# SECURITIES AND EXCHANGE COMMISSION
                   WASHINGTON, D.C. 20549

                               FORM 10-Q

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

For the Quarterly Period Ended March 31, 2000

                         Commission File Number 33-82034

INDIANTOWN COGENERATION, L.P.
            (Exact name of co-registrant as specified in its charter)

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

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

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

7500 Old Georgetown Road, 13th 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

## Item 1
   
Financial Statements:

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

PART II    OTHER INFORMATION

1

PART I
                              FINANCIAL INFORMATIONIndiantown Cogeneration, L.P
                    Consolidated Balance SheetsAs of March 31, 2000 and December 31, 1999

`March 31,                  December 31,
                           ASSETS                                                 2000                        1999
--------------------------------------------------------------             -------------------        ---------------------
                                                                              (Unaudited)
CURRENT ASSETS:
     Cash and cash equivalents                                           $          1,751,092          $         2,416,997
     Accounts receivable-trade                                                     13,774,244                   13,471,985
     Inventories                                                                    1,080,898                    1,146,017
    Prepaids                                                                        1,105,605                      807,372
     Deposits                                                                          44,450                       44,450
    Investments held by Trustee, including restricted funds
        of $19,337,518 and $2,752,669, respectively
                                                                                   26,981,798                    3,283,909
                                                                           -------------------        ---------------------
               Total current assets                                                44,738,087                   21,170,730
                                                                           -------------------        ---------------------

INVESTMENTS HELD BY TRUSTEE,
     restricted funds                                                              14,524,232                   14,501,877

DEPOSITS                                                                              150,675                       80,000

PROPERTY, PLANT & EQUIPMENT:
     Land                                                                           8,582,363                    8,582,363
     Electric and steam generating facilities                                     698,801,603                  698,401,089
     Less accumulated depreciation                                               (69,170,518)                 (65,534,397)
                                                                           -------------------        ---------------------
               Net property, plant & equipment                                    638,213,448                  641,449,055
                                                                           -------------------        ---------------------

FUEL RESERVE                                                                        1,286,368                    1,318,099

DEFERRED FINANCING COSTS, net of accumulated amortization of
    $44,060,794 and $43,854,648, respectively
                                                                                   16,126,122                   16,332,268
                                                                           -------------------        ---------------------

               Total assets                                                      $715,038,932          $       694,852,029
                                                                           ===================        =====================



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

2

Indiantown Cogeneration, L. P.
                           Consolidated Balance SheetsAs of March 31, 2000 and December 31, 1999

`March 31,              December 31, 1999
LIABILITIES AND PARTNERS' CAPITAL                                         2000
--------------------------------------------------------------    ---------------------     ----------------------
                                                                      (Unaudited)
CURRENT LIABILITIES:
     Accrued payables/liabilities                             $              8,299,252        $         7,584,406
     Accrued interest                                                       16,020,257                  2,267,017
     Current portion - First Mortgage Bonds                                 11,533,135                 11,533,135
     Current portion lease payable - railcars                                  314,152                    308,534
                                                                  ---------------------     ----------------------
         Total current liabilities                                          36,166,796                 21,693,092
                                                                  ---------------------     ----------------------

LONG TERM DEBT:
     First Mortgage Bonds                                                  454,708,865                454,708,865
     Tax Exempt Facility Revenue Bonds                                     125,010,000                125,010,000
     Lease payable - railcars                                                4,194,490                  4,275,166
                                                                  ---------------------     ----------------------
               Total long term debt                                        583,913,355                583,994,031


      Reserve-Major Maintenance                                                    -0-                    920,356
                                                                  ---------------------     ----------------------
               Total liabilities                                           620,079,971                606,607,479
                                                                  ---------------------     ----------------------

PARTNERS' CAPITAL:
    Toyan Enterprises                                                       28,535,116                 26,517,489
    Palm Power Corporation                                                   9,495,877                  8,824,455
    Indiantown Project Investment Partnership                               18,944,276                 17,604,787
    Thaleia                                                                 37,983,512                 35,297,819
                                                                  ---------------------     ----------------------
               Total partners' capital                                      94,958,781                 88,244,550
                                                                  ---------------------     ----------------------

               Total liabilities and partners' capital             $       715,038,932       $        694,852,029
               Capital                                                    $721,268,887               $708,139,691
                                                                   =====================    ======================


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

Indiantown Cogeneration, L.P.
               Consolidated Statements of OperationsFor the Three Months Ended March 31, 2000 and March 31, 1999

`Three Months Ended            Three Months Ended
                                                                   March 31, 2000                March 31, 1999
                                                              -------------------------     -------------------------
Operating Revenues:                                                   (Unaudited)                    (Unaudited)
     Electric capacity and capacity bonus revenue
                                                                       $30,981,320                   $30,903,983
     Electric energy revenue                                            13,105,749                     4,818,398
     Steam revenue                                                          19,171                        28,634
                                                                        ----------                    ----------
         Total operating revenues                                       44,106,240                    35,751,015
                                                                        ----------                    ----------

Cost of Sales:
     Fuel and ash                                                       13,446,313                     5,320,617
     Operating and maintenance                                           4,263,406                     3,332,264
     Depreciation                                                        3,785,291                     3,907,783
                                                                        ----------                     ---------
         Total cost of sales                                            21,495,010                    12,560,664
                                                                        ----------                    ----------

Gross Profit                                                            22,611,230                    23,190,351
                                                                        ----------                    ----------

Other Operating Expenses:
     General and administrative                                          1,261,212                       982,748
     Insurance and taxes                                                 1,501,719                     1,658,650
                                                                         ---------                     ---------
         Total other operating expenses                                  2,762,931                     2,641,398
                                                                         ---------                     ---------

Operating Income                                                        19,848,299                    20,548,953
                                                                        ----------                    ----------

Non-Operating Income (Expenses):

     Interest expense                                                 (14,453,537)                  (14,422,744)
     Interest/Other income                                                399,113                       391,183
                                                                       -----------                   -----------
         Net non-operating expense                                    (14,054,424)                  (14,031,561)
                                                                      ------------                  ------------

Income before cumulative effect of
         change in accounting principle                                 5,793,875                     6,517,392

Cumulative effect of change in accounting
principle                                                                 920,356                           -0-
                                                                       ----------                    ----------
Net Income                                                             $6,714,231                    $6,517,392
                                                                       ==========                    ==========


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

4

Indiantown Cogeneration, L.P.
               Consolidated Statements of Cash FlowsFor the Three Months Ended March 31, 2000 and 1999

`Three Months              Three Months
                                                                                Ended                     Ended
                                                                              March 31,                 March 31,
                                                                                2000                      1999
                                                                         --------------------     ----------------------
                                                                             (Unaudited)               (Unaudited)

    CASH FLOWS FROM OPERATING ACTIVITIES:
         Net income                                                    $           6,714,231       $          6,517,392
             Adjustments to reconcile net income to net
                cash provided by operating activities:
                   Depreciation and amortization                                   3,991,437                  4,117,408
                   (Increase)decrease in accounts receivable                       (302,259)                    865,940
                   Decrease in inventories and fuel reserves                          96,850                  2,067,354
                   Increase in deposits and prepaids                               (368,908)                  (333,915)
                   Increase in accounts payable, accrued liabilities
                       and accrued interest                                       14,468,086                 10,777,675
                   (Decrease) increase in major maintenance
                       reserve                                                     (920,356)                    102,195
                   (Decrease)in lease payable                                       (75,058)                   (65,831)
                                                                         --------------------     ----------------------
                           Net cash provided by operating activities              23,604,023                 24,044,218
                                                                         --------------------     ----------------------

    CASH FLOWS FROM INVESTING ACTIVITIES:
            Purchase of property, plant & equipment                              549,684                  (455,975)
            Increase in investment held by trustee                              (23,720,244)               (23,831,797)
                                                                         --------------------     ----------------------
                           Net cash used in investing activities                (24,269,928)               (24,287,772)
                                                                         --------------------     ----------------------
    CHANGE IN CASH AND CASH EQUIVALENTS                                            (665,905)                  (243,554)
    CASH and CASH EQUIVALENTS, beginning of year                                   2,416,997                  2,419,089
                                                                          -------------------     ----------------------
    CASH and CASH EQUIVALENTS, end of period                              $        1,751,092      $           2,175,535
                                                                          ===================     ======================


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

5

Indiantown Cogeneration, L.P.
                             Notes to Consolidated Financial Statements
                                           As of March 31, 2000
                                            (Unaudited)

1.   ORGANIZATION AND BUSINESS:

         

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

         

     The  original  general  partners  were  Toyan  Enterprises   ("Toyan"),   a
California corporation and a wholly owned special purpose indirect subsidiary of
PG&E Generating Company, LLC and Palm Power Corporation ("Palm"), a Delaware
corporation and a special purpose  indirect  subsidiary of Bechtel  Enterprises,
Inc.  ("Bechtel  Enterprises").  The sole limited  partner was TIFD III-Y,  Inc.
("TIFD"),  a special purpose  indirect  subsidiary of General  Electric  Capital
Corporation ("GECC"). During 1994, the Partnership formed its sole, wholly owned
subsidiary,  Indiantown Cogeneration Funding Corporation ("ICL Funding"), to act
as agent for, and co-issuer  with, the  Partnership in accordance  with the 1994
bond  offering.  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 20.0% limited partnership interest from TIFD and TIFD's
membership  on the Board of Control.  On November  19, 1999,  Thaleia  purchased
TIFD's remaining limited partner interest in the Partnership from TIFD.

         

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

6

`As of             As of               As of          As of               As of
                       August 21,        October 20,         June 4,        September 20,       November 24,
                       1998              1998                1999           1999                1999
                       ----              ----                ----           ----                ----
        Toyan          30.05%            30.05%               30.05%            30.05%                30.05%
        Palm           10%               10%*                 10%*              10%*                  10%*
        IPILP          19.95%**          19.95%**             19.95%            19.95%                19.95%
        TIFD           40%               40%                  20.1%             .1%                   --
        Thaleia        --                --                   19.9%*            39.9%*                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 20, 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 Generating Company ("PG&E Gen"),
formerly known as U.S.  Generating  Company,  pursuant to a Management  Services
Agreement (the "MSA").  The Facility is operated by PG&E  Operating Services
Company  ("PG&E OSC"),  formerly known as U.S.  Operating  Services Company,
pursuant to an Operation and  Maintenance  Agreement (the "O&M  Agreement").
PG&E Gen and PG&E OSC are general partnerships  wholly-owned by PG&E
Generating  Company,  LLC,  an  indirect  wholly-owned  subsidiary  of  PG&E
Corporation.2.  FINANCIAL STATEMENTS:

         

     The consolidated  balance sheets as of March 31, 2000, and the consolidated
statements  of  operations  and cash flows for the three  months ended March 31,
2000 and 1999,  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 March 31, 2000,
and the results of  operations  and cash flows for the three  months ended March
31, 2000 and 1999.

         

     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, 1999.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 $2.0 million is also
held in long term assets in the accompanying balance sheets.

7

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.Change in Accounting Principle

         

     The Partnership's  depreciation is based on the plant being considered as a
single  property  unit.   Certain  components  within  the  plant  will  require
replacement  or overhaul  several times within the estimated  life of the plant.
The scheduled major overhaul represented an accrual for anticipated expenditures
for scheduled  significant  replacement and overhaul costs of the Facility.  The
expense was being  recognized  ratably over the scheduled  overhaul cycle of the
related equipment.

         

     It is anticipated that the Securities and Exchange  Commission ("SEC") will
issue a ruling during fiscal year 2000, which will change the allowed methods of
accounting for scheduled major overhauls. In this ruling, the SEC is expected to
announce that it will not accept the accrue-in-advance  method of accounting for
scheduled major overhauls. The Partnership has, therefore, changed its method of
accounting  for scheduled  major overhaul to the as incurred  method.  The SEC's
anticipated  ruling will allow companies to recognize the change as a cumulative
effect of a change in accounting principle in the year of adoption. As such, the
Partnership  has  reflected  a  cumulative  effect  of a  change  in  accounting
principle of $920,356 in its  financial  statements  for the period ending March
31, 2000.New Accounting Pronouncement

         

     In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting  for Derivative  Instruments and Hedging  Activities"  ("SFAS 133").
SFAS  133  established   accounting  and  reporting   standards  for  derivative
instruments,   including  certain  derivative   instruments  embedded  in  other
contracts,  and for hedging activities.  It requires that entities recognize all
derivative  instruments  as either  assets or  liabilities  in the  statement of
financial  position  and measure  those  instruments  at fair value.  If certain
conditions are met, a derivative may be  specifically  designated as (a) a hedge
of the exposure to changes in the fair value of a recognized  asset or liability
or an unrecognized  firm commitment,  or (b) a hedge of the exposure to variable
cash flows of a forecasted  transaction.  The  Partnership has also entered into
certain other  contracts that may meet the definition of derivative  instruments
under SFAS 133. The  Partnership  is  evaluating  all contracts to determine the
impact on its financial  statements.  SFAS 133, as amended, is effective for the
Partnership in fiscal year 2001.

8

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 March 31, 2000 and  December  31,
1999,  estimated  present  value  of this  deposit  was  $150,675  and  $80,000,
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 March 31, 2000, the Partnership had approximately $638 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 three months ended
March 31, 2000, the Partnership had total operating  revenues of approximately $
44.1  million,  total  operating  costs of $24.3  million,  total  net  interest
expenses of approximately  $14.0 million,  and a cumulative  effect of change in
accounting  principle of $0.9 million  resulting in net income of  approximately
$6.7 million.

         

     The  Partnership  is  engaged in  litigation  with FPL,  the  Partnership's
primary source of revenue. Under certain circumstances, an adverse ruling in the
litigation  could have a material adverse effect on the  Partnership's  business
and financial  condition.  Please see Part II Item 1, Legal  Proceedings,  for a
description of the  litigation,  and Part II, Item 5, Other  Information,  for a
description  of the  Partnership's  options  to  mitigate  the risk  posed by an
adverse ruling in such litigation.

         

     The  Partnership  has  obtained  all  material  environmental  permits  and
approvals  required as of March 31, 2000,  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.

9

Results of Operations

         

     For the three months ending March 31, 2000 and 1999, the Facility  achieved
an average  Capacity Billing Factor of 100.01% and 101.64%,  respectively.  This
resulted in earning  monthly  capacity  payments  aggregating  $28.2 million and
$28.1  million and bonuses  aggregating  $2.8 million for the three months ended
March 31,  2000 and 1999.  The  Capacity  Billing  Factor  measures  the overall
availability  of  the  Facility,  but  gives  a  heavier  weighting  to  on-peak
availability.  During the three months  ended March 31,  2000,  the Facility was
dispatched  by FPL and  generated  571,896  megawatt-hours  compared  to 208,484
megawatt-hours  during the same period in 1999.  The  increase was due to higher
oil and gas prices incurred by FPL during the first quarter to generate  energy.
The monthly  dispatch rate for the first three months of 2000 ranged from 73% to
87%, as compared to a range of 18% to 35% for the corresponding period in 1999.

         

     Net income for the three  months ended March 31,  2000,  was  approximately
$6.7 million  compared to the net income of  approximately  $6.5 million for the
corresponding  period in the prior year. The $0.2 million  increase is primarily
attributable to lower net energy costs of $0.1 million,  an increase in capacity
revenue of $0.1 million, a reduction in insurance and taxes of $0.2 million, and
an expense  reversal  of $0.9  million  for a  cumulative  change in  accounting
principle  relating to major maintenance costs. This is offset by higher general
and  administrative  costs of $0.2 million for legal fees for the FPL litigation
and an increase in operating  and  maintenance  costs of $0.9 million due to the
increase in dispatch.Electric Energy Revenues

`For the three months ended
                                           March 31, 2000              March 31, 1999
                                           --------------              --------------

Revenues                                   $ 44.1 million              $35.7  million
KWhs                                       571.9                       208.5
Average Capacity Billing Factor            100.01%                     101.64%
Average Dispatch Rate                      80.45%                      29.56%`

For the three  months  ended  March 31,  2000,  the  Partnership  had total
operating  revenues of approximately  $44.1 million as compared to $35.7 million
for the  corresponding  period in the prior year.  The $8.4 million  increase in
operating  revenue is primarily  due to higher  energy  revenue  resulting  from
higher dispatch by FPL.

         

     Costs  of  revenues  for the  three  months  ended  March  31,  2000,  were
approximately  $21.5  million  on sales of  571,896  MWhs as  compared  to $12.6
million on sales of 208,484 MWhs for the corresponding period in the prior year.
This increase is primarily a result of higher fuel and ash costs of $8.2 million
and an increase of $0.9  million  for  operating  and  maintenance  costs,  both
resulting from higher dispatch.

         

     Total other  operating  expenses for the three months ended March 31, 2000,
were  approximately  $2.8  million  compared to the $2.6  million of total other
operating  expenses  for the  corresponding  period in the prior year.  The $0.2
million increase is due to higher general and administrative  expenses for legal
expenses for the FPL litigation.

10

Net  interest  expense  for the  three  months  ended  March 31,  2000,  of
approximately  $14.0 million  compared to $14.0 million of net interest  expense
for the same period in the prior year.Liquidity and Capital Resources

         

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

         

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

         

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

         

     The  Partnerships  total borrowings from inception through March 2000
were $769  million.  The equity loan of $139  million was repaid on December 26,
1995. As of March 31, 2000, 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`

The weighted  average  interest rate paid by the Partnership on its debt for the
three months ended March 31, 2000 and 1999, was 9.204% and 9.167%, respectively.

11

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 March 31, 2000, no drawings have been made on any
of these letters of credit. The Letter of Credit and Reimbursement Agreement has
a term of seven years subject to extension at the  discretion of the banks party
thereto.

         

     The  Partnership  entered into a debt service  reserve letter of credit and
reimbursement agreement,  dated as of November 1, 1994, with Banque Nationale de
Paris pursuant to which a debt service reserve letter of credit in the amount of
approximately $60 million was issued.  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 March 31,  2000,  no drawings  have been made on the debt service
reserve letter of credit.

         

     In order to  provide  for the  Partnership's  working  capital  needs,  the
Partnership  entered into a Revolving  Credit Agreement with Credit Suisse dated
as of  November 1, 1994.  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. As of March 31, 2000, thirteen working capital loans had been made to
the  Partnership  under the working  capital loan facility.  All working capital
loans were 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

12

cogenerate  sufficient steam to maintain its Qualifying  Facility status.  While
FPL has not disputed that the Partnership  may maintain  Minimum Load operations
if the  Facility  is  delivering  power when FPL  requests  the  Partnership  to
decommit  the  Facility,  the  complaint  states that FPL has  claimed  absolute
discretion  to deny the  Partnership  permission  to reconnect the Facility with
FPL's system.

         

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

         

     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 April 23,
1999,  FPL filed answer to the counts which were not challenged in the motion to
dismiss.  On May 13, 1999, the Partnership filed its response to FPL's motion to
dismiss and request for declaratory judgement. On May 18, 1999, the Court denied
FPL's  Motion to  Dismiss  in its  entirety.  The  Partnership  filed an amended
complaint  which was accepted on June 17,  1999.  The amended  complaint  simply
consolidated the  Partnership's  claims for breach of contract 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 to address
issues  raised by the Court in its  decision to dismiss  this count.  The second
amended  complaint  which was filed on March 21, 2000, is attached as an exhibit
to the  Partnership's  Annual Report on Form 10-K filed with the  Securities and
Exchange  Commission on March 30, 2000. On April 7, 2000,  FPL filed a motion to
dismiss ICL's second amended  complaint and the Partnership filed its opposition
papers  April 21,  2000.  The Court has not yet ruled on FPL's motion to dismiss
the second amended complaint. The Court has also ordered a mediation session. In
addition, a trial period has been established by the Court in April 2001.

         

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

13

Item 5   OTHER INFORMATIONQF Mitigation Options

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

         

     To  mitigate  the risk of a  possible  adverse  ruling  by the  Court,  the
Partnership  has  analyzed  the  feasibility  of various  options.  The analyses
included the following:

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

         

     The analyses included an evaluation as to whether the steam usage for these
alternatives  would  qualify  for QF purposes  and to  determine  each  option's
feasibility  - whether the option can increase  steam  production on a schedule,
which may include  regulatory  approval,  that would  assure  maintenance  of QF
status at an acceptable cost to the  Partnership.  The Partnership has completed
its  initial  analyses of the  options,  but has not yet  determined  whether to
implement  any option.  The  Partnership  has,  however,  commenced  the lengthy
process of amending its Site  Certification  to allow for a chilled  water plant
and a carbon dioxide facility. The Partnership may defer a decision to implement
any option until a judgment is made in the litigation with FPL. If any option is
implemented,  the Partnership may, subject to the terms of the indenture for the
Bonds,  finance such option with senior secured debt ranking pari passu with the
Bonds.

         

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

         

     Notwithstanding  the  18-day  period,  in March of 1999,  during  which FPL
prevented   the  Facility  from   reconnecting   to  FPL's  system  and  thereby
cogenerating  qualifying steam, the Partnership  cogenerated steam totaling 6.1%
of  electrical  output in 1999 thereby  exceeding  the  statutorily  required 5%
threshold.

14

Governmental Approvals

         

     The  Partnership  has  obtained  all  material  environmental  permits  and
approvals  required,  as of March  31,  2000,  in order to  continue  commercial
operation of the Facility. Certain of these permits and approvals are subject to
periodic renewal.  Certain  additional permits and approvals will be required in
the future for the continued  operation of the Facility.  The Partnership is not
aware of any  technical  circumstances  that would  prevent the issuance of such
permits  and  approvals  or  the  renewal  of  currently  issued  permits.   The
Partnership  timely  filed its  application  for a Title V air permit on May 24,
1996. The permit was issued on October 11, 1999.

         

     On December 22, 1999, the Partnership  submitted to the Florida  Department
of  Environmental  Protection  ("DEP")  a  request  for  amendments  to the Site
Certification and an application for modifications of the Site Certificate.  The
amendments to the Site Certification are being provided to inform DEP of certain
changes to the Facility's  design and  operation.  The requests will not require
changes to the Conditions of  Certification  for the Facility and do not involve
significant  environmental  impacts that would require new environmental permits
or approvals.  Also submitted was an application for  modifications  of the Site
Certificate,  which describes other proposed  changes to the Facility design and
operations.  The  modifications  will  require  changes  to  the  Conditions  of
Certification.  The requests  include  modifications to allow the additions of a
carbon  dioxide  plant and a chilled  water plant,  changes in the cooling water
storage pond  elevation,  and  modifications  of the operation of the pulverized
coal-fired boiler to increase the electric generation output.

         

     The DEP has proposed to modify the conditions of the Site  Certification to
allow emergency discharge of cooling water and process water to conform to NPDES
Permit Number FL0183750, which was issued on January 19, 2000.Energy Prices

         

     In October 1999, FPL filed with the Florida  Public Service  Commission its
projections for its 2000-2001 "as available" energy costs (in this context,  "as
available"  energy costs reflect actual energy  production  costs avoided by FPL
resulting  from the purchase of energy from the  Facility  and other  Qualifying
Facilities). The projections filed by FPL are lower for certain periods than the
energy prices  specified in the Power  Purchase  Agreement  for energy  actually
delivered by the Facility.  At other times,  the  projections  exceed the energy
prices  specified in the Power Purchase  Agreement.  Should FPL's "as available"
energy cost projections  prove to reflect actual rates, FPL may elect,  pursuant
to its  dispatch  and control  rights over the  Facility  set forth in the Power
Purchase  Agreement,  to run the Facility less frequently or at lower loads than
if the Facility's energy prices were lower than the cost of other energy sources
available to FPL. Since capacity payments under the Power Purchase Agreement are
not affected by FPL's dispatch of the Facility and because capacity payments are
expected  by the  Partnership  to cover all of the  Partnership's  fixed  costs,
including debt service,  the  Partnership  currently  expects that, if the filed
projections prove to reflect actual rates, such rates and the resulting dispatch
of the Facility  will not have a material  adverse  effect on the  Partnership's
ability to service its debt.  To the extent the  Facility is not operated by FPL
during Caulkins' processing season (November to June), the Partnership may elect
to run the  Facility  at a  minimum  load  or shut  down  the  Facility  and run
auxiliary  boilers to produce steam for Caulkins in amounts  required  under the
Partnership's  steam  agreement  with  Caulkins.  Such  operations may result in
decreased net operating  income for such periods.  The Partnership  expects that
the decrease, if any, will not be material. For the three months ended March 31,
2000,  FPL has

15

`Exhibit
        No.                                    Description
        ---                                    -----------

        27                                 Financial Data Schedule
















                                       16`

SIGNATURE

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


Date:  May 15, 2000                             ________________________
                                                John R. Cooper
                                                Vice President and
                                                Chief Financial Officer


                                                INDIANTOWN COGENERATION FUNDING
                                                CORPORATION
                                                (Co-Registrant)


Date:  May 15, 2000                              ________________________
                                                 John R. Cooper
                                                 Vice President and
                                                 Chief Financial Officer`