UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

                QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                  For the quarterly period ended March 31, 2003

                          Commission File No. 001-12995

                   CE CASECNAN WATER AND ENERGY COMPANY, INC.
                   ------------------------------------------
             (Exact name of registrant as specified in its charter)

               Philippines                                   Not Applicable
        ------------------------------                     -------------------
       (State or other jurisdiction of                      (I.R.S. Employer
       incorporation or organization)                      Identification No.)

   24th Floor, 6750 Building, Ayala Avenue
      Makati, Metro Manila, Philippines                      Not Applicable
      ---------------------------------                      --------------
  (Address of principal executive offices)                     (Zip Code)

                                 (632) 892-0276
                                 --------------
              (Registrant's telephone number, including area code)

         Securities registered pursuant to Section 12(b) of the Act: N/A
         Securities registered pursuant to Section 12(g) of the Act: N/A

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 such  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. Yes [x] No [ ]

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

As of May 12, 2003, 767,162 shares of common stock were outstanding.


<PAGE>

                                TABLE OF CONTENTS
                                -----------------

                         PART I - FINANCIAL INFORMATION

Item 1.    Financial Statements................................................3
Item 2.    Management's Discussion and Analysis of Financial Condition and
           Results of Operations..............................................13
Item 3.    Quantitative and Qualitative Disclosures About Market Risk.........19
Item 4.    Controls and Procedures............................................19

                           PART II - OTHER INFORMATION

Item 1.    Legal Proceedings..................................................20
Item 2.    Changes in Securities and Use of Proceeds..........................20
Item 3.    Defaults Upon Senior Securities....................................20
Item 4.    Submission of Matters to a Vote of Security Holders................20
Item 5.    Other Information..................................................20
Item 6.    Exhibits and Reports on Form 8-K...................................20

SIGNATURES....................................................................21
CERTIFICATIONS................................................................22
EXHIBIT INDEX.................................................................24

                                      -2-

<PAGE>


                         PART I - FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS.




                         INDEPENDENT ACCOUNTANTS' REPORT


To the Board of  Directors  and  Stockholders  of CE  Casecnan  Water and Energy
Company, Inc.

We have reviewed the accompanying balance sheets of CE Casecnan Water and Energy
Company,  Inc. as of March 31, 2003 and the related statements of operations and
of cash  flows for the  three  months  ended  March  31,  2003 and  2002.  These
financial statements are the responsibility of the Company's management.

We conducted our review in accordance with standards established by the American
Institute  of  Certified  Public  Accountants.  A review  of  interim  financial
information consists principally of applying analytical review procedures to the
financial  data and making  inquiries of persons  responsible  for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the objective of which is
the  expression  of an opinion  regarding the  financial  statements  taken as a
whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material  modifications that should
be made to the  accompanying  interim  financial  statements  for  them to be in
conformity with accounting principles generally accepted in the United States of
America.

We previously audited in accordance with auditing  standards  generally accepted
in the United States of America,  the balance sheet as of December 31, 2002, and
the related  statements of operations,  changes in  stockholders'  equity and of
cash  flows for the year then ended (not  presented  herein),  and in our report
dated January 24, 2003, we expressed an unqualified  opinion on those  financial
statements.  In our  opinion,  the  information  set  forth in the  accompanying
balance  sheet  information  as of December  31, 2002,  is fairly  stated in all
material  respects  in  relation  to the  balance  sheet  from which it has been
derived.



/s/ Joaquin Cunanan & Co.
JOAQUIN CUNANAN & CO.
A PricewaterhouseCoopers Member Firm


Makati City, Philippines
April 21, 2003


                                      -3-
<PAGE>


                   CE CASECNAN WATER AND ENERGY COMPANY, INC.
                                 BALANCE SHEETS
                (In thousands of U.S. Dollars, except share data)
<TABLE>
<CAPTION>

                                                                                 AS OF
                                                                         -----------------------
                                                                         MARCH 31,  DECEMBER 31,
                                                                            2003        2002
                                                                         ---------  ------------
                                                                        (UNAUDITED)
                                     ASSETS
<S>                                                                       <C>         <C>
Current assets:
  Cash and cash equivalents ..........................................    $  4,040    $    705
  Trade receivable, net ..............................................      48,237      51,515
  Accrued interest and other receivable ..............................       8,514       7,009
  Prepaid insurance ..................................................       2,469       3,532
  Other current assets ...............................................       2,561       2,030
                                                                          --------    --------
    Total current assets .............................................      65,821      64,791
                                                                          --------    --------
Restricted cash and investments ......................................      32,058       7,078
Bond issue costs, net ................................................       4,879       5,218
Property, plant and equipment, net ...................................     449,421     453,507
Deferred income tax ..................................................       5,371       5,371
Other assets .........................................................       2,472       5,542
                                                                          --------    --------
TOTAL ASSETS .........................................................    $560,022    $541,507
                                                                          ========    ========


                      LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable and accrued expenses ..............................    $ 11,236    $ 10,785
  Accrued interest on notes payable ..................................       2,478       2,048
  Accrued interest on long-term debts ................................      12,668       4,223
  Payable to affiliates ..............................................      34,023      33,342
  Current portion of long-term debt ..................................      41,468      41,468
                                                                          --------    --------
    Total current liabilities ........................................     101,873      91,866
                                                                          --------    --------

Notes payable ........................................................      51,263      51,263
Long-term debts, net of current portion ..............................     246,457     246,457
                                                                          --------    --------
  Total liabilities ..................................................     399,593     389,586
                                                                          --------    --------

Commitments and contingencies (Note 4)

Stockholders' equity:
Capital stock - authorized 2,148,000 shares, one Philippine peso
  ($0.038) par value; 767,162 shares issued and outstanding ..........          29          29
Additional paid-in capital ...........................................     123,807     123,807
Retained earnings ....................................................      36,593      28,085
                                                                          --------    --------
  Total stockholders' equity .........................................     160,429     151,921
                                                                          --------    --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ...........................    $560,022    $541,507
                                                                          ========    ========
</TABLE>

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

                                      -4-
<PAGE>


                   CE CASECNAN WATER AND ENERGY COMPANY, INC.
                            STATEMENTS OF OPERATIONS
                (In thousands of U.S. Dollars, except share data)


                                                             THREE MONTHS
                                                            ENDED MARCH 31,
                                                        ----------------------
                                                          2003         2002
                                                        ---------    ---------
                                                            (UNAUDITED)
     REVENUE:
       Delivery of water ............................   $  22,442    $  18,488
       Sale of electricity ..........................       9,057        9,094
                                                        ---------    ---------
         Total revenue ..............................      31,499       27,582
                                                        ---------    ---------
     OPERATING EXPENSES:
       Depreciation .................................       5,673        6,140
       Plant operations .............................       3,176        1,737
       Doubtful accounts ............................       4,067        2,260
                                                        ---------    ---------
         Total operating expenses ...................      12,916       10,137
                                                        ---------    ---------

     OPERATING INCOME ...............................      18,583       17,445

     OTHER INCOME (EXPENSE):
       Interest expense .............................     (10,153)     (10,797)
       Other, net ...................................          78           27
                                                        ---------    ---------
         Total other expense, net ...................     (10,075)     (10,770)
                                                        ---------    ---------

     INCOME BEFORE PROVISION FOR INCOME TAXES .......       8,508        6,675
     Provision for income taxes .....................          --           --
                                                        ---------    ---------
     NET INCOME .....................................   $   8,508    $   6,675
                                                        =========    =========

     NET INCOME PER SHARE ...........................   $   11.09    $    8.70
                                                        =========    =========
     Average number of common shares outstanding ....     767,162      767,162
                                                        =========    =========

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

                                      -5-
<PAGE>


                   CE CASECNAN WATER AND ENERGY COMPANY, INC.
                            STATEMENTS OF CASH FLOWS
                         (In thousands of U.S. Dollars)
<TABLE>
<CAPTION>

                                                                             THREE MONTHS
                                                                            ENDED MARCH 31,
                                                                         --------------------
                                                                           2003        2002
                                                                         --------    --------
                                                                             (UNAUDITED)

<S>                                                                      <C>         <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income .........................................................   $  8,508    $  6,675
  Adjustments to reconcile net cash flows from operating activities:
    Depreciation .....................................................      5,673       6,140
    Amortization of bond issue costs .................................        339         374
    Changes in other items:
      Trade receivable, net ..........................................      3,278     (14,996)
      Accrued interest and other receivable ..........................     (1,505)     (1,536)
      Prepaid insurance and other current assets .....................        532         461
      Accounts payable and accrued expenses ..........................        451       1,138
      Accrued interest ...............................................      8,875       8,598
                                                                         --------    --------
        Net cash flows from operating activities .....................     26,151       6,854
                                                                         --------    --------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Additions to development property, plant and equipment .............     (1,587)       (700)
  Other assets .......................................................      3,070       3,153
                                                                         --------    --------
    Net cash flows from investing activities .........................      1,483       2,453
                                                                         --------    --------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Increase in restricted cash ........................................    (24,980)     (8,004)
  Increase (decrease) in payable to affiliates .......................        681        (593)
                                                                         --------    --------
    Net cash flows from financing activities .........................    (24,299)     (8,597)
                                                                         --------    --------

NET INCREASE IN CASH AND CASH EQUIVALENTS ............................      3,335         710
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD .....................        705       1,078
                                                                         --------    --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD ...........................   $  4,040    $  1,788
                                                                         ========    ========

SUPPLEMENTAL DISCLOSURE:
  Interest paid, net of amounts capitalized ..........................   $     --    $  1,834
                                                                         --------    ========
  Income taxes paid ..................................................   $     --    $     --
                                                                         ========    ========
</TABLE>

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

                                      -6-
<PAGE>


                   CE CASECNAN WATER AND ENERGY COMPANY, INC.
                          NOTES TO FINANCIAL STATEMENTS

1.  GENERAL

The accompanying unaudited interim financial statements have been prepared by CE
Casecnan Water and Energy Company, Inc. ("CE Casecnan" or the "Company") without
audit,  pursuant to the rules and  regulations  of the  Securities  and Exchange
Commission for interim  financial  reporting.  In the opinion of the management,
the  accompanying   unaudited  financial   statements  contain  all  adjustments
(consisting only of normal recurring  accruals)  necessary to present fairly the
financial  position  of the  Company as of March 31, 2003 and the results of its
operations  and cash flows for the three  months  ended March 31, 2003 and 2002.
The results of operations for the three months ended March 31, 2003 and 2002 are
not necessarily indicative of the results to be expected for the full year.

The accompanying unaudited interim financial statements and notes thereto should
be read in conjunction with the audited  financial  statements and notes thereto
included in the Company's Annual Report on Form 10-K for the year ended December
31, 2002. In  particular,  the  Company's  significant  accounting  policies and
practices are presented in Note 2 to the financial statements included therein.

The Company's  operations consist of one reportable segment,  the domestic water
and electricity generation industry.

2.  TRADE RECEIVABLE, NET

Trade  receivable,  net  pertains  to the  receivable  due from  the  Philippine
National  Irrigation  Administration  ("NIA") for water delivered to NIA and the
electricity  generated and delivered by the Company to the  Philippine  National
Power Corporation  ("NPC") on behalf of NIA. Trade receivable,  net at March 31,
2003 and December 31, 2002 consists of the following (in thousands):

                                             MARCH 31,    DECEMBER 31,
                                               2003           2002
                                             ---------    ------------
                                            (UNAUDITED)
     Water delivery fee .................     $ 60,694      $ 52,854
     Guaranteed energy delivery fee .....        3,676         6,709
     Excess energy delivery fee .........           --         4,018
                                              --------      --------
       Trade receivable .................       64,370        63,581
     Allowance for doubtful accounts ....      (16,133)      (12,066)
                                              --------      --------
       Trade receivable, net ............     $ 48,237      $ 51,515
                                              ========      ========

NIA has  paid all  amounts  due for  energy  delivery  fees  under  the  Project
Agreement  as of March 31,  2003,  and all amounts due for Water  Delivery  Fees
under the Project  Agreement  except the tax  compensation  portion of the Water
Delivery Fees, none of which has been paid.

Under  the  terms  of the  Project  Agreement,  NIA has  the  option  of  timely
reimbursing CE Casecnan  directly for certain taxes CE Casecnan has paid. If NIA
does not so reimburse CE  Casecnan,  the taxes paid by CE Casecnan  result in an
increase in the Water  Delivery  Fee.  The payment of certain  other taxes by CE
Casecnan  results  automatically in an increase in the Water Delivery Fee. As of
March 31, 2003, CE Casecnan has paid approximately $58.1 million in taxes, which
as a result of the  foregoing  provisions  results in an  increase  in the Water
Delivery  Fee. NIA has failed to pay the portion of the Water  Delivery Fee each
month related to the payment of these taxes by CE Casecnan.  As a result of this
non-payment,  on August 19, 2002,  CE Casecnan  filed a Request for  Arbitration
against  NIA,  seeking  payment of such  portion of the Water  Delivery  Fee and
enforcement of the relevant  provision of the Project  Agreement  going forward.
The  arbitration  will  be  conducted  in  accordance  with  the  rules  of  the
International Chamber of Commerce.

NIA filed its Answer and  Counterclaim  on March 31,  2003.  In its Answer,  NIA
asserts,  among  other  things,  that most of the taxes  which CE  Casecnan  has
factored into the Water Delivery Fee compensation formula do not fall

                                      -7-
<PAGE>

within the scope of the  relevant  section of the  Project  Agreement,  that the
compensation  mechanism itself is invalid and unenforceable under Philippine law
and  that  the  Project   Agreement   is   inconsistent   with  the   Philippine
build-operate-transfer law. As such, NIA seeks dismissal of CE Casecnan's claims
and a  declaration  from the  arbitral  tribunal  that the taxes which have been
taken into account in the Water  Delivery  Fee  compensation  mechanism  are not
recoverable  thereunder  and  that,  at  most,  certain  taxes  may be  directly
reimbursed  (rather than compensated for through the Water Delivery Fee) by NIA.
NIA also  counterclaims  for approximately $7 million which it alleges is due to
it as a result of the delayed  completion of the Casecnan Project.  On April 23,
2003, NIA filed a Supplemental Counterclaim in which it asserts that the Project
Agreement  is contrary to law and to public  policy and by way of relief seeks a
declaration  that the Project  Agreement is void from the beginning or should be
cancelled,  or an order for  reformation of the Project  Agreement.  The Company
intends to vigorously contest all of NIA's assertions and counterclaims.

The three  member  arbitration  panel has been  confirmed  by the  International
Chamber of Commerce and an initial  organizational hearing was held on April 28,
2003. Hearings on this matter are scheduled for July 2004.

Total  revenue  for the three  months  ended  March 31, 2003 and 2002 were $31.5
million and $27.6  million,  respectively.  Included in these  amounts,  for the
three months ended March 31, 2003 and 2002,  were $9.6 million and $8.1 million,
respectively,  of tax  compensation  for Water  Delivery  Fees under the Project
Agreement,  none of which has been paid and the  uncollectible  portion of which
the  Company   currently   estimates  to  be  $4.1  million  and  $2.3  million,
respectively.  As of March 31, 2003 and December 31, 2002, the cumulative unpaid
portion of the tax  compensation  portion of the Water  Delivery  Fees  invoiced
since  the  start of  commercial  operations  totaled  $45.9  million  and $36.3
million,  respectively. The allowance for doubtful accounts as of March 31, 2003
and  December  31,  2002  represents  the  Company's  current  estimate  of  the
uncollectible portion of such unpaid portion of the Water Delivery Fees and does
not reflect any projections  related to future  billings and their  collections.
Any change in the Company's  assessment of the potential  outcome of the pending
arbitration with NIA, and future disputes,  if any, could  significantly  impact
such  allowance  and the  results  of  operations.  The  receivable,  net of the
allowance  for  doubtful  accounts for the period  since  commercial  operations
began, remains less than the amount of taxes paid.

3.  RELATED PARTY TRANSACTIONS

In the normal course of business,  the Company  transacts with its affiliates in
the form of advances  for  construction  related  and  operating  expenses.  The
payable to affiliates  was $34.0 million and $33.3 million at March 31, 2003 and
December 31, 2002,  respectively.  Costs incurred by the Company in transactions
with  related  parties  amounted to $0.6  million and $0.4 million for the three
months ended March 31, 2003 and 2002, respectively.

As of March 31, 2003 and December 31, 2002, the Company has issued $51.3 million
of unsecured subordinated notes payable to CE Casecnan Ltd., a stockholder,  due
November  15, 2005.  The  unsecured  notes bear  interest at LIBOR plus two (2%)
percent which is payable every May 15 and November 15.  Interest  expense on the
unsecured  notes was $0.4  million  during the three months ended March 31, 2003
and 2002.  Any overdue  payment of  principal  or interest  payable on the notes
shall increase the annual  interest by two (2%) percent.  At March 31, 2003, the
effective  interest rate on the notes was 3.4%.  The notes may be prepaid at any
time without premium or penalty but with accrued interest, if any. The unsecured
subordinated notes and any and all payments,  whether of principal,  interest or
otherwise  are  subject  in all  respects  to  the  terms  of the  Subordination
Agreement  dated  November 15, 2001 between CE Casecnan  Ltd. and the Company in
favor of the  Trustee,  the  Collateral  Agent,  the  co-collateral  agent,  the
Depositary,  any party that becomes a Permitted  Counterparty  under an Interest
Rate/Currency  Protection  Agreement,  any party that becomes a working  capital
facility  agent and any other  Person  that  becomes a secured  party  under the
Intercreditor Agreement.

                                      -8-

<PAGE>

4.  COMMITMENTS AND CONTINGENCIES

Replacement Contract
--------------------

The  Casecnan  Project was  initially  constructed  pursuant  to a  fixed-price,
date-certain,  turnkey  construction  contract (the "Hanbo Contract") on a joint
and several  basis by Hanbo  Corporation  ("Hanbo")  and Hanbo  Engineering  and
Construction Co., Ltd. ("HECC"), both of which are South Korean corporations. On
May 7, 1997, the Company  terminated the Hanbo Contract due to defaults by Hanbo
and HECC  including the  insolvency  of both  companies.  On the same date,  the
Company  entered into a new  fixed-price,  date  certain,  turnkey  engineering,
procurement  and  construction  contract to  complete  the  construction  of the
Casecnan Project (the  "Replacement  Contract").  The work under the Replacement
Contract was  conducted  by a  consortium  consisting  of  Cooperativa  Muratori
Cementisti CMC di Ravenna and Impresa Pizzarotti & C. Spa.,  (collectively,  the
"Contractor"),  working  together with Siemens A.G.,  Sulzer Hydro Ltd., Black &
Veatch and Colenco Power Engineering Ltd.

On  November  20,  1999,  the  Replacement  Contract  was  amended to extend the
Guaranteed  Substantial  Completion  Date for the Casecnan  Project to March 31,
2001. This amendment was approved by the lenders' independent engineer under the
Trust Indenture.

On February 12, 2001, the Contractor  filed a Request for  Arbitration  with the
International  Chamber of  Commerce  seeking  schedule  relief of up to 153 days
through August 31, 2001 resulting from various alleged force majeure events.  In
its March 20, 2001  Supplement to Request for  Arbitration,  the Contractor also
seeks  compensation for alleged  additional costs of approximately $4 million it
incurred  from the claimed  force  majeure  events to the extent it is unable to
recover from its  insurer.  On April 20, 2001,  the  Contractor  filed a further
supplement  seeking an additional  compensation for damages of approximately $62
million for the alleged force majeure event (and geologic conditions) related to
the  collapse  of  the  surge  shaft.   The  Contractor  has  alleged  that  the
circumstances  surrounding  the placing of the Casecnan  Project into commercial
operation in December 2001 amounted to a repudiation of the Replacement Contract
and has filed a claim for unspecified  quantum meruit  damages,  and has further
alleged that the delay liquidated  damages clause which provides for payments of
$125,000 per day for each day of delay in completion of the Casecnan Project for
which the Contractor is responsible is  unenforceable.  The arbitration is being
conducted  applying New York law and pursuant to the rules of the  International
Chamber of Commerce.

Hearings  have  been held in  connection  with this  arbitration  in July  2001,
September  2001,  January 2002,  March 2002,  November 2002 and January 2003. As
part of those hearings,  on June 25, 2001, the arbitration  tribunal temporarily
enjoined CE Casecnan from making calls on the demand guaranty posted by Banca di
Roma in  support  of the  Contractor's  obligations  to CE  Casecnan  for  delay
liquidated damages. As a result of the continuing nature of that injunction,  on
April 26, 2002, CE Casecnan and the Contractor  mutually  agreed that no demands
would  be made on the  Banca  di Roma  demand  guaranty  except  pursuant  to an
arbitration  award.  As of March 31,  2003,  however,  CE Casecnan  has received
approximately $6.0 million of liquidated damages from demands made on the demand
guarantees  posted by  Commerzbank on behalf of the  Contractor.  On November 7,
2002, the  International  Chamber of Commerce issued the arbitration  tribunal's
partial  award with  respect to the  Contractor's  force  majeure  and  geologic
conditions  claims.  The  arbitration  panel  awarded the  Contractor 18 days of
schedule relief in the aggregate for all of the force majeure events and awarded
the  Contractor  $3.8 million with  respect to the cost of the  collapsed  surge
shaft.  The $3.8  million is shown as part of the  accounts  payable and accrued
expenses  balance  at  March  31,  2003  and  December  31,  2002.  All  of  the
Contractor's other claims with respect to force majeure and geologic  conditions
were denied.

Further hearings on the Contractor's  repudiation and quantum meruit claims, the
alleged  unenforceability  of the delay  liquidated  damages  clause and certain
other matters had been  scheduled for March 24 through March 28, 2003,  but were
postponed  as a result of the  commencement  of  military  action  in Iraq.  The
hearings have been rescheduled for June 30 through July 11, 2003.

If the Contractor were to prevail on its claim that the delay liquidated damages
clause is unenforceable, the Company would not be entitled to collect such delay
damages for the period from March 31, 2001 through  December  11,  2001.  If the
Contractor  were to prevail in its  repudiation  claim and prove quantum  meruit
damages in excess of amounts

                                      -9-
<PAGE>

paid to the Contractor,  the Company could be liable to make additional payments
to the Contractor.  CE Casecnan  believes all of such allegations and claims are
without merit and is vigorously contesting the Contractor's claims.

Casecnan NIA Arbitration
------------------------

Under  the  terms  of the  Project  Agreement,  NIA has  the  option  of  timely
reimbursing CE Casecnan  directly for certain taxes CE Casecnan has paid. If NIA
does not so reimburse CE  Casecnan,  the taxes paid by CE Casecnan  result in an
increase in the Water  Delivery  Fee.  The payment of certain  other taxes by CE
Casecnan  results  automatically in an increase in the Water Delivery Fee. As of
March 31, 2003, CE Casecnan has paid approximately $58.1 million in taxes, which
as a result of the  foregoing  provisions  results in an  increase  in the Water
Delivery  Fee. NIA has failed to pay the portion of the Water  Delivery Fee each
month, related to the payment of these taxes by CE Casecnan. As a result of this
non-payment,  on August 19, 2002,  CE Casecnan  filed a Request for  Arbitration
against  NIA,  seeking  payment of such  portion of the Water  Delivery  Fee and
enforcement of the relevant  provision of the Project  Agreement  going forward.
The  arbitration  will  be  conducted  in  accordance  with  the  rules  of  the
International Chamber of Commerce.

NIA filed its Answer and  Counterclaim  on March 31,  2003.  In its Answer,  NIA
asserts,  among  other  things,  that most of the taxes  which CE  Casecnan  has
factored into the Water Delivery Fee compensation formula do not fall within the
scope of the relevant  section of the Project  Agreement,  that the compensation
mechanism itself is invalid and unenforceable  under Philippine law and that the
Project  Agreement is  inconsistent  with the Philippine  build-operate-transfer
law. As such, NIA seeks dismissal of CE Casecnan's claims and a declaration from
the arbitral  tribunal  that the taxes which have been taken into account in the
Water Delivery Fee  compensation  mechanism are not  recoverable  thereunder and
that, at most, certain taxes may be directly reimbursed (rather than compensated
for  through  the  Water  Delivery  Fee)  by NIA.  NIA  also  counterclaims  for
approximately  $7  million  which it  alleges  is due to it as a  result  of the
delayed  completion  of the Casecnan  Project.  On April 23,  2003,  NIA filed a
Supplemental  Counterclaim  in which it asserts  that the Project  Agreement  is
contrary  to  Philippine  law and  public  policy  and by way of relief  seeks a
declaration  that the Project  Agreement is void from the beginning or should be
cancelled,  or alternatively,  an order for reformation of the Project Agreement
or any portions or sections  thereof  which may be  determined to be contrary to
such law and or public policy.  The Company intends to vigorously contest all of
NIA's assertions and counterclaims.

The three  member  arbitration  panel has been  confirmed  by the  International
Chamber of Commerce and an initial  organizational hearing was held on April 28,
2003. Hearings on this matter are scheduled for July 2004.

Project Transmission Line
-------------------------

Under the Project Agreement, if NIA is able to accept delivery of water into the
Pantabangan  Reservoir  and NPC has  completed  the Casecnan  Project's  related
transmission line, the Company was liable to pay NIA $5,500 per day for each day
of delay in completion of the Casecnan Project beyond July 27, 2000,  increasing
to $13,500 per day for each day of delay in completion beyond November 27, 2000.
The Casecnan Project  transmission line was completed on August 13, 2001 and NIA
has completed the  installation and testing of the Casecnan  Project's  metering
equipment.  Accordingly,  the Company has accrued  $1.6  million for  liquidated
damages as of March 31, 2003 and December 31, 2002,  payable to NIA for 120 days
of delay and this is shown as part of accounts  payable and accrued  expenses in
the balance sheets.

Casecnan Stockholder Litigation
-------------------------------

Pursuant  to the  share  ownership  adjustment  mechanism  in  the  CE  Casecnan
stockholder  agreement,  which is based upon pro forma financial  projections of
the Casecnan Project prepared following  commencement of commercial  operations,
in February 2002, MidAmerican Energy Holdings Company  ("MidAmerican"),  through
its indirect  wholly owned  subsidiary  CE Casecnan  Ltd.,  advised the minority
stockholder  LaPrairie Group Contractors  (International)  Ltd.,  ("LPG"),  that
MidAmerican's  indirect  ownership interest in CE Casecnan had increased to 100%
effective from commencement of commercial operations. On July 8, 2002, LPG filed
a complaint in the Superior Court of the State of California, City and County of
San Francisco  against,  inter alia, CE Casecnan  Ltd. and

                                      -10-
<PAGE>

MidAmerican.  In the complaint,  LPG seeks compensatory and punitive damages for
alleged breaches of the stockholder  agreement and alleged breaches of fiduciary
duties  allegedly owed by CE Casecnan Ltd. and MidAmerican to LPG. The complaint
also seeks injunctive  relief against all defendants and a declaratory  judgment
that LPG is entitled to maintain its 15% interest in CE Casecnan. The impact, if
any, of this litigation on the Company cannot be determined at this time.

In February  2003, San Lorenzo Ruiz Builders and  Developers  Group,  Inc. ("San
Lorenzo"),  an original  shareholder  substantially  all of whose  shares in the
Company  MidAmerican  purchased in 1998,  threatened to initiate legal action in
the  Philippines in connection  with certain aspects of its option to repurchase
such shares on or prior to  commercial  operation of the Casecnan  Project.  The
Company believes that San Lorenzo has no valid basis for any claim and, if named
as a  defendant  in any  action  that  may be  commenced  by San  Lorenzo,  will
vigorously defend any such action.

BIR Audit
---------

The  Bureau  of  Internal  Revenue  ("BIR"),   consistent  with  the  Philippine
government's public statements to increase tax revenues,  has commenced auditing
the Company for all taxes,  including income taxes, for the years 2001 and 2000.
In  addition,  the BIR has issued  letters of  authority  to audit the tax years
1998,  1997 and 1996.  The only  basis on which  tax years  prior to 1999 can be
audited is if the BIR  successfully  argues in a  Philippine  administrative  or
court proceeding that the tax returns for those years are false or fraudulent in
some respect.  The Company  believes that any  allegations  that such tax years'
filings are false or fraudulent are without merit and accordingly that any audit
of such tax years is improper  and without  proper  legal  basis,  although  the
outcome  of  any  audit  by the  Philippine  tax  authorities  in  light  of the
government's  public  statements to increase tax revenues is  uncertain.  If the
Company is  ultimately  held liable the amounts  assessed may be  material.  The
Company further  believes that it currently is in compliance with applicable tax
laws and regulations with respect to all of its tax returns and filings.

Political Risks
---------------

The Philippine  Congress has passed the Electric  Power  Industry  Reform Act of
2001 ("EPIRA"),  which is aimed at restructuring  the Philippine power industry,
privatization of the NPC and introduction of a competitive  electricity  market,
among other  initiatives.  The implementation of EPIRA may have an impact on the
Comapny's  future  operations  in the  Philippines  and  the  Philippines  power
industry as a whole, the effect of which is not yet determinable and estimable.

In connection with an interagency  review of approximately 40 independent  power
project  contracts in the Philippines,  the Casecnan Project (together with four
other  projects) has reportedly  been  identified as raising legal and financial
questions and, with those projects,  has been prioritized for renegotiation.  No
written report has yet been issued with respect to the interagency  review,  and
the timing and nature of steps,  if any that the Philippine  Government may take
in this regard are not known. Accordingly,  it is not known what, if any, impact
the  government's  review will have on the  operations  of the Company.  Company
representatives,  together with certain current and former government officials,
also have been  requested to appear,  and have  appeared  during 2002,  before a
Philippine Senate committee which has raised questions and made allegations with
respect to the Casecnan Project's tariff structure and implementation.

On May 5,  2003,  the  Philippine  Supreme  Court  issued  its  ruling in a case
involving  an  unsolicited   build-operate-transfer   ("BOT")  project  for  the
development, construction and operation of the new Manila International Airport.
Various  members  of  Congress  and labor  unions  initiated  the  action in the
Philippine Supreme Court on September 17, 2002 seeking to enjoin the enforcement
of the BOT  agreement  with an  international  consortium  known as PIATCO  (the
"PIATCO Agreement"). The PIATCO Consortium is unrelated to the Company. On March
4, 2003,  PIATCO  separately  initiated  an  International  Chamber of  Commerce
arbitration pursuant to the terms of the PIATCO Agreement. The Supreme Court, in
its ruling, stated that there were no unresolved factual issues and therefore it
had original jurisdiction and concluded that the pendency of the arbitration did
not  preclude  the court from  ruling on a case  brought by  non-parties  to the
PIATCO Agreement, such as members of the Philippine Congress or non-governmental
organizations. In a public speech on November 29, 2002 prior to the December 10,
2002 oral arguments before the Philippine  Supreme Court,  Philippine  President
Arroyo  stated  that she  would  not  honor the  PIATCO  Agreement  because  the
executive  branch's legal  department  had concluded it was "null and void".  In
light of that  announcement,  the project  owners  stopped  work on the project,
which is  approximately  90% complete and  accordingly  has not been placed into
commercial operation.  In its 10 to 3 ruling (with one abstention) issued on May
5, 2003,  the  Philippine  Supreme  Court  ruled that the PIATCO  Agreement  was
contrary  to  Philippine  law and  public  policy  and was "null and  void".  CE
Casecnan is assessing the impact of the PIATCO ruling on the Casecnan Project.

                                      -11-
<PAGE>

As previously  disclosed,  on April 24, 2003 Standard & Poor's Ratings  Services
("S&P")  lowered  its  rating of CE  Casecnan  to `BB' from `BB+' as a result of
S&P's  downgrade  of the  Republic  of the  Philippines.  The  downgrade  of the
Philippines  by S&P  reflected  the  Country's  growing  debt  burden and fiscal
rigidity.

On May 8, 2003,  Moody's  Investors  Service  ("Moody's")  placed the Ba2 senior
secured  notes  rating of CE Casecnan on review for possible  downgrade,  noting
NIA's supplemental  counterclaim  seeking to have the Project Agreement declared
void.  Moody's  noted  that  actions  by  government  related  agencies  and the
resulting instability of contractual arrangements was becoming inconsistent with
their rating approach that attaches  significant benefit to offtake arrangements
with those government supported entities.

Concentration of Risk
---------------------

NIA's payments of obligations  under the Project Agreement will be substantially
denominated  in United States  Dollars and are expected to be the Company's sole
source of operating  revenues.  Because of the Company's  dependence on NIA, any
material failure of NIA to fulfill its obligations  under the Project  Agreement
and any  material  failure of the  Republic  of the  Philippines  to fulfill its
obligations  under the Performance  Undertaking would  significantly  impair the
ability  of the  Company  to  meet  its  existing  and  future  obligations.  No
stockholders,  partners or affiliates of the Company, including MidAmerican, and
no directors,  officers or employees of the Company will  guarantee or be in any
way liable for payment of the Company's obligations. As a result, payment of the
Company's  obligations depends upon the availability of sufficient revenues from
the Company's business after the payment of operating expenses.


                                      -12-

<PAGE>


ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF  OPERATIONS.

The following is  management's  discussion  and analysis of certain  significant
factors which have affected the financial condition and results of operations of
CE Casecnan Water and Energy Company ("CE  Casecnan" or the  "Company"),  during
the  periods  included  in  the  accompanying  statements  of  operations.  This
discussion should be read in conjunction with the Company's historical financial
statements and the notes to those statements.

FORWARD-LOOKING STATEMENTS

From time to time, CE Casecnan may make  forward-looking  statements  within the
meaning of the federal securities laws that involve  judgments,  assumptions and
other uncertainties beyond the control of the Company or any of its subsidiaries
individually.  These  forward-looking  statements  may  include,  among  others,
statements  concerning  revenue and cost trends,  cost recovery,  cost reduction
strategies and anticipated outcomes, pricing strategies,  changes in the utility
industry,  planned  capital  expenditures,  financing  needs  and  availability,
statements of CE Casecnan's expectations,  beliefs, future plans and strategies,
anticipated  events or trends and similar comments  concerning  matters that are
not historical facts.
 These types of forward-looking statements are based on current expectations and
involve a number of known and unknown risks and  uncertainties  that could cause
the actual results and performance of the Company to differ  materially from any
expected   future  results  or  performance,   expressed  or  implied,   by  the
forward-looking statements. In connection with the safe harbor provisions of the
Private  Securities  Litigation  Reform Act of 1995, CE Casecnan has  identified
important  factors that could cause  actual  results to differ  materially  from
those  expectations,  including  weather effects on revenues and other operating
uncertainties,  uncertainties  relating to economic and political conditions and
uncertainties regarding the impact of regulations,  changes in government policy
and  competition.  The  Company  does not  assume any  responsibility  to update
forward-looking information contained herein.

CRITICAL ACCOUNTING POLICIES

The  preparation of financial  statements and related  disclosures in conformity
with accounting  principles  generally  accepted in the United States of America
requires management to make judgments, assumptions and estimates that affect the
amounts reported in the Financial  Statements and accompanying notes.  Estimates
are used for, but not limited to, the  accounting for the allowance for doubtful
accounts and  deferred  income  taxes.  Actual  results  could differ from these
estimates. The following critical accounting policies are impacted significantly
by judgments, assumptions and estimates used in the preparation of the financial
statements.

Allowance for Doubtful Accounts
-------------------------------

The allowance for doubtful accounts is based on the Company's  assessment of the
collectibility   of   payments   from   the   Philippine   National   Irrigation
Administration  ("NIA"). This assessment requires judgment regarding the outcome
of pending  disputes  and the ability of the customer to pay the amounts owed to
the Company.  Any change in the Company's  assessment of the  collectibility  of
accounts  receivable  that was not previously  provided for could  significantly
impact the calculation of such allowance and the results of operations.

Deferred Income Tax Assets and Liabilities
------------------------------------------

Deferred  income tax assets and  liabilities  are  recognized for the future tax
consequences  attributable to differences  between the financial reporting bases
of assets and  liabilities  and their  related  tax bases.  Deferred  income tax
assets and  liabilities  are  measured  using the tax rate  expected to apply to
taxable income in the years in which those temporary differences are expected to
be recovered or settled.  A valuation  allowance is provided for deferred income
tax  assets  if it is more  likely  than  not  that a tax  benefit  will  not be
realized.

                                      -13-

<PAGE>

RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2003 AND 2002

Total  revenue  increased  $3.9 million or 14.1% to $31.5  million for the three
months ended March 31, 2003 from $27.6  million for the three months ended March
31, 2002. Water delivery revenue increased to $22.4 million for the three months
ended March 31, 2003 from $18.5  million  for the three  months  ended March 31,
2002 and  electricity  sales revenue was $9.1 million for the three months ended
March 31, 2003 and March 31, 2002.  The increase in water fees was due to a 7.5%
increase in Water Delivery Fee rate as a result of the annual  escalation factor
and the  accrual of the  revenue  related to the  additional  taxes  recoverable
during  operations  pursuant  to the  contract.  See Note 4 -  "Commitments  and
Contingencies,   Casecnan  NIA  Arbitration."   Revenues  from  water  delivery,
guaranteed energy and excess energy generated and delivered are 71%, 29% and 0%,
respectively,  of the total  revenue for the three  months  ended March 31, 2003
while 67%, 33% and 0%, respectively for the three months ended March 31, 2002.

Operating  expenses  increased  $2.8  million or 27.7% to $12.9  million for the
three months ended March 31, 2003 from $10.1  million for the three months ended
March 31, 2002.  The increase was caused by higher  doubtful  accounts  expense,
higher local business taxes,  higher insurance  premium  amortization and higher
legal costs. Included within operating expenses for the three months ended March
31, 2003 are  depreciation,  plant  operations and doubtful  accounts expense of
$5.7  million,  $3.2  million  and  $4.1  million,  respectively.   Depreciation
decreased by $0.5 million while plant  operations and doubtful  accounts expense
increased   from  prior  year  amounts  of  $1.7   million  and  $2.3   million,
respectively.

Interest  expense  decreased $0.6 million or 5.6% to $10.2 million for the three
months ended March 31, 2003 from $10.8  million for the three months ended March
31, 2002.  The primary reason for the decrease was the repayment of the floating
rate notes as well as a 5% reduction in the balance of the Series B bonds due to
a principal payment of $8.6 million in 2002.

LIQUIDITY AND CAPITAL RESOURCES

The Company's  cash and cash  equivalents  were $4.0 million and $0.7 million at
March 31, 2003 and December 31, 2002, respectively.

The Company  generated cash flows from operations of $26.2 million for the three
months ended March 31, 2003,  compared  with $6.9 million for the same period in
2002.  The increase from 2002 was  primarily  due to the  collection of November
2002 revenues in February 2003 instead of December 2002. In addition,  operating
cash flows in 2002 was lower due to the  delayed  payment of the  February  2002
revenues in April 2002 instead of March 2002.

The Company provided $1.5 million from investing activities for the three months
ended March 31, 2003,  compared to $2.5 million for the same period in 2002. The
decrease is due to increased  cash used for  additions  to  property,  plant and
equipment totaling $0.9 million over the amount for the same period in 2002.

The Company  used $24.3  million in  financing  activities  for the three months
ended March 31, 2003,  compared to $8.6 million for the same period in 2002. The
increase is due to increased  funding of the Company's debt service reserve fund
totaling  $17.0  million over the amount for the same period in 2002,  partially
offset by the Company's  payable to  affiliates  increase of $0.7 million in the
first three  months of 2003  compared to a decrease of $0.6 million for the same
period in 2002.

CE Casecnan  constructed and operates the Casecnan Project,  which was developed
as an unsolicited proposal under the Philippine  build-operate-transfer  ("BOT")
law, under the terms of the Project Agreement between CE Casecnan and NIA. Under
the Project  Agreement,  CE Casecnan  developed,  financed and  constructed  the
Casecnan  Project  over the  construction  period,  and owns  and  operates  the
Casecnan Project for 20 years (the "Cooperation Period"). During the Cooperation
Period,  NIA is obligated to accept all  deliveries of water and energy,  and so
long as the Casecnan  Project is physically  capable of operating and delivering
in  accordance  with

                                      -14-
<PAGE>

agreed  levels set forth in the Project  Agreement,  NIA is  obligated to pay CE
Casecnan a fixed fee for the delivery of a threshold volume of water and a fixed
fee for the delivery of a threshold amount of electricity.  In addition,  NIA is
obligated to pay a fee for all electricity  delivered in excess of the threshold
amount up to a specified amount.

The Republic of the  Philippines  has provided a Performance  Undertaking  under
which NIA's  obligations  under the Project Agreement are guaranteed by the full
faith and credit of the Republic of the Philippines.  The Project  Agreement and
the  Performance  Undertaking  provide for the resolution of disputes by binding
arbitration in Singapore under international arbitration rules.

NIA's payment  obligations  under the Project  Agreement are the Company's  sole
source of operating  revenues.  Because of the Company's  dependence on NIA, any
material failure of NIA to fulfill its obligations  under the Project  Agreement
and any  material  failure of the  Republic  of the  Philippines  to fulfill its
obligations  under the Performance  Undertaking would  significantly  impair the
ability of the Company to meet its  obligations  pertaining  to its  outstanding
debt.

The  Casecnan  Project was  initially  constructed  pursuant  to a  fixed-price,
date-certain,  turnkey  construction  contract (the "Hanbo Contract") on a joint
and several  basis by Hanbo  Corporation  ("Hanbo")  and Hanbo  Engineering  and
Construction Co., Ltd. ("HECC"), both of which are South Korean corporations. On
May 7, 1997, the Company  terminated the Hanbo Contract due to defaults by Hanbo
and HECC  including the  insolvency  of both  companies.  On the same date,  the
Company  entered into a new  fixed-price,  date  certain,  turnkey  engineering,
procurement  and  construction  contract to  complete  the  construction  of the
Casecnan Project (the  "Replacement  Contract").  The work under the Replacement
Contract was  conducted  by a  consortium  consisting  of  Cooperativa  Muratori
Cementisti CMC di Ravenna and Impresa Pizzarotti & C. Spa.,  (collectively,  the
"Contractor"),  working  together with Siemens A.G.,  Sulzer Hydro Ltd., Black &
Veatch and Colenco Power Engineering Ltd.

On  November  20,  1999,  the  Replacement  Contract  was  amended to extend the
Guaranteed  Substantial  Completion  Date for the Casecnan  Project to March 31,
2001. This amendment was approved by the lenders' independent engineer under the
Trust Indenture.

On February 12, 2001, the Contractor  filed a Request for  Arbitration  with the
International  Chamber of  Commerce  seeking  schedule  relief of up to 153 days
through August 31, 2001 resulting from various alleged force majeure events.  In
its March 20,  2001  Supplement  to  Request  for  Arbitration,  the  Contractor
requested  compensation for alleged additional costs of approximately $4 million
it incurred from the claimed force majeure  events to the extent it is unable to
recover from its  insurer.  On April 20, 2001,  the  Contractor  filed a further
supplement  seeking an additional  compensation for damages of approximately $62
million for the alleged force majeure event (and geologic conditions) related to
the  collapse of the surge  shaft.  The  Contractor  also has  alleged  that the
circumstances  in which the Company assumed control of the Casecnan  Project and
placed  it  into  commercial  operation  on  December  11,  2001  amounted  to a
repudiation of the  Construction  Contract and has filed a claim for unspecified
quantum  meruit  damages,  and has  further  alleged  that the delay  liquidated
damages  clause which  provides for payments of $125,000 per day for each day of
delay in  completion  of the  Casecnan  Project  for  which  the  Contractor  is
responsible is  unenforceable.  The arbitration is being conducted  applying New
York law and in  accordance  with  the  rules of the  International  Chamber  of
Commerce.

Hearings  have  been held in  connection  with this  arbitration  in July  2001,
September  2001,  January 2002,  March 2002,  November 2002 and January 2003. As
part of those hearings,  on June 25, 2001, the arbitration  tribunal temporarily
enjoined CE Casecnan from making calls on the demand guaranty posted by Banca di
Roma in  support  of the  Contractor's  obligations  to CE  Casecnan  for  delay
liquidated damages. As a result of the continuing nature of that injunction,  on
April 26, 2002, CE Casecnan and the Contractor  mutually  agreed that no demands
would  be made on the  Banca  di Roma  demand  guaranty  except  pursuant  to an
arbitration  award.  As of March 31,  2003,  however,  CE Casecnan  has received
approximately $6.0 million of liquidated damages from demands made on the demand
guarantees  posted by  Commerzbank on behalf of the  Contractor.  On November 7,
2002, the  International  Chamber of Commerce issued the arbitration  tribunal's
partial  award with  respect to the  Contractor's

                                      -15-
<PAGE>

force majeure and geologic  conditions claims. The arbitration panel awarded the
Contractor  18 days of  schedule  relief in the  aggregate  for all of the force
majeure events and awarded the Contractor  $3.8 million with respect to the cost
of the collapsed surge shaft.  The $3.8 million is shown as part of the accounts
payable and accrued  expenses  balance at March 31, 2003 and  December 31, 2002.
All of the Contractor's  other claims with respect to force majeure and geologic
conditions were denied.

Further hearings on the Contractor's  repudiation and quantum meruit claims, the
alleged  unenforceability  of the delay  liquidated  damages  clause and certain
other matters had been  scheduled for March 24 through March 28, 2003,  but were
postponed  as a result of the  commencement  of  military  action  in Iraq.  The
hearings have been rescheduled for June 30 through July 11, 2003.

If the Contractor were to prevail on its claim that the delay liquidated damages
clause is unenforceable, the Company would not be entitled to collect such delay
damages for the period from March 31, 2001 through  December  11,  2001.  If the
Contractor  were to prevail in its  repudiation  claim and prove quantum  meruit
damages in excess of amounts already paid to the  Contractor,  the Company could
be liable to make additional  payments to the Contractor.  CE Casecnan  believes
all such  allegations and claims are without merit and is vigorously  contesting
the Contractor's claims.

Casecnan NIA Arbitration
------------------------

Under  the  terms  of the  Project  Agreement,  NIA has  the  option  of  timely
reimbursing CE Casecnan  directly for certain taxes CE Casecnan has paid. If NIA
does not so reimburse CE  Casecnan,  the taxes paid by CE Casecnan  result in an
increase in the Water  Delivery  Fee.  The payment of certain  other taxes by CE
Casecnan  results  automatically in an increase in the Water Delivery Fee. As of
March 31, 2003, CE Casecnan has paid approximately $58.1 million in taxes, which
as a result of the  foregoing  provisions  results in an  increase  in the Water
Delivery  Fee. NIA has failed to pay the portion of the Water  Delivery Fee each
month, related to the payment of these taxes by CE Casecnan. As a result of this
non-payment,  on August 19, 2002,  CE Casecnan  filed a Request for  Arbitration
against  NIA,  seeking  payment of such  portion of the Water  Delivery  Fee and
enforcement of the relevant  provision of the Project  Agreement  going forward.
The  arbitration  will  be  conducted  in  accordance  with  the  rules  of  the
International Chamber of Commerce.

NIA filed its Answer and  Counterclaim  on March 31,  2003.  In its Answer,  NIA
asserts,  among  other  things,  that most of the taxes  which CE  Casecnan  has
factored into the Water Delivery Fee compensation formula do not fall within the
scope of the relevant  section of the Project  Agreement,  that the compensation
mechanism itself is invalid and unenforceable  under Philippine law and that the
Project  Agreement is  inconsistent  with the Philippine  build-operate-transfer
law. As such, NIA seeks dismissal of CE Casecnan's claims and a declaration from
the arbitral  tribunal  that the taxes which have been taken into account in the
Water Delivery Fee  compensation  mechanism are not  recoverable  thereunder and
that, at most, certain taxes may be directly reimbursed (rather than compensated
for  through  the  Water  Delivery  Fee)  by NIA.  NIA  also  counterclaims  for
approximately  $7  million  which it  alleges  is due to it as a  result  of the
delayed  completion  of the Casecnan  Project.  On April 23,  2003,  NIA filed a
Supplemental  Counterclaim  in which it asserts  that the Project  Agreement  is
contrary  to  Philippine  law and  public  policy  and by way of relief  seeks a
declaration  that the Project  Agreement is void from the beginning or should be
cancelled,  or alternatively,  an order for reformation of the Project Agreement
or any portions or sections  thereof  which may be  determined to be contrary to
such law and or public policy.  The Company intends to vigorously contest all of
NIA's assertions and counterclaims.

The three  member  arbitration  panel has been  confirmed  by the  International
Chamber of Commerce and an initial  organizational hearing was held on April 28,
2003. Hearings on this matter are scheduled for July 2004.

Project Transmission Line
-------------------------

Under the Project Agreement, if NIA is able to accept delivery of water into the
Pantabangan  Reservoir  and NPC has  completed  the Casecnan  Project's  related
transmission line, the Company was liable to pay NIA $5,500 per day for each day
of delay in completion of the Casecnan Project beyond July 27, 2000,  increasing
to $13,500 per day for each

                                      -16-
<PAGE>


day of delay in  completion  beyond  November  27, 2000.  The  Casecnan  Project
transmission  line was  completed on August 13, 2001 and NIA has  completed  the
installation  and  testing  of  the  Casecnan  Project's   metering   equipment.
Accordingly,  the Company has accrued $1.6 million for liquidated  damages as of
March 31, 2003 and December  31, 2002,  payable to NIA for 120 days of delay and
this is shown as part of accounts  payable  and accrued  expenses in the balance
sheets.  In its  counterclaim in the pending ICC  arbitration,  NIA has asserted
that it is due approximately $7 million of liquidated damages as a result of the
delayed completion of the Casecnan Project. See "Casecnan NIA Arbitration."

Casecnan Stockholder Litigation
-------------------------------

Pursuant  to the  share  ownership  adjustment  mechanism  in  the  CE  Casecnan
stockholder  agreement,  which is based upon pro forma financial  projections of
the Casecnan Project prepared following  commencement of commercial  operations,
in February 2002, MidAmerican Energy Holdings Company  ("MidAmerican"),  through
its indirect  wholly owned  subsidiary  CE Casecnan  Ltd.,  advised the minority
stockholder  LaPrairie Group Contractors  (International)  Ltd.,  ("LPG"),  that
MidAmerican's  indirect  ownership interest in CE Casecnan had increased to 100%
effective from commencement of commercial operations. On July 8, 2002, LPG filed
a complaint in the Superior Court of the State of California, City and County of
San Francisco  against,  inter alia, CE Casecnan  Ltd. and  MidAmerican.  In the
complaint,  LPG seeks  compensatory and punitive damages for alleged breaches of
the stockholder  agreement and alleged  breaches of fiduciary  duties  allegedly
owed by CE Casecnan  Ltd.  and  MidAmerican  to LPG.  The  complaint  also seeks
injunctive relief against all defendants and a declaratory  judgment that LPG is
entitled to maintain  its 15% interest in CE  Casecnan.  The impact,  if any, of
this litigation on the Company cannot be determined at this time.

In February  2003, San Lorenzo Ruiz Builders and  Developers  Group,  Inc. ("San
Lorenzo"),  an original  shareholder  substantially  all of whose  shares in the
Company  MidAmerican  purchased in 1998,  threatened to initiate legal action in
the  Philippines in connection  with certain aspects of its option to repurchase
such shares on or prior to  commercial  operation of the Casecnan  Project.  The
Company believes that San Lorenzo has no valid basis for any claim and, if named
as a  defendant  in any  action  that  may be  commenced  by San  Lorenzo,  will
vigorously defend any such action.

BIR Audit
---------

The  Bureau  of  Internal  Revenue  ("BIR"),   consistent  with  the  Philippine
government's public statements to increase tax revenues,  has commenced auditing
the Company for all taxes,  including income taxes, for the years 2001 and 2000.
In  addition,  the BIR has issued  letters of  authority  to audit the tax years
1998,  1997 and 1996.  The only  basis on which  tax years  prior to 1999 can be
audited is if the BIR  successfully  argues in a  Philippine  administrative  or
court proceeding that the tax returns for those years are false or fraudulent in
some respect.  The Company  believes that any  allegations  that such tax years'
filings are false or fraudulent are without merit and accordingly that any audit
of such tax years is improper  and without  proper  legal  basis,  although  the
outcome  of  any  audit  by the  Philippine  tax  authorities  in  light  of the
government's  public  statements to increase tax revenues is  uncertain.  If the
Company is  ultimately  held liable the amounts  assessed may be  material.  The
Company further  believes that it currently is in compliance with applicable tax
laws and regulations with respect to all of its tax returns and filings.

Political Risks
---------------

The Philippine  Congress has passed the Electric  Power  Industry  Reform Act of
2001 ("EPIRA"),  which is aimed at restructuring  the Philippine power industry,
privatization of the NPC and introduction of a competitive  electricity  market,
among other  initiatives.  The implementation of EPIRA may have an impact on the
Comapny's  future  operations  in the  Philippines  and  the  Philippines  power
industry as a whole, the effect of which is not yet determinable and estimable.

In connection with an interagency  review of approximately 40 independent  power
project  contracts in the Philippines,  the Casecnan Project (together with four
other  projects) has reportedly  been  identified as raising legal and financial
questions and, with those projects,  has been prioritized for renegotiation.  No
written report has yet been issued with respect to the interagency  review,  and
the timing and nature of steps,  if any that the Philippine  Government may take
in this regard are not known. Accordingly,  it is not known what, if any, impact
the  government's  review will have on the  operations  of the Company.  Company
representatives,  together with certain current and former government officials,
also have been  requested to appear,  and have  appeared  during 2002,  before a
Philippine Senate committee

                                      -17-
<PAGE>

which has raised  questions  and made  allegations  with respect to the Casecnan
Project's  tariff structure and  implementation.  On May 5, 2003, the Philippine
Supreme   Court  issued  its  ruling  in  a  case   involving   an   unsolicited
build-operate-transfer  ("BOT") project for the  development,  construction  and
operation of the new Manila International  Airport.  Various members of Congress
and labor  unions  initiated  the  action  in the  Philippine  Supreme  Court on
September    17,   2002   seeking   to   enjoin   the    enforcement    of   the
build-operate-transfer  agreement  with an  international  consortium  known  as
PIATCO (the  "PIATCO  Agreement").  The PIATCO  Consortium  is  unrelated to the
Company. On March 4, 2003, PIATCO separately initiated an International  Chamber
of  Commerce  arbitration  pursuant  to the terms of the PIATCO  Agreement.  The
Supreme  Court,  in its  ruling,  stated that there were no  unresolved  factual
issues  and  therefore  it had  original  jurisdiction  and  concluded  that the
pendency of the  arbitration  did not  preclude  the court from ruling on a case
brought  by  non-parties  to  the  PIATCO  Agreement,  such  as  members  of the
Philippine  Congress or  non-governmental  organizations.  In a public speech on
November  29,  2002 prior to the  December  10, 2002 oral  arguments  before the
Philippine Supreme Court,  Philippine President Arroyo stated that she would not
honor the PIATCO Agreement  because the executive  branch's legal department had
concluded  it was "null and void".  In light of that  announcement,  the project
owners  stopped work on the  project,  which is  approximately  90% complete and
accordingly has not been placed into commercial operation. In its 10 to 3 ruling
(with one abstention)  issued on May 5, 2003, the Philippine Supreme Court ruled
that the PIATCO  Agreement was contrary to Philippine  law and public policy and
was "null and void". CE Casecnan is assessing the impact of the PIATCO ruling on
the Casecnan Project.

As previously  disclosed,  on April 24, 2003 Standard & Poor's Ratings  Services
("S&P")  lowered  its  rating of CE  Casecnan  to `BB' from `BB+' as a result of
S&P's  downgrade  of the  Republic  of the  Philippines.  The  downgrade  of the
Philippines  by S&P  reflected  the  Country's  growing  debt  burden and fiscal
rigidity.

On May 8, 2003,  Moody's  Investors  Service  ("Moody's")  placed the Ba2 senior
secured  notes  rating of CE Casecnan on review for possible  downgrade,  noting
NIA's supplemental  counterclaim  seeking to have the Project Agreement declared
void.  Moody's  noted  that  actions  by  government  related  agencies  and the
resulting instability of contractual arrangements was becoming inconsistent with
their rating approach that attaches  significant benefit to offtake arrangements
with those government supported entities.

Concentration of Risk
---------------------

NIA's payments of obligations  under the Project Agreement will be substantially
denominated  in United States  Dollars and are expected to be the Company's sole
source of operating  revenues.  Because of the Company's  dependence on NIA, any
material failure of NIA to fulfill its obligations  under the Project  Agreement
and any  material  failure of the  Republic  of the  Philippines  to fulfill its
obligations  under the Performance  Undertaking would  significantly  impair the
ability  of the  Company  to  meet  its  existing  and  future  obligations.  No
stockholders,  partners or affiliates of the Company, including MidAmerican, and
no directors,  officers or employees of the Company will  guarantee or be in any
way liable for payment of the Company's obligations. As a result, payment of the
Company's  obligations depends upon the availability of sufficient revenues from
the Company's business after the payment of operating expenses.

                                      -18-
<PAGE>


ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

For  quantitative  and  qualitative  disclosures  about market risk affecting CE
Casecnan,  see Item 7A "Qualitative  and Quantitative  Disclosures  About Market
Risk" of CE Casecnan's  Annual  Report on Form 10-K for the year ended  December
31, 2002. CE Casecnan's exposure to market risk has not changed materially since
December 31, 2002.

ITEM 4.  CONTROLS AND PROCEDURES.

CE  Casecnan  Water and  Energy  Company's  chief  executive  officer  and chief
financial  officer have  established  "disclosure  controls and  procedures" (as
defined in Rule  13a-14(c) and Rule 15d-14(c) of the Securities and Exchange Act
of  1934) to  ensure  that  material  information  of the  companies  and  their
subsidiaries  is made known to them by others within the  respective  companies.
Under their supervision, an evaluation of the disclosure controls and procedures
was performed within 90 days prior to the filing of this quarterly report. Based
on that evaluation,  the above-mentioned officers have concluded that, as of the
date of the  evaluation,  the disclosure  controls and procedures were operating
effectively.  Additionally,  the  above-mentioned  officers find that there have
been no  signification  changes in internal  controls,  or in other factors that
could  significantly  affect internal  controls,  subsequent to the date of that
evaluation.


                                      -19-

<PAGE>


                           PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS.

See Note 4 to the financial statements and discussion in management's discussion
and analysis.

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS.

Not applicable.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES.

Not applicable.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

Not applicable.

ITEM 5.  OTHER INFORMATION.

Not applicable.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K.

(a)      EXHIBITS:

         The exhibits listed on the accompanying Exhibit Index are filed as part
         of this Quarterly Report.

(b)      REPORTS ON FORM 8-K:

         None.


                                      -20-

<PAGE>


                                   SIGNATURES


Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.



                               CE CASECNAN WATER AND ENERGY COMPANY, INC.
                               ------------------------------------------
                                              (Registrant)





Date:  May 12, 2003                         /s/  Patrick J. Goodman
                               -------------------------------------------------
                                                 Patrick J. Goodman
                               Senior Vice President and Chief Financial Officer


                                      -21-
<PAGE>


                     SECTION 302 CERTIFICATION FOR FORM 10-Q
CERTIFICATIONS
--------------

I, David A. Baldwin, certify that:

1. I have reviewed this  quarterly  report on Form 10-Q of CE Casecnan Water and
Energy Company, Inc.;

2. Based on my  knowledge,  this  quarterly  report  does not contain any untrue
statement of a material fact or omit to state a material fact  necessary to make
the statements made, in light of the  circumstances  under which such statements
were made, not  misleading  with respect to the period covered by this quarterly
report;

3.  Based  on my  knowledge,  the  financial  statements,  and  other  financial
information  included in this quarterly  report,  fairly present in all material
respects the financial  condition,  results of operations  and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4.  The  registrant's  other  certifying  officers  and  I are  responsible  for
establishing and maintaining  disclosure  controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) Designed  such  disclosure  controls and  procedures  to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others  within those  entities,  particularly  during the
period in which this quarterly report is being prepared;

b) Evaluated  the  effectiveness  of the  registrant's  disclosure  controls and
procedures  as of a date  within  90  days  prior  to the  filing  date  of this
quarterly report (the "Evaluation Date"); and

c) Presented in this quarterly report our conclusions about the effectiveness of
the  disclosure  controls  and  procedures  based  on our  evaluation  as of the
Evaluation Date;

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

a) All significant  deficiencies in the design or operation of internal controls
which  could  adversely  affect the  registrant's  ability  to record,  process,
summarize and report  financial data and have  identified  for the  registrant's
auditors any material weaknesses in internal controls; and

b) Any  fraud,  whether  or not  material,  that  involves  management  or other
employees who have a significant role in the registrant's internal controls; and

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

Date: May 12, 2003


                              /s/ David A. Baldwin
                            -------------------------
                                David A. Baldwin
                                    President
                            (chief executive officer)


<PAGE>


                     SECTION 302 CERTIFICATION FOR FORM 10-Q
CERTIFICATIONS
--------------

I, Patrick J. Goodman, certify that:

1. I have reviewed this  quarterly  report on Form 10-Q of CE Casecnan Water and
Energy Company, Inc.;

2. Based on my  knowledge,  this  quarterly  report  does not contain any untrue
statement of a material fact or omit to state a material fact  necessary to make
the statements made, in light of the  circumstances  under which such statements
were made, not  misleading  with respect to the period covered by this quarterly
report;

3.  Based  on my  knowledge,  the  financial  statements,  and  other  financial
information  included in this quarterly  report,  fairly present in all material
respects the financial  condition,  results of operations  and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4.  The  registrant's  other  certifying  officers  and  I are  responsible  for
establishing and maintaining  disclosure  controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) Designed  such  disclosure  controls and  procedures  to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others  within those  entities,  particularly  during the
period in which this quarterly report is being prepared;

b) Evaluated  the  effectiveness  of the  registrant's  disclosure  controls and
procedures  as of a date  within  90  days  prior  to the  filing  date  of this
quarterly report (the "Evaluation Date"); and

c) Presented in this quarterly report our conclusions about the effectiveness of
the  disclosure  controls  and  procedures  based  on our  evaluation  as of the
Evaluation Date;

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

a) All significant  deficiencies in the design or operation of internal controls
which  could  adversely  affect the  registrant's  ability  to record,  process,
summarize and report  financial data and have  identified  for the  registrant's
auditors any material weaknesses in internal controls; and

b) Any  fraud,  whether  or not  material,  that  involves  management  or other
employees who have a significant role in the registrant's internal controls; and

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



Date:  May 12, 2003


                             /s/ Patrick J. Goodman
                        --------------------------------
                               Patrick J. Goodman
               Senior Vice President and Chief Financial Officer
                           (chief financial officer)

                                      -23-
<PAGE>


                                  EXHIBIT INDEX

Exhibit No.
-----------

99.1      Chief Executive Officer's  Certificate  Pursuant to Section 906 of the
          Sarbanes-Oxley Act of 2002.

99.2      Chief Financial Officer's Certificate Pursuant to Section 906 of the
          Sarbanes-Oxley Act of 2002.



                                      -24-