primarily due to an increase in energy revenue in the first quarter of 2004
caused by an increase in unit energy cost adjustment for the fourth quarter of
2003. Deposits and prepaids decreased in 2004 by $0.1 million from 2003 and
accounts payable, accrued liabilities and accrued interest decreased in 2004 by
$3.4 million from 2003. Net cash provided by investing activities for the six months ended June 30,
2004 was approximately $4.6 million as compared net cash used in investing
activities of $2.8 million for the six months ended June 30, 2003. Net cash
provided by investing activities increased due to a decrease in investments
held by trustee. Net cash used in financing activities for the six months ended June 30, 2004
was $18.3 million compared to $8.2 million for the corresponding period in
2003. The increase is due to a partner distribution of $9.7 million and an
increase in the payment of overall debt of $0.4 million. The Partnership believes that it will have adequate cash flows from operations
in 2004 to timely fund future working capital requirements and to cover debt
repayment obligations. 16




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##### 



For 2004, the Partnership has identified possible capital improvements of
approximately $0.9 million that will enhance the reliability of the facility
and, if approved by the Board of Control, are funded through cash generated
from operations that would otherwise be distributed to the partners. These
include an oil storage building, a locomotive remote control system, evaporator
structural improvements, water system upgrades and distributed controls system
modifications. The Partnership has decided to defer a project to install upper
aquifer wells originally budgeted in 2004 for $1.2 million while it continues
to address alternate means for backup water supplies. Credit Ratings As previously reported, on March 19, 2004 S&P placed its BBB- rating on the
debt of ICL Funding on Credit Watch with negative implications. The credit
watch reflects the risk of a downgrade if the PPA negotiations with FPL
regarding a new energy payment index are not resolved to mitigate the current
mismatch between energy revenues and fuel expenses. On August 4, 2004, S&P issued a press release, which stated that the
announcement by NEGT of its agreement to sell National Energy Power Company,
LLC, through which NEGT holds interest in the Partnership, to Denali Power, LLC
will not affect the rating on the Partnership. S&Ps rating on the senior
secured debt of Indiantown Cogeneration Funding Corporation remains at BBB-
with a credit watch negative. Bonds The Partnerships total borrowings from inception through June 30, 2004 were
$769 million. An equity loan of $139 million was repaid on December 26, 1995.
As of March 31, 2004, the borrowings included $125 million from the 1994 Tax
Exempt Bonds and all of the available First Mortgage Bonds. The weighted average interest rates paid by the Partnership on its debt for the
six months ended June 30, 2004 and 2003 were 9.198% and 9.201%, respectively. Credit Agreements As previously reported, on October 10, 2003, the Partnership closed a
transaction with Calyon New York Branch (Calyon, formerly known as Credit
Lyonnais New York Branch), as agent and arranger, to replace certain letters of
credit. The facilities include a Debt Service Reserve Letter of Credit up to
$29.9 million, which has a term of seven years; Performance Letters of Credit
up to $15.0 million, which have a term of five years; and a Working Capital
Revolving
Facility up to $10.0 million, which has a term of three years and is presently
capped at $3.0 million. Under the Performance Letters of Credit, the ESA
Letter of Credit for $10.0 million was issued in favor of LDC. On June 11, 2004, under the Performance Letters of Credit, a Qualifying
Facility (QF) Letter of Credit was issued in favor of FPL for an aggregate
amount of $4.0 million, which is to be increased from time to time up to $5.0
million. Amounts previously deposited into a cash reserve account of $4.0
million held in lieu of a letter of credit were released and deposited in
accordance with the terms set forth in the Amended and Restated Disbursement
Agreement. 17




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##### 



Under the provisions of the financing documents above, since the Partnership
had not successfully executed a Replacement Index with FPL and a similar price
index with Massey by January 31, 2004, cash normally available to be
distributed to the Partners was restricted. The Partnership and Calyon entered
into a Temporary Waiver and Agreement (the Agreement) dated as of June 14,
2004. Under the Agreement, Calyon, with the consent of the required banks
under the letters of credit, agreed to waive the banks rights and remedies
under the Amended and Restated Disbursement Agreement and the letter of credit
agreements, including the right to deliver notice that would require the
Partnership to begin cash collateralizing the letters of credit, during the
period from June 14, 2004 and ending on December 1, 2004. Significant Contractual Payment Obligations Since December 31, 2003 the Partnership has not committed to any new
significant contractual payment obligations of the types described under the
caption Liquidity and Capital Resources contained in Item 7, Managements
Discussion and Analysis of Financial Condition and Results of Operations of
the Partnerships December 31, 2003 Annual Report on Form 10-K. Critical Accounting Policies There have been no changes to the Partnerships critical accounting policies
since December 31, 2003. See Item 7, Managements Discussion and Analysis of
Financial Condition and Results of Operations, of the Partnerships December
31, 2003 Annual Report on Form 10-K for further discussion. Accounting Principles Issued But Not Yet Adopted In January 2003, the FASB issued Interpretation No. 46, Consolidation of
Variable Interest Entities(FIN 46). FIN 46, as subsequently revised in
December 2003 (FIN 46R), is an interpretation of Accounting Research Bulletin
No. 51, Consolidated Financial Statements(ARB 51), and supersedes Emerging
Issues Task Force (EITF) Issues No. 90-15 and 96-21, which prescribe accounting
for lease arrangements with nonsubstantive lessors. This Interpretation
clarifies the application of ARB 51 to certain entities, defined as variable
interest entities (VIEs), in which equity investors do not have a
controlling financial interest or do not have sufficient equity at risk for the
entity to finance it activities without additional subordinated financial
support. FIN 46R requires that a VIE is to be consolidated by a company if
that company is subject to a
majority of the risk of loss from the VIEs activities or is entitled to
receive a majority of the VIEs residual returns, or both. The consolidation requirements of FIN No. 46 apply immediately to VIEs created
after January 31, 2003. There were no new VIEs created by the Partnership
between February 1, 2003 and March 31, 2004. The Partnership is a non-public
entity as defined by the interpretation. As a non-public entity, the
consolidation requirements related to entities or arrangements existing before
February 1, 2003 are effective January 1, 2005. The Partnership has not
identified any arrangements with other potential VIEs. The Partnership will
continue to evaluate its arrangements for potential FIN 46R application
effective January 1, 2005. The Partnership does not expect that implementation
of this interpretation will have a significant impact its consolidated
financial statements. 18




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##### 



Legal Matters From time to time the Partnership may, in the ordinary course of its business,
become a party in various legal proceedings or may become subject to potential
claims. Management does not believe that the resolution of these matters will
have a material adverse effect on the Partnerships consolidated financial
position or results of operations. See Part I, Item 3 of the Partnerships
December 31, 2003 Annual Report on Form 10-K for further discussion of
significant pending litigation. Regulations and Environmental Matters The Partnership has obtained all material environmental permits and approvals
required, as of June 30, 2004, 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. On February 23, 2004 the Partnership timely submitted to the Florida Department
of Environmental Protection (FDEP) a renewal application for the Facilitys
Title V operating permit (the Title V Permit), which is due to expire on
October 11, 2004. On July 16, 2004 the FDEP issued a draft report of the Title
V Permit to the Partnership for comments. On July 30, 2004 the Partnership
sent a petition to the FDEP asking for an extension on the public notification
requirement in order to give time to discuss with the FDEP the contents of the
compliance assurance program in the Title V Permit. Item 3 Quantitative and Qualitative Disclosures About Market Risk For quantitative and qualitative disclosures about market risk, see Item 7A,
Quantitative and Qualitative Disclosures About Market Risk, of the
Partnerships December 31, 2003 Annual Report on Form 10-K. The Partnerships
exposures to market risk have not changed materially since December 31, 2003. Item 4 Controls and Procedures Evaluation of Disclosure Controls and Procedures An evaluation of the disclosure controls and procedures of the Partnership and
Indiantown Cogeneration Funding Corporation (ICL Funding) as of June 30, 2004
has been conducted under the supervision and with the participation of the
principal executive officer and principal financial officer of both the
Partnership and ICL Funding. Based on that evaluation, such officers have
concluded that, as of such date, the disclosure controls and procedures of the
Partnership and ICL Funding are effective, in that they provide reasonable
assurance that such officers are alerted on a timely basis to material
information that is required to be included in the Partnerships and ICL
Fundings periodic filings under the Securities Exchange Act of 1934, as
amended. During the quarter ended June 30, 2004, no changes occurred in the
Partnerships or ICL Fundings internal control over financial reporting that
have materially affected, or are reasonably likely to materially affect, the
Partnerships or ICL Fundings internal control over financial reporting. (See
Item 5 Other Information, for newly appointed directors and executive
officers of ICL Funding and the Partnership.) 19




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##### 



PART II
OTHER INFORMATION Item 4 Submission of Matters to a Vote of Security Holders On July 1, 2004, the Partnership, as the sole shareholder of ICL Funding,
executed an action by written consent electing Thomas J. Bonner and William H.
Runge, III to the Board of Directors of ICL Funding. All other directorships
remain the same as previously disclosed in the Partnerships December 31, 2003
Annual Report on Form 10-K. Item 5 Other Information Directors and Executive Officers On July 1, 2004, Thomas J. Bonner was also elected as a Vice President of ICL
Funding and J. Tracy Mey was removed as Assistant Controller of ICL Funding and
elected as Controller and Chief Accounting Officer of both ICL Funding and the
Partnership. Effective July 1, 2004, Thomas E. Legro resigned from his positions as Vice
President, Controller and Chief Accounting Officer of ICL Funding and Vice
President, Controller and Principal Accounting Officer of the Partnership. The
following tables set forth the names and positions of newly appointed directors
and executive officers. Indiantown Cogeneration Funding Corporation: Name
    
    PositionWilliam H. Runge, III
    
    DirectorThomas J. Bonner
    
    Director and Vice PresidentJ. Tracy Mey
    
    Controller and Chief Accounting Officer
 Indiantown Cogeneration, L.P.: Name
    
    PositionJ. Tracy Mey
    
    Controller and Chief Accounting Officer
 20




---



##### 



William H. Runge, III is Associate Chief Restructuring Officer and Chief
Financial Officer of NEGT, an affiliate of the Partnership, and has been
associated with NEGT since October 2002. Mr. Runge is also a managing director
with Alvarez & Marsal, LLC, a global professional services firm specializing in
business diagnostics, business plan development and financial strategies for
corporate turnarounds and restructuring. Prior to joining Alvarez & Marsal,
LLC, Mr. Runge was a partner with a Big Five public accounting firm and a chief
financial officer and chief operating officer in private industry. Mr. Runge
was elected Director of ICL Funding on July 1, 2004. Thomas J. Bonner is Vice President  Asset Management for Cogentrix and has
been with Cogentrix since 1987. Prior to joining Cogentrix, Mr. Bonner spent 5
years as a utility manager in an integrated fiber and chemical production
facility. Mr. Bonner holds a B.S. from the U.S. Naval Academy, and an M.B.A.
from Old Dominion University. Mr. Bonner was elected Director and Vice
President of ICL Funding on July 1, 2004 and is also a member of the Board of
Control of the Partnership.
J. Tracy Mey is Controller and Chief Accounting Officer of Power Services
Company, an affiliate of the Partnership, and has been with Power Services
Company since it was formed in 1989. Prior to joining Power Services Company,
Mr. Mey held positions with a Fortune 500 International engineering &
manufacturing firm and with the public accounting firm of Arthur Andersen &
Company. Mr. Mey was elected Controller and Chief Accounting Officer of both
ICL Funding and the Partnership on July 1, 2004. Prior to July 1, 2004, Mr.
Mey served as Assistant Controller of ICL Funding. Audit Committee The Board of Directors of the ICL Funding performs the functions and
responsibilities of an audit committee of the Partnership and ICL Funding. The
Board of Directors has determined that one of its members, William H. Runge,
III, is an audit committee financial expert as defined in Item 401(h) of the
Securities and Exchange Commissions Regulation S-K, and has also determined
that Mr. Runge is not independent within the meaning of such provision
because he is an executive officer of NEGT. The Partnership and ICL Funding,
however, are not required under the Commissions rules implementing Section
10A(m) of the Securities Exchange Act of 1934, as amended, to have an audit
committee consisting of independent members because they are not listed
issuers within the meaning of such rules. 21




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##### 



Item 6 Exhibits and Reports on Form 8-K a) Exhibits: Exhibit No.
    
    Exhibit Description10.1
    
    Temporary Waiver and Agreement dated as of June 14, 2004
between the Partnership and Calyon New York Branch, as agent bank10.2
    
    QF Letter of Credit Agreement dated as of June 11, 2004 between
the Partnership and Florida Power and Light Company31.1
    
    Certification of Principal Executive Officer of Indiantown
Cogeneration, L.P., pursuant to Section 302 of the Sarbanes  Oxley
Act of 2002 dated August 12, 200431.2
    
    Certification of Principal Financial Officer of Indiantown
Cogeneration, L.P., pursuant to Section 302 of the Sarbanes  Oxley
Act of 2002 dated August 12, 200431.3
    
    Certification of Principal Executive Officer of Indiantown
Cogeneration Funding Corporation, pursuant to Section 302 of the
Sarbanes  Oxley Act of 2002 dated August 12, 200431.4
    
    Certification of Principal Financial Officer of Indiantown
Cogeneration Funding Corporation, pursuant to Section 302 of the
Sarbanes  Oxley Act of 2002 dated August 12, 200432.1
    
    Certification of Principal Executive Officer of Indiantown
Cogeneration, L.P., pursuant to Section 906 of the Sarbanes  Oxley
Act of 2002 dated August 12, 200432.2
    
    Certification of Principal Financial Officer of Indiantown
Cogeneration, L.P., pursuant to Section 906 of the Sarbanes  Oxley
Act of 2002 dated August 12, 200432.3
    
    Certification of Principal Executive Officer of Indiantown
Cogeneration Funding Corporation, pursuant to Section 906 of the
Sarbanes  Oxley Act of 2002 dated August 12, 200432.4
    
    Certification of Principal Financial Officer of Indiantown
Cogeneration Funding Corporation, pursuant to Section 906 of the
Sarbanes  Oxley Act of 2002 dated August 12, 2004
 b) Reports on Form 8-K: None 22




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SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the
co-registrants have duly caused this report to be signed on their behalf by the
undersigned thereunto duly authorized. Indiantown Cogeneration, L.P.
(Co-Registrant)Date: August 12, 2004
    /s/ J. TRACY MEYJ. Tracy MeyController and Chief Accounting Officer Indiantown Cogeneration Funding
Corporation
(Co-Registrant)Date: August 12, 2004
    /s/ J. TRACY MEYJ. Tracy MeyController and Chief Accounting Officer 23




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EXHIBIT INDEX Exhibit No.
    
    Exhibit Description10.1
    
    Temporary Waiver and Agreement dated as of June 14, 2004
between the Partnership and Calyon New York Branch, as agent bank10.2
    
    QF Letter of Credit Agreement dated as of June 11, 2004 between
the Partnership and Florida Power and Light Company31.1
    
    Certification of Principal Executive Officer of Indiantown
Cogeneration, L.P., pursuant to Section 302 of the Sarbanes  Oxley
Act of 2002 dated August 12, 200431.2
    
    Certification of Principal Financial Officer of Indiantown
Cogeneration, L.P., pursuant to Section 302 of the Sarbanes  Oxley
Act of 2002 dated August 12, 200431.3
    
    Certification of Principal Executive Officer of Indiantown
Cogeneration Funding Corporation, pursuant to Section 302 of the
Sarbanes  Oxley Act of 2002 dated August 12, 200431.4
    
    Certification of Principal Financial Officer of Indiantown
Cogeneration Funding Corporation, pursuant to Section 302 of the
Sarbanes  Oxley Act of 2002 dated August 12, 200432.1
    
    Certification of Principal Executive Officer of Indiantown
Cogeneration, L.P., pursuant to Section 906 of the Sarbanes  Oxley
Act of 2002 dated August 12, 200432.2
    
    Certification of Principal Financial Officer of Indiantown
Cogeneration, L.P., pursuant to Section 906 of the Sarbanes  Oxley
Act of 2002 dated August 12, 200432.3
    
    Certification of Principal Executive Officer of Indiantown
Cogeneration Funding Corporation, pursuant to Section 906 of the
Sarbanes  Oxley Act of 2002 dated August 12, 200432.4
    
    Certification of Principal Financial Officer of Indiantown
Cogeneration Funding Corporation, pursuant to Section 906 of the
Sarbanes  Oxley Act of 2002 dated August 12, 2004