FORM 10-K

(Mark One)
[ x ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
               EXCHANGE ACT OF 1934
For the Fiscal year ended December 31, 2002.
                          -----------------

                                       or

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
               EXCHANGE ACT OF 1934
For the transition period from ______________________to_________________________


                        Commission File Number 333-83815
                                               ---------

                          Caithness Coso Funding Corp.
                          ----------------------------
             (Exact name of registrant as specified in its charter)

                Delaware                                       94-3328762
                --------                                       ----------
    (State or other jurisdiction of                          (IRS Employer
     incorporation or organization)                         Identification No.)

   Coso Finance Partners               California              68-0133679
   Coso Energy Developers              California              94-3071296
   Coso Power Developers               California              94-3102796
   ---------------------               ----------              ----------
(Exact names of Registrants as  (State or other jurisdiction  (IRS Employer
specified in their characters)      of incorporation)        Identification No.)

           565 Fifth Avenue, 29th Floor, New York, New York      10017-2478
           ------------------------------------------------      ----------
               (Address of principal executive offices)          (Zip Code)

Registrant's telephone number, including area code      (212) 921-9099
                                                        --------------

Securities registered pursuant to Section 12(g) of the Act:

                  9.05% Series B Senior Secured Notes Due 2009
                  --------------------------------------------
                                (Title of class)

     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 if disclosure of delinquent  filers pursuant to Item
405 of Regulation  S-K (229.405 of this chapter) is not  contained  herein,  and
will not be  contained,  to the best of  registrant's  knowledge,  in definitive
proxy or information  statements  incorporated  by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [ ]

The Registrant's Common Stock is not traded in a public market.

         Aggregate market value of the voting stock held by non-affiliates
         of the registrant:
                                 Not applicable

                       Documents Incorporated by Reference

                                 Not applicable
<PAGE>


                          CAITHNESS COSO FUNDING CORP.
                           ANNUAL REPORT ON FORM 10-K
                  FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001

                                     Part I                                Page
                                                                           ----

Item 1.           Business                                                   1

Item 2.           Properties                                                 7

Item 3.           Legal Proceedings                                          8

Item 4.           Submission of Matters to a Vote of Security Holders        8

                                     Part II

Item 5.           Market for the Registrant's Common Equity and
                     Related Stockholder Matters (Not applicable)            8

Item 6.           Selected Financial Data                                    8

Item 7.           Management's Discussion and Analysis of Financial
                     Condition and Results of Operations                     12

Item 7A.          Quantitative and Qualitative Disclosures About
                     Market Risk                                             23

Item 8.           Financial Statements and Supplementary Data                24

Item 9.           Changes in and Disagreements with Accountants on
                     Accounting and Financial Disclosure                     25


                                    Part III

Item 10.          Directors and Executive Officers of the Registrants        25

Item 11.          Executive Compensation                                     27

Item 12.          Security Ownership of Certain Beneficial Owners and
                     Management (Not applicable)                             27

Item 13.          Certain Relationships and Related Transactions             29


                                     Part IV

Item 14.          Exhibits, Financial Statement Schedules and Reports
                     on Form 8-K                                             31


<PAGE>


                                     Part I
Item 1. Business.


The Coso Projects

     The Coso projects  consist of three 80 MW geothermal  power plants,  called
Navy I, BLM and Navy II, certain transmission lines, wells, gathering system and
other related facilities.  The Coso projects are located near one another in the
Mojave Desert approximately 150 miles northeast of Los Angeles,  California, and
have been generating  electricity since the late 1980s. Unlike fossil fuel-fired
power plants, the Coso projects' power plants use geothermal energy derived from
the natural heat of the earth's interior to generate electricity.

     Coso Finance Partners (The Navy I partnership)  owns Navy I and its related
facilities,  Coso  Energy  Developers  (the  BLM  partnership)  owns BLM and its
related facilities and Coso Power Developers (the Navy II partnership) owns Navy
II and its related facilities  (collectively,  the Coso partnerships).  The Coso
partnerships  and their  affiliates own the exclusive right to explore,  develop
and  use,  currently  without  any  known  interference  from  any  other  power
developers, a portion of the Coso Known Geothermal Resource Area.

     The  geothermal  power  plants,  each of which has three  separate  turbine
generator units, have consistently operated above their nominal capacities,  and
the combined  average  capacity  factor for the plants has been at least 100% or
more historically.

     The Coso  partnerships  sell 100% of the electrical energy generated at the
plants to Southern  California  Edison (Edison) under three  long-term  Standard
Offer No. 4 power purchase  agreements.  Each power purchase  agreement  expires
after the last maturity date of the senior secured notes.  (Edison is one of the
largest investor-owned electric utilities in the United States.) Under the power
purchase agreements, the Coso partnerships receive the following payments:

     *    Capacity  payments  for being able to produce  electricity  at certain
          levels.  Capacity payments are fixed throughout the lives of the power
          purchase agreements;

     *    Capacity bonus payments if they are able to produce  electricity above
          a  specified,   higher  level.  The  maximum  capacity  bonus  payment
          available  is also fixed  throughout  the lives of the power  purchase
          agreements; and

     *    Energy  payments based on the amount of electricity  their  respective
          plants actually produce.

     Energy  payments were fixed for the first ten years of firm operation under
the  power  purchase  agreements.  Firm  operation  was  achieved  for each Coso
partnership  when  Edison  and that Coso  partnership  under its power  purchase
agreement  agreed that each  generating unit at a plant was a reliable source of
generation  and could  reasonably  be  expected to operate  continuously  at its
effective  rating.  After the first  ten years of firm  operation  and until its
power purchase agreement expires,  Edison is required to make energy payments to
the Coso partnership based on its avoided cost of energy.  Edison's avoided cost
of energy is Edison's cost to generate  electricity if Edison were to produce it
itself  or buy it from  another  power  producer  rather  than  buy it from  the
relevant Coso partnership.  Future energy payments required to be paid by Edison
to the Coso  partnerships  will  most  likely  be less  than  historical  energy
payments  because  they will be paid based on Edison's  avoided  cost of energy,
instead of the fixed payments paid during the first ten years.  The fixed energy
price period  expired in August 1997 for the Navy I  partnership,  in March 1999
for the BLM  partnership,  and in January 2000 for the Navy II partnership.  The
Edison  power  purchase  agreements  will  expire in August  2011 for the Navy I
partnership; in March 2019 for the BLM partnership;  and in January 2010 for the
Navy II partnership.

                                       1

     Edison  entered  into  an  agreement  (the   "Agreement")   with  the  Coso
partnerships on June 19, 2001 that addressed renewable energy pricing and issues
concerning  California's  energy  crisis.  The  Agreement,  which was amended on
November 30,  2001,  established  May 1, 2002 as the date the Coso  partnerships
began  receiving  a fixed  energy rate of 5.37 cents per kWh for five (5) years.
Subsequent  to the five year  period,  Edison  will be  required  to make energy
payments to the Coso partnerships based on its avoided cost of energy until each
partnership's power purchase agreement expires.


AB1890 Energy Subsidy Payments

     In addition to receiving payments under the power purchase agreements,  the
Coso  partnerships  historically  qualified for subsidy  payments from a special
purpose state fund established under California Legislature AB1890 (AB1890). The
California  Energy  Commission   administered  the  fund.  AB1890,  as  amended,
provided,  in  part,  for  subsidy  payments  from  1998  through  2001 to power
generators using renewable sources of energy,  including  geothermal energy, and
who were  being  paid  based on the  avoided  cost of  energy.  The  funds  were
distributed  in the  form of a  production  incentive  payment  that  subsidizes
renewable  energy  producers when prices paid for their  electricity  were below
certain pre-determined target prices. Under AB1890, the Navy I partnership,  the
BLM partnership and the Navy II partnership received subsidy payments for energy
delivered to Edison by the respective Coso partnership, if Edison's avoided cost
of energy fell below 3.0 cents per kWh.  This subsidy  payment was capped at 1.0
cent per kWh.


Purchase of CalEnergy Interests

     On February 25, 1999,  Caithness  Acquisition  Company, LLC (CAC), a wholly
owned subsidiary of Caithness Energy,  LLC,  (Caithness Energy) purchased all of
the  interests in the Coso  projects  that were owned by CalEnergy  Company Inc.
(CalEnergy),  which is now known as MidAmerican  Energy  Holdings  Company.  The
purchase  price  consisted of $205.0  million in cash,  plus the  assumption  of
CalEnergy's and its affiliates'  share of debt  outstanding on the Coso projects
which  then  totaled  approximately  $67.0  million.  In order to  complete  the
purchase,  CAC arranged for short-term debt financing in the principal amount of
approximately $211.5 million. CAC used a portion of the proceeds from the Series
A note offering that it received from the Coso partnerships, together with funds
from other sources, to repay all of this short-term borrowing.


Operating Strategy

     The Coso partnerships seek to maximize their cash flow at the Coso projects
through active  management of their cost structure and the geothermal  resource.
After CAC'S purchase of all of CalEnergy's  interests in the Coso projects,  the
Coso partnerships retained Coso Operating Company,  (COC) which is an affiliate,
to  maintain  all  three  plants,  the  transmission  lines  and the  geothermal
resource,  including well  drilling.  As a result of the change in operators and
restructuring  of  operator  fees,  the  aggregate  annual fees paid by the Coso
partnerships  for such maintenance has been reduced  significantly.  Payments of
operator fees are  subordinated  to all payments  made under the senior  secured
notes.  CAC,  which  purchased  the  managing  partners'  interest  in the  Coso
partnerships, has caused any management fees payable by each Coso partnership to
its partners to be subordinated to payments made under the senior secured notes.

     The Coso projects qualify as Small Power  Qualifying  Facilities (QF) under
the Public Utility Regulatory Policies Act (PURPA) and the rules and regulations
promulgated  under PURPA by the Federal  Energy  Regulatory  Commission  (FERC).
PURPA exempts the Coso projects from certain federal and state regulations.  The
Coso projects must continue to satisfy certain ownership and fuel-use  standards
to maintain  their QF status.  Since their  inception,  the Coso  projects  have
satisfied  these  standards  and expect that they will  continue to do so in the
future.
                                       2


The Sponsor

     Caithness  Energy,   the  principal   operating   subsidiary  of  Caithness
Corporation,  is a developer and owner of independent  power projects and is the
sponsor of the Coso  projects.  Since  1966,  the  current  owners of  Caithness
Corporation  have been  involved  in the  development  of  long-term  investment
opportunities  involving natural resources.  Caithness Corporation is one of the
two original  sponsors of the Coso projects and formed  Caithness Energy in 1995
to consolidate its ownership of independent power projects.

     Caithness  Energy believes that it is currently the second largest owner of
geothermal  power projects in the United States,  based on the total  electrical
generating  capacity of its power projects.  Through its controlled  affiliates,
Caithness  Energy owns  interests in six geothermal  plants,  including the Coso
projects,  totaling  325 MW of  generating  capacity.  Caithness  Energy is also
seeking to develop additional  natural gas power projects,  and has interests in
other operating power generating  facilities,  including solar, wind and natural
gas, totaling an additional 696 MW of generating capacity.

     Caithness  Energy  is  headquartered  in New York  City and has  additional
offices in California, Nevada, Colorado and Florida.


The Issuer

     Caithness  Coso  Funding  Corp.   (Funding  Corp.)  is  a  special  purpose
corporation  and a wholly  owned  subsidiary  of the Coso  partnerships.  It was
formed for the purpose of issuing the senior secured notes on behalf of the Coso
partnerships  who  have  jointly,   severally,  and  unconditionally  guaranteed
repayment of the senior secured notes.

     Funding Corp. has no material assets, other than the loans made to the Coso
partnerships,  and does not conduct any business,  other than issuing the senior
secured notes and making the loans to the Coso partnerships.


The Coso Known Geothermal Resource Area

     The Coso  projects  are  located in an area that has been  designated  as a
Known Geothermal Resources Area by the Bureau of Land Management pursuant to the
Geothermal  Steam Act of 1970. The Bureau of Land Management  designates an area
as a Known  Geothermal  Resource  Area when it  determines  that a  commercially
viable  geothermal  resource is likely to exist there.  There are over 100 Known
Geothermal Resource Areas in the United States, most of which are located in the
western United States in tectonically active regions.

     The  Coso  Known  Geothermal  Resource  Area is  located  in  Inyo  County,
California,   approximately  150  miles  northeast  of  Los  Angeles.  The  Coso
geothermal  resource is a  "liquid-dominated"  hot water source contained within
the heterogeneous  fractured granite rocks of the Coso Mountains. It is believed
the heat source for the Coso geothermal resource is a hot molten rock or "magma"
body located at a depth of six-to-seven  miles beneath the surface of the field.
Geochemical  studies indicate that the water in the Coso geothermal  resource is
ancient water that has been there since the ice age or longer.


Steam Sharing Program

     In 1994, the Coso partnerships entered into a Geothermal Exchange Agreement
which implemented a steam-sharing  program among the Coso projects.  The purpose
of the  steam-sharing  program is to enhance the  management  and  optimize  the
overall  use of the Coso  geothermal  resource.  Pursuant  to the steam  sharing
program,  the Coso  partnerships  constructed an inter-project  steam supply and
water  injection  system that links the three Coso  projects  and BLM North (see
page 5 BLM North)  together via metered  transfer  lines  through which the Coso
partnerships exchange steam and other geothermal resources with one another.

                                        3

     As part  of the  steam  sharing  program,  the  Coso  partnerships  plan to
conserve the  geothermal  resource  whenever  possible  by, among other  things,
transferring  steam  between and among the Coso  projects and BLM North,  rather
than drilling new wells at the Coso projects' sites prematurely, and expanding a
flexible  field-wide  water  reinjection  program.  While the U.S.  Navy and the
Bureau of Land Management have consented to the steam sharing program,  each has
reserved  the right,  in its sole  discretion,  to withdraw  its consent to such
transfers under certain circumstances.

     In  2002,  the Navy I  partnership  and the  Navy II  partnership  incurred
aggregate  royalties  to the U.S Navy of  approximately  $1.6  million for steam
transferred  by Navy I to Navy II and by Navy II to BLM under the steam  sharing
program  from  geothermal  resources  located on the property on which Navy I or
Navy II, as the case may be, are situated.  Of this amount,  the Navy I and Navy
II partnerships each incurred  approximately  $0.8 million.  The BLM partnership
reimbursed the Navy II partnership  approximately  $0.1 million of the royalties
incurred by the Navy II partnership. The BLM partnership incurs a royalty to the
U.S.  Navy  for  electricity  generated  by BLM and  sold to  Edison  for  steam
transferred from U.S. Navy property.


Royalty and Revenue-Sharing Arrangements

     The Coso  partnerships  are required to make  royalty  payments to, and are
subject to other revenue-sharing arrangements with, the U.S. Navy, the Bureau of
Land Management and certain other persons.


Navy I

     The Navy I partnership  pays a royalty for Unit I through  reimbursement of
electricity  supplied to the U.S. Navy by Edison from  electricity  generated at
the Navy I plant.  The  reimbursement  is based  on a  pricing  formula  that is
included in the U.S.  Navy  Contract.  This  formula is  primarily  based on the
tariff rates charged by Edison,  which was  increased in 2001 by the  California
Public Utilities  Commission (CPUC), and is subject to future revision.  Indices
utilized in the  calculation  of the Navy I partnership  Unit 1 contract  energy
pricing remained  unchanged  historically based on an agreement between the U.S.
Navy  and  the  Navy  I   partnership.   In  October  2002  and  November  2001,
modifications to the calculation of the reimbursement  pricing formula were made
to the U.S. Navy Contract  resulting in a reduction of accrued royalties of $1.3
million and $6.5 million,  respectively,  which was agreed to by the U.S.  Navy.
The parties have currently agreed to a replacement index and true-up calculation
in favor of the Navy I partnership.

     In addition,  with respect to Unit 1 at Navy I, the Navy I  partnership  is
obligated to pay the U.S.  Navy the sum of $25.0  million on or before  December
31, 2009, the expiration date of the term of the U.S. Navy contract.  Payment of
this obligation will be made from an established  sinking fund to which the Navy
I partnership has been making payments since 1987.

     For Units 2 and 3 at Navy I, the Navy I partnership's  royalty expense is a
fixed  percentage of its  electricity  sales to Edison.  The royalty  expense is
15.0% of  revenues  received  by the Navy I  partnership  through  2003 and will
increase to 20.0% of revenues  received from 2004 through 2009,  the  expiration
date of the U.S. Navy contract.


BLM

     The BLM partnership  pays royalties to the Bureau of Land Management  under
the BLM lease. The royalty rate is 10% of the net value of the steam produced by
the BLM  partnership.  This royalty rate is fixed for the life of the BLM lease.
In addition to this royalty,  the BLM  partnership  is obligated,  in connection
with the assignment of the BLM lease to the BLM partnership, to pay a royalty of
5% based on the value of the steam  produced  to Coso  Land  Company,  a general
partnership  of which CAC and  another  affiliate  of  Caithness  Energy are the
general  partners.  The  royalty is  subordinated  to the payment of all the BLM
partnership's  other royalties,  all debt service and all operating costs of the
BLM partnership. No portion of the royalty accrued to Coso Land Company has been
paid to date.
                                       4


BLM North

     In  December  of 2000,  the  Bureau of Land  Management  allowed  Coso Land
Company to assign each of the Coso partnerships an undivided  one-third interest
in leases they had  previously  bought from the Los Angeles  Department of Water
and Power (LADWP).  The assignment  required each Coso  partnership to pay $8.00
per acre in additional  rent to the Bureau of Land  Management.  When the leased
property  commences to produce  geothermal steam, the Coso partnerships will pay
monthly  royalties under the LADWP leases of 10% of the value of steam produced,
5% of  the  value  of any  by-products,  and 5% of  the  value  of  commercially
demineralized  water.  The  Bureau  of Land  Management  may  establish  minimum
production  levels and reduce the foregoing  royalties if necessary to encourage
greater recovery of leased resources.


Navy II

     The Navy II  partnership  pays royalties to the U.S Navy under the U.S Navy
contract. The Navy II partnership's royalty expense is a fixed percentage of its
electricity sales to Edison.  The royalty rate was 10.0% of electricity sales to
Edison through 1999,  increased to 18.0% for 2000 through 2004 and will increase
to 20.0% from 2005 through the end of the Navy contract.


Operations and Maintenance

     The operations and  maintenance  services for the Coso projects,  including
the Navy I, BLM, and Navy II transmission  lines,  wells,  gathering system, and
other  related  facilities,   are  performed  by  COC  on  behalf  of  the  Coso
partnerships  pursuant to the Operation  and  Maintenance  agreements.  COC is a
wholly  owned  subsidiary  of CAC that was  initially  formed  by  CalEnergy  to
facilitate  the  transfer  of  operational  control  of the Coso  projects  to a
Caithness Energy affiliate.

     On  February  26,  1999,  CalEnergy  ceased to be the  operator of the Coso
projects, and FPL Energy Operating Services,  Inc. (FPLEOSI), an indirect wholly
owned subsidiary of FPL Energy, Inc., assumed that role. An amended and restated
operation and maintenance  agreement  between  FPLEOSI and the managing  general
partners  was  implemented.  Under  that  agreement,  FPLEOSI  became  the plant
operator  and under a separate  operations  and  maintenance  agreement  COC was
responsible for maintenance of the geothermal resource. On October 17, 1999, the
operating  agreement  between  FPLEOSI and the  managing  general  partners  was
terminated  and COC  became  the sole  operator  of the plant and  continued  to
maintain the geothermal field.


Insurance

     The Coso  partnerships  currently  have  property,  business  interruption,
catastrophe and general liability insurance. For the period February 25, 2002 to
February  24,  2003 the plants  were  insured up to their  replacement  cost for
general  property  damage and over $166.0  million in the aggregate for business
interruption,  subject to a  $250,000  deductible  for  property  damage  (and a
$500,000  deductible for the turbine  generator sets),  with a 60-day deductible
for  business  interruption   (including  machinery   breakdown).   Catastrophic
insurance  (including  earthquake  and flood) was capped at $160.0  million  for
property damage,  subject to a minimum deductible of $2.5 million or 5.0% of the
loss. The  deductible  for flood damage is $250,000 for any one loss.  Liability
insurance  coverage  was $53.0  million  (occurrence  based).  Operators'  extra
expense  (control of well)  insurance  is $10.0  million per  occurrence  with a
$250,000 deductible.
                                       5

Employees

     Employees necessary for the operation of the Coso partnerships are provided
by COC,  under  their  respective  operation  and  maintenance  agreements.  COC
maintains  a qualified  technical  staff  covering a broad range of  disciplines
including geology,  geophysics,  geochemistry,  drilling  technology,  reservoir
engineering, plant engineering,  construction management,  maintenance services,
production management, electric power operation and certain accounting services.
As of December 31, 2002, COC employed 87 people to operate and maintain the Coso
projects.


Competition

     The Coso partnerships sell all electrical energy generated at the plants to
Edison under three long-term Standard Offer No. 4 power purchase agreements. The
payments under these agreements have constituted 100% of the operating  revenues
of each power plant since its inception.


Environmental and Regulatory Matters

     The Coso partnerships are subject to environmental  laws and regulations at
the  federal,  state  and  local  levels  in  connection  with the  development,
ownership  and  operation of the Coso  projects.  These  environmental  laws and
regulations  generally  require that a wide variety of permits and  governmental
approvals be obtained to construct and operate an energy-producing facility. The
facility  must then operate in  compliance  with the terms of these  permits and
approvals.  If the  Coso  partnerships  fail  to  operate  their  facilities  in
compliance with applicable laws,  permits and approvals,  governmental  agencies
could levy fines, curtail operations, or seek orders to cease operations.

     The Coso  partnerships  believe  they  are in  compliance  in all  material
respects with all environmental  regulatory  requirements applicable to the Coso
projects, and that maintaining compliance with current governmental requirements
will not  require a material  increase  in capital  expenditures  or  materially
adversely  affect  that Coso  partnership's  financial  condition  or results of
operations.  It is possible,  however,  that future  developments,  such as more
stringent   requirements  of   environmental   laws  and  enforcement   policies
thereunder,  could affect  capital and other costs at the Coso  projects and the
manner in which the Coso partnerships conduct their business.


Financial Information
  (in thousands)
<TABLE>
<CAPTION>
                                                         Years Ended December 31,
                                                         ------------------------
<S>                                           <C>              <C>              <C>
Navy I Partnership                                  2002             2001             2000
                                                    ----             ----             ----

Total Operating Revenue(g)(h)                 $   92,065       $   53,400       $   52,419
Operating Income                                  58,689           24,218           23,295
Total Assets                                     195,072          193,114          198,409

                                       6

                                                         Years Ended December 31,
                                                         ------------------------

BLM Partnership                                     2002             2001             2000
                                                    ----             ----             ----

Total Operating Revenue(g)(h)                 $   81,252       $   44,041       $   42,174
Operating Income                                  52,726           12,645           10,760
Total Assets                                     174,871          183,978          201,312


                                                         Years Ended December 31,
                                                         ------------------------

Navy II Partnership                                 2002             2001             2000
                                                    ----             ----             ----

Total Operating Revenue(g)(h)                 $   79,592       $   36,389       $   43,054
Operating Income                                  50,164            1,981            8,471
Total Assets                                     168,834          170,058          195,693
</TABLE>


                See Footnotes to Summary Selected Financial and Operating Data


Item 2.  Properties


Plants

Navy I

     Navy I and its steam  resource  are  located  on the  United  States  Naval
Weapons Center at China Lake. In December of 2000,  Navy I acquired an undivided
one-third  interest in leases previously  purchased from LADWP located on Bureau
of Land Management property.  It commenced operations in 1987.  Geothermal steam
for Navy I is produced  using over 45  production  and  injection  wells located
within a radius of approximately  3,000 feet of Navy I. Navy I consists of three
separate turbine generators,  known as Units 1, 2 and 3, each with approximately
30 MW of electrical  generating  capacity.  Navy I's steam  gathering and piping
systems are  cross-connected  to Navy II via metered transfers to allow steam to
be  transferred  from wells  located on the real  property  covered by the LADWP
leases to Navy I and between Navy I and Navy II,  pursuant to the steam  sharing
program.  Unit 1 commenced  firm  operation in 1987, and Units 2 and 3 commenced
firm operation during 1988. Navy I has an aggregate gross electrical  generating
capacity of approximately 90 MW, and operated at an average  operating  capacity
factor of 104.7% in 2002,  108.3% in 2001 and 111.8% in 2000,  based on a stated
capacity of 80 MW.


BLM

     BLM and its  steam  resource  are  located  on  Bureau  of Land  Management
property,  within the  boundaries of the United  States Naval Weapons  Center at
China Lake. In December of 2000, BLM acquired an undivided one-third interest in
leases previously  purchased from LADWP which are also located on Bureau of Land
Management  property.  It  commenced  operations  in 1989.  BLM is  comprised of
turbine  generators located at two different power blocks: the BLM East site and
the BLM West site. The BLM East site is located  approximately 1.3 miles east of
the BLM West site. Geothermal steam for BLM is produced using over 42 production
and injection  wells located  within a radius of  approximately  4,000 feet from
either the BLM East or the BLM West site. BLM consists of three separate turbine
generators, known as Units 7, 8 and 9. Units 7 and 8 are located at the BLM East
site, each with a generating  capacity of  approximately  30 MW, while Unit 9 is
located at the BLM West site, with a generating capacity of approximately 30 MW.
All three units commenced firm operation  during 1989. BLM's steam gathering and
piping  systems are cross  connected  to Navy II via metered  transfers to allow
steam to be  transferred  between Navy II and BLM pursuant to the steam  sharing
program.   BLM  has  an  aggregate  gross  electrical   generating  capacity  of
approximately  90 MW, and operated at an average  operating  capacity  factor of
93.9% in 2002,  102.8% in 2001 and 109.4% in 2000, based on a stated capacity of
80 MW.

                                       7

Navy II

     Navy II and its steam  resource  are  located  on the United  States  Naval
Weapons Center at China Lake. In December of 2000, Navy II acquired an undivided
one-third  interest in leases previously  purchased from LADWP which are located
on  Bureau  of Land  Management  property.  It  commenced  operations  in  1989.
Geothermal  steam for Navy II is produced using over 35 production and injection
wells located  within a radius of  approximately  6,000 feet of Navy II. Navy II
consists of three separate turbine  generators,  known as Units 4, 5 and 6, each
with approximately 30 MW of electrical  generating  capacity.  All three Navy II
units  commenced  firm  operation in 1990.  Navy II's steam  supply  systems are
cross-connected  to Navy I and BLM steam supply systems via metered transfers to
allow steam to be transferred  between or among the plants pursuant to the steam
sharing  program.  Navy  II  has  an  aggregate  gross  electrical  capacity  of
approximately  90 MW, and operated at an average  operating  capacity  factor of
100.4% in 2002, 104.9% in 2001 and 111.1% in 2000, based on a stated capacity of
80 MW.


Transmission Lines

     The  electricity  generated  by Navy I is  conveyed  over an  approximately
28.8-mile 115 kilovolt ("kV")  transmission  line on the U.S. Navy and Bureau of
Land  Management  land that is connected to the Edison  substation  at Inyokern,
California.  The Navy I partnership owns and uses this transmission line and its
related  facilities.  The  electricity  generated by BLM and Navy II is conveyed
over an approximately 28.8-mile 230 kV transmission line on U.S. Navy and Bureau
of Land  Management  land that is also  connected  to the Edison  substation  at
Inyokern,  California.  Coso  Transmission  Line  Partners  owns the BLM/Navy II
transmission line and related facilities.


Item 3. Legal Proceedings.

     The Coso  partnerships are currently parties to various items of litigation
relating to day-to-day  operations.  Management  does not believe the outcome of
such  proceedings  will be material to the  financial  condition  and results of
operations of the Coso partnerships, either individually or taken as a whole.


Item 4. Submission of Matters to a Vote of Security Holders.

     None

                                     Part II


Item 5.  Market for Registrant's Common Equity and Related Stockholder Matters.

     Not applicable.


Item 6. Selected Financial Data.

     The  selected  fiscal year end  financial  data has been  derived  from the
audited financial statements of the Coso partnerships. The information contained
in the following tables should be read in conjunction with the audited financial
statements and notes thereto included elsewhere in this report.

                                       8

<PAGE>
<TABLE>
<CAPTION>
                                                       Navy I Partnership
                                                        (Stand-alone)(a)
                                                (In thousands, except ratio data)


                                                                                          Year Ended December 31,
                                                                                          -----------------------
<S>                                                                <C>           <C>           <C>           <C>         <C>
                                                                     2002(c)       2001(c)       2000(c)       1999(c)       1998
                                                                     ----          ----          ----          ----          ----
Statement of Operations Data:
     Operating revenues(b)(g)(h)(i).........................       $ 92,065      $ 53,400      $ 52,419      $ 55,666     $ 53,153
     Operating expenses.....................................        (33,376)      (29,182)      (29,124)      (32,129)     (31,894)
                                                                    --------      --------      --------      --------     --------
     Operating income.......................................         58,689        24,218        23,295        23,537       21,259

Non-Operating income and (expense):
     Interest expense.......................................        (10,836)      (11,732)      (12,493)      (11,573)      (4,210)
     Other expenses.........................................           (315)         (705)         (520)       (4,377)      (1,046)
     Interest and other income, net.........................          1,574         2,928         2,506         2,234          585
                                                                    --------      --------      --------      --------      -------

     Net income.............................................       $ 49,112      $ 14,709      $ 12,788      $  9,821     $ 16,588
                                                                     ======        ======        ======         =====       ======

Operating Data:
     Operating capacity factor (d)(e).......................         104.7%        108.3%        111.8%         95.4%        94.6%
     kWh produced...........................................        733,877       758,890       785,624       668,388      662,560

                              See Footnotes to Summary Selected Financial and Operating Data
</TABLE>

<TABLE>
<CAPTION>

                                                        BLM Partnership
                                                         (Stand-alone)
                                               (In thousands, except ratio data)



                                                                                          Year Ended December 31,
                                                                                          -----------------------

<S>                                                                <C>          <C>            <C>           <C>         <C>
                                                                     2002(c)       2001(c)       2000(c)       1999(c)       1998
                                                                     ----          ----          ----          ----          ----
Statement of Operations Data:
     Operating revenues (b)(g)(h)(i)........................       $ 81,252     $ 44,041       $ 42,174      $ 49,877    $ 107,199
     Operating expenses.....................................        (28,526)     (31,396)       (31,414)      (38,534)     (44,687)
                                                                    --------     --------       --------      --------     --------
     Operating income.......................................         52,726       12,645         10,760        11,343       62,512

Non-Operating income and (expense):
     Interest expense ......................................         (8,567)      (8,958)        (9,174)       (8,725)      (6,107)
     Other expenses.........................................           (255)        (440)          (318)       (3,332)      (1,113)
     Interest and other income, net.........................          1,455        3,766          8,125         1,066        1,181
                                                                     -------      -------        -------       -------      -------

     Net income.............................................       $ 45,359     $  7,013       $  9,393      $    352    $  56,473
                                                                     ======        =====          =====        ======       ======

Operating Data:
     Operating capacity factor (d)(e).......................          93.9%       102.8%         109.4%        105.0%       104.4%
     kWh produced...........................................        657,813      720,130        769,098       735,840      731,767

                              See Footnotes to Summary Selected Financial and Operating Data
</TABLE>
                                        9
<PAGE>

<TABLE>
<CAPTION>
                                                     Navy II Partnership
                                                        (Stand-alone)
                                               (In thousands, except ratio data)

                                                                                          Year Ended December 31,
                                                                                          -----------------------

<S>                                                                <C>           <C>           <C>           <C>          <C>
                                                                     2002(c)       2001(c)       2000(c)       1999(c)        1998
                                                                     ----          ----          ----          ----           ----
Statement of Operations Data:
     Operating revenues (b)(g)(h)(i)........................       $ 79,592      $ 36,389      $ 43,054     $ 113,746    $ 119,564
     Operating expenses.....................................        (29,428)      (34,408)      (34,583)      (43,577)     (41,120)
                                                                    --------      --------      --------      --------     --------
     Operating income.......................................         50,164         1,981         8,471        70,169       78,444

Non-Operating income and (expense):
     Interest expense.......................................         (7,538)       (8,128)       (9,130)      (11,947)      (7,918)
     Other expenses.........................................           (217)       (1,119)         (769)       (4,191)      (1,868)
     Interest and other income, net.........................            894         2,883         2,868         2,174        1,799
                                                                     -------       -------       -------      --------      -------

     Net income (loss)......................................       $ 43,303      $ (4,383)     $  1,440     $  56,205    $  70,457
                                                                     ======        =======      =======        ======      =======

Operating Data:
     Operating capacity factor (d)(e).......................         100.4%        104.9%        111.1%        112.0%       108.6%
     kWh produced...........................................        703,920       735,210       780,709       785,772      760,659



                                 See Footnotes to Summary Selected Financial and Operating Data
</TABLE>
                                       10


<TABLE>
<CAPTION>
                                                                                       As of December 31,
                                                                                       ------------------
<S>                                                               <C>           <C>         <C>          <C>           <C>
                                                                       2002         2001         2000         1999         1998
                                                                       ----         ----         ----         ----         ----
Balance Sheet Data (in thousands):
----------------------------------

Navy I Partnership (stand-alone)(a)
   Cash and cash equivalents.............................         $   4,215     $    264    $   3,506    $   7,821     $    --
   Restricted cash and advances..........................            28,692       21,325       22,996       25,001        7,524
   Property, plant and equipment, net....................           136,313      140,437      149,076      153,879      180,189
   Power purchase agreement, net.........................             9,945       11,093       12,240       13,388          --
   Total assets..........................................           195,072      193,114      198,409      218,192      202,266
   Project loans:
     Existing project debt, payable to
        Coso Funding Corp................................               --           --           --           --        40,566
   Project notes (f).....................................           110,955      122,550      134,984      151,550          --
   Partners' capital.....................................            65,408       52,425       46,871       49,362      149,933

BLM Partnership (stand-alone)
   Cash and cash equivalents.............................         $   1,423     $    --     $   5,862    $   6,423     $    --
   Restricted cash, investments and advances.............             6,646        7,368       14,502        9,806          290
   Property, plant and equipment, net....................           135,853      148,417      153,618      165,650      202,270
   Power purchase agreement, net.........................            17,365       18,437       19,510       20,549          --
   Total assets..........................................           174,871      183,978      201,312      216,391      228,381
   Project loans:
     Existing project debt, payable to
        Coso Funding Corp................................               --           --           --           --        37,958
   Project notes (f).....................................            89,875       96,250      100,907      107,900          --
   Partners' capital.....................................            56,603       52,762       69,245       79,350      163,191

Navy II Partnership (stand-alone)
   Cash and cash equivalents.............................          $    824     $    --     $   7,741    $   6,020     $    818
   Restricted cash, investments and advances.............            10,855        5,517       10,214       54,338          --
   Property, plant and equipment, net....................           116,192      124,665      136,947      147,522      188,840
   Power purchase agreement, net.........................            20,026       22,820       25,614       28,409          --
   Total assets..........................................           168,834      170,058      195,693      273,269      220,867
   Project loans:
     Existing project debt, payable to
        Coso Funding Corp................................               --           --           --           --        61,323
   Project notes (f).....................................            80,401       84,200       94,176      153,550          --
   Partners' capital.....................................            85,361       62,220       87,423      104,331      153,661




                                      See Footnotes to Summary Selected Financial and Operating Data
</TABLE>
                                       11


           Footnotes to Summary Selected Financial and Operating Data

(a)  Reflects the combined  financial results of the Navy I partnership and Coso
     Finance Partners II, a California general  partnership ("CFP II"). The Navy
     I  partnership  and  CFP II were  first  formed  as  separate  entities  to
     facilitate the initial bank financing for the  construction and development
     of Navy I.  Initially,  the Navy I  partnership  acquired all of the assets
     relating to the first turbine  generator unit at Navy I and CFP II acquired
     all of the  assets of Navy I relating  to the  second  and third  generator
     units at Navy I. In 1988,  CFP II assigned all of its rights and  interests
     in the second and third generator units at Navy I to the Navy I partnership
     in return for a 5.0%  royalty to be paid based on the Navy I  partnership's
     steam  production.  Since the Navy I  partnership  and CFP II operate under
     common  ownership  and  management   control,   the  historical   financial
     statements  of  the  entities  have  been  combined  after  elimination  of
     intercompany amounts related to the royalty arrangement. CFP II merged with
     and into the Navy I partnership and the accrued  royalty was  extinguished.
     In  addition,  the  royalty  will no longer be  accrued  from and after the
     Series A note offering.

(b)  The fixed energy price periods expired for the Navy I partnership in August
     1997, for the BLM partnership in March 1999 and for the Navy II partnership
     in January 2000.

(c)  After CAC's purchase of all of  CalEnergy's  interests in the Coso projects
     on  February  25,  1999,  the  Coso  partnerships  adopted  a new  basis of
     accounting and, accordingly, the financial information for the period after
     the  acquisition  is presented on a different  cost basis than that for the
     period before the acquisition and therefore is not comparable. The purchase
     price was allocated to the portion of the assets and liabilities  purchased
     from CalEnergy based on their fair values, with the amount of fair value of
     net assets in excess of the purchase  price being  allocated to  long-lived
     assets on a pro-rata basis.

(d)  Based on a stated capacity of 80 MW.

(e)  The variance in the operating  capacity factors for the Navy I partnership,
     the BLM partnership, and the Navy II partnership are due to the transfer of
     steam from the Navy I partnership to the BLM and Navy II partnerships under
     the steam sharing program.

(f)  Reflects  indebtedness owed to Funding Corp., which loaned all the proceeds
     from the offering to the Coso partnerships at interest rates and maturities
     identical to the interest rates and maturities of the senior secured notes.

(g)  Reflects  non-recognition  of operating revenues for the period November 1,
     2000 through  March 26, 2001,  based on  non-collection  of amounts due for
     power generated and sold to Edison.

(h)  Certain  balances in prior years have been  reclassified  to conform to the
     presentation adopted in the current year.

(i)  Reflects recognition of operating revenue in 2002 resulting from collection
     of  amounts  due for  power  generated  and sold to Edison  for the  period
     November 1, 2000 through March 26, 2001.


Item 7. Management's  Discussion and Analysis of Financial Condition and Results
        of Operations.

     Except for financial information contained herein, the matters discussed in
this  annual  report may be  considered  forward-looking  statements  within the
meaning of Section 27A of the  Securities  Act of 1933, as amended,  and Section
21E of the Securities Exchange Act of 1934, as amended,  and subject to the safe
harbor created by the Securities  Litigation Reform Act of 1995. Such statements
include  declarations  regarding the intent,  belief or current  expectations of
Caithness Coso Funding Corp. ("Funding Corp."), Coso Finance Partners ("the Navy
I partnership"),  Coso Energy Developers ("the BLM partnership"), and Coso Power
Developers ("the Navy II partnership"),  collectively, (the "Coso partnerships")
and their respective management. Such statements may be identified by terms such
as expected,  anticipated,  may,  will,  believe or other terms or variations of
such words.  Any such  forward-looking  statements  are not guarantees of future
performance  and  involve a number of risks and  uncertainties;  actual  results
could differ materially from those indicated by such forward-looking statements.
Among the important factors that could cause actual results to differ materially
from those  indicated  by such  forward-looking  statements  include but are not
limited to: (i) risks relating to the  uncertainties  in the  California  energy
market, (ii) the financial viability of Southern California Edison,  ("Edison"),
(iii) the  information is of a preliminary  nature and may be subject to further
adjustment,  (iv) risks  related to the operation of power plants (v) the impact
of avoided  cost  pricing  along  with other  pricing  variables,  (vi)  general
operating risks, including resource availability and regulatory oversight, (vii)
the dependence on third parties,  (viii) changes in government regulation,  (ix)
the  effects of  competition,  (x) the  dependence  on senior  management,  (xi)
fluctuations in quarterly  results due in part to seasonality,  (xii) affects of
September  11,  2001,  including  U.S.  Navy  activity  and (xiii)  the  alleged
manipulation of the California energy market.

                                       12

General

     The Coso projects consist of three 80MW geothermal power plants,  which are
referred  to as Navy I, BLM and Navy II, and their  transmission  lines,  wells,
gathering  systems and other related  facilities.  The Coso projects are located
near one another at the United  States  Naval Air Weapons  Center at China Lake,
California.  The Navy I partnership owns Navy I and its related facilities.  The
BLM  partnership  owns BLM and its related  facilities.  The Navy II partnership
owns Navy II and its related facilities. Affiliates of Caithness Corporation and
CalEnergy Company, Inc. ("CalEnergy"),  which is now known as MidAmerican Energy
Holdings  Company,  formed  the  Coso  partnerships  in the  1980s  to  develop,
construct,  own and operate the Coso  projects.  On February 25, 1999  Caithness
Acquisition  Company,  LLC, (CAC) purchased all of CalEnergy's  interests in the
Coso projects for $205.0 million in cash, plus the assumption of CalEnergy's and
its  affiliates'  share of debt  outstanding  at the Coso  projects  which  then
totaled approximately $67.0 million.

     Each Coso partnership  sells 100% of the electrical energy generated at its
plant to Edison under a long-term Standard Offer No.4 power purchase  agreement.
Each power purchase agreement expires after the final maturity date of the 9.05%
Series B Senior Secured Notes issued by Funding Corp.

     Each Coso partnership is entitled to the following payments under its power
purchase agreement:

     *    Capacity  payments  for being able to produce  electricity  at certain
          levels.  Capacity payments are fixed throughout the life of each power
          purchase agreement;

     *    Capacity  bonus  payments if the Coso  partnership  is able to produce
          electricity  above  a  specified  higher  level.  The  maximum  annual
          capacity bonus payment  available is also fixed throughout the life of
          each power purchase agreement; and

     *    Energy  payments which are based on the amount of electricity the Coso
          partnership's plant actually produces.

     Energy  payments were fixed for the first ten years of firm operation under
each power purchase  agreement.  After the first ten years of firm operation and
until a Coso partnership's power purchase agreement expires, Edison makes energy
payments  to the Coso  partnership  based on  Edison's  avoided  cost of energy.
Edison's  avoided  cost of energy is Edison's  cost to generate  electricity  if
Edison were to produce it itself or buy it from another  power  producer  rather
than buy it from the Coso  partnerships.  The power  purchase  agreement for the
Navy I partnership will expire in August 2011, the power purchase  agreement for
the BLM partnership will expire in March 2019, and the power purchase  agreement
for the Navy II partnership  will expire in January 2010. The fixed energy price
period expired in August 1997 for the Navy I partnership,  in March 1999 for the
BLM partnership and in January 2000 for the Navy II partnership.

                                       13

     Edison entered into an agreement  ("Agreement")  with the Coso partnerships
on June 19, 2001 that addressed  renewable energy pricing and issues  concerning
California's  energy crisis.  The  Agreement,  which was amended on November 30,
2001, established May 1, 2002, as the date the Coso partnerships began receiving
a fixed energy rate of 5.37 cents per kWh for five (5) years.  Subsequent to the
five-year  period,  Edison will be required to make energy  payments to the Coso
partnerships based on its avoided cost of energy until each partnership's  power
purchase agreement expires.  Estimates of Edison's future avoided cost of energy
may vary  significantly  and it is not  possible to predict  with  accuracy  the
likely level of future avoided cost of energy prices.

     From January 1, 2002 through April 30, 2002, the Coso partnerships  elected
to receive from Edison a fixed  energy rate of 3.25 cents per kWh.  Starting May
1, 2002,  the Coso  partnerships  received  5.37 cents per kWh,  pursuant to the
agreement  discussed  above.  The  average  rate  of  energy  paid  to the  Coso
partnerships for the years ended December 31, 2002, 2001 and 2000 was 4.66, 7.46
and 5.76 cents per kWh, respectively.

     In 1994, the Coso partnerships  implemented a steam-sharing  program, under
the Coso Geothermal Exchange Agreement. The purpose of the steam-sharing program
is to enhance the management of the Coso geothermal resource and to optimize the
resource's overall benefits to the Coso partnerships by transferring steam among
the Coso projects.  Under the steam sharing program,  the partnership  receiving
the steam transfer  splits revenue  earned from  electricity  generated with the
partnership that transferred the steam.

     The Coso  partnerships  are required to make  royalty  payments to the U.S.
Navy and the Bureau of Land  Management.  The Navy I partnership  pays a royalty
for Unit I through  reimbursement  of  electricity  supplied to the U.S. Navy by
Edison from  electricity  generated at the Navy I plant.  The  reimbursement  is
based on a pricing  formula  that is included in the U.S.  Navy  Contract.  This
formula is  primarily  based on the tariff  rates  charged by Edison,  which was
increased in 2001 by the California Public Utilities  Commission  (CPUC), and is
subject to future  revision.  Indices  utilized in the calculation of the Navy I
partnership Unit 1 contract energy pricing remained unchanged historically based
on an agreement  between the U.S.  Navy and the Navy I  partnership.  In October
2002 and November 2001,  modifications  to the calculation of the  reimbursement
pricing formula were made to the U.S. Navy Contract  resulting in a reduction of
accrued  royalties of $1.3  million and $6.5  million,  respectively,  which was
agreed to by the U.S. Navy.  The parties have currently  agreed to a replacement
index and true-up  calculation in favor of the Navy I  partnership.  For Units 2
and 3, the Navy I partnership's royalty expense paid to the U.S. Navy is a fixed
percentage  of  electricity  sales  at 15% of  revenue  received  by the  Navy I
partnership  through 2003 and will  increase to 20% from 2004 through  2009.  In
addition,  the Navy I partnership is required to pay the U.S. Navy $25.0 million
in December  2009, the date their  contract  expires.  The payment is secured by
funds  placed  on  deposit  monthly,  which  funds  plus  accrued  interest  are
anticipated to aggregate  $25.0 million by the expiration  date of the contract.
Currently,  the monthly  amount  deposited  is  approximately  $60,000.  The BLM
partnership pays a 10% royalty to the Bureau of Land Management based on the net
value of steam produced. The Navy II partnership pays a royalty to the U.S. Navy
based on a fixed percentage of electricity sales to Edison. The royalty rate was
10% of  electricity  sales through  1999,  and increased to 18% for 2000 through
2004 and will  increase to 20% from 2005 through the end of the  contract  term.
The Coso  partnerships  also pay other royalties,  at various rates which in the
aggregate are not material.

     Funding Corp is a special purpose corporation and a wholly owned subsidiary
of the Coso  partnerships.  It was formed for the  purpose of issuing the senior
secured notes on behalf of the Coso  partnerships  who have jointly,  severally,
and unconditionally guaranteed repayment of the senior secured notes.

     On May 28,  1999,  Funding  Corp.  issued  $110.0  million of 6.80%  senior
secured notes that were due in 2001, and were paid off on December 15, 2001, and
$303.0  million of 9.05% senior secured notes due in 2009. The proceeds from the
notes were loaned to the Coso  partnerships and are payable to Funding Corp from
payments of principal and interest on the notes.  Funding Corp. does not conduct
any other operations apart from issuing the notes.

                                     14

     Under the  depository  agreement  with the trustee for the notes,  the Coso
partnerships  established  accounts with a depository and pledged those accounts
as  security  for the benefit of the holders of the senior  secured  notes.  All
amounts  deposited  with  the  depository  are,  at the  direction  of the  Coso
partnerships,  invested by the depository in permitted investments. All revenues
or other proceeds  actually received by the Coso partnerships are deposited in a
revenue  account and withdrawn  upon receipt by the  depository of a certificate
from the relevant Coso partnerships  detailing the amounts to be paid from funds
in its respective revenue account.

     Periodic  increases in natural gas prices and imbalances between supply and
demand,  among other  factors,  have at times led to  significant  increases  in
wholesale  electricity  prices in California.  During those periods,  Edison had
fixed  tariffs with their retail  customers  that were  significantly  below the
wholesale   prices  it  paid  in   California.   This  resulted  in  significant
under-recoveries  by Edison of its  electricity  purchase  costs. On January 16,
2001,  Edison announced that it was temporarily  suspending  payments for energy
provided,  including  the energy  provided by the Coso  partnerships,  pending a
permanent solution to its liquidity crisis.  This cash flow shortfall  adversely
affected Edison's liquidity and in turn it did not pay the Coso partnerships for
energy  delivered  from November 2000 through March 26, 2001. As of December 31,
2001, the Coso partnerships were unable to determine the time frame during which
any  future  payments  would be  received.  Due to the  uncertainty  surrounding
Edison's  ability  to make  payment  on past  due  amounts,  collection  was not
reasonably  assured  and the  Navy  I,  BLM and  Navy  II  partnerships  had not
recognized   revenue  of  $22.0  million,   $21.8  million  and  $22.7  million,
respectively, from Edison for Energy delivered during the period January 1, 2001
through March 26, 2001. The provision for doubtful accounts  previously recorded
as of  December  31, 2000 by the Navy I, BLM and Navy II  partnerships  of $15.2
million,  $15.3 million and $15.3 million,  respectively,  was  reclassified  to
conform with the 2001 presentation.

     Pursuant  to a CPUC  order,  Edison  resumed  making  payments  to the Coso
partnerships  beginning with power generated on March 27, 2001. Edison also made
a payment equal to 10% of the unpaid  balance for power  generated from November
1, 2000 to March 26, 2001, and paid interest on the outstanding amount at 7% per
annum.  That payment was made pursuant to the Agreement  between  Edison and the
Coso  partnerships  described  above.  On March 1, 2002,  Edison reached certain
financing  milestones  and paid  Navy I, BLM and  Navy II $37.3  million,  $37.1
million  and  $38.0  million,   respectively,  for  revenue  generated  but  not
recognized for the period November 1, 2000 through March 26, 2001.

     On  September  23, 2002,  the United  States Court of Appeals for the Ninth
Circuit issued an opinion and order on appeal from a district court's stipulated
judgment,  which affirmed the stipulated judgment in part and referred questions
based on California state law to the California Supreme Court. The appeals court
stated that if the  Agreement  violated  California  state law, then the appeals
court would be required to void the stipulated judgment.  The California Supreme
Court has accepted  the Ninth  Circuit  Court of Appeals  request to address the
issues referred to it in the September 23, 2002 ruling.  Pending the findings of
the  California  Supreme  Court on matters  relating to state law, the Agreement
remains in full force and effect.

     On March 27, 2001,  the CPUC  instituted a new formula to measure  Edison's
short run  avoided  costs  ("SRAC"),  which is the  basis  for a portion  of the
payments that Edison makes to the Coso Partnerships under their respective power
purchase agreement.  In a decision dated September 4, 2002, the California Court
of Appeals ruled that the CPUC erred in not considering the possible retroactive
application  of the revised SRAC formula to deliveries  beginning on December 1,
2000.  The California  Court of Appeals  remanded the matter back to the CPUC to
make such a consideration.

     Edison  filed a  petition  for a writ of  review of the  January  2001 CPUC
decision,  claiming  that the  "floor"  line loss  factor of 0.95 for  renewable
generators  violated the Public Utility Regulatory Policies Act of 1978 (PURPA).
Subsequently,  the  California  Court of Appeals issued a decision on August 20,
2002 in response to the writs  affirming the January 2001 CPUC decision,  except
for the 0.95  "floor",  which it rejected as an abuse of discretion by the CPUC.
Based on these decisions it may be determined that payments between January 2001
and May 2002  that  applied  the 0.95  minimum  line  loss  factor  resulted  in
overpayments to the Coso  partnerships  and that the Coso  partnerships may have
future  payments offset by such amounts deemed  overpayments.  While this matter
was  appealed to the  California  Supreme  Court,  the  petition  for review was
denied.  The Coso  partnerships are currently  evaluating  potential  actions to
redress this issue. The Coso partnerships' Agreements set a 1.0 line loss factor
for all energy sold between May 2002 through May 2007.

                                       15

The Coso  partnerships  cannot predict whether any subsequent  action  regarding
this matter will be successful.


Capacity Utilization

     For purposes of consistency in financial  presentation,  the plant capacity
factor for each of the Coso  partnerships is based on a nominal  capacity amount
of 80MW (240MW in the aggregate).  The Coso  partnerships have a gross operating
capacity  that  allows  for the  production  of  electricity  in excess of their
nominal capacity  amounts.  Utilization of this operating margin is based upon a
number of factors and can be expected to vary  throughout  the year under normal
operating conditions.


     The following  data includes the operating  capacity  factor,  capacity and
electricity  production  (in kWh) for each  Coso  partnership  on a  stand-alone
basis:
<TABLE>
<CAPTION>
                                                                Year Ended December 31,
                                                                -----------------------

     <S>                                                <C>              <C>              <C>
                                                        2002             2001             2000
     Navy I Partnership (stand alone)                   ----             ----             ----
     Operating capacity factor                         104.7%           108.3%           111.8%
     Capacity (MW) (average)                            83.78            86.63            89.44
     kWh produced (000s)                              733,877          758,890          785,624

     BLM Partnership (stand alone)
     Operating capacity factor                          93.9%           102.8%           109.4%
     Capacity (MW) (average)                            75.09            82.21            87.56
     kWh produced (000s)                              657,813          720,130          769,098

     Navy II Partnership (stand alone)
     Operating capacity factor                         100.4%           104.9%           111.1%
     Capacity (MW) (average)                            80.36            83.93            88.88
     kWh produced (000s)                              703,920          735,210          780,709
</TABLE>

     Total energy  production for the BLM  partnership was 657.8 million kWh for
2002,  as compared  to 720.1  million  kWh for 2001,  a decrease  of 8.7%.  This
decrease  in energy  production  was  primarily  due to a decline in steam which
management  is  attempting  to remediate  through well  maintenance  and capital
improvements. The declines in total energy production for the Navy I and Navy II
partnerships for 2002 as compared to 2001 were not significant.

     Total energy  production for the BLM  partnership was 720.1 million kWh for
2001, as compared to 769.1 million kWh in 2000, a decrease of 6.4%. Total energy
production  for the Navy II  partnership  was 735.2  million  kWh for  2001,  as
compared to 780.7  million kWh in 2000, a decrease of 5.8%.  These  decreases in
energy  production  were  primarily due to the deferment of certain  capital and
maintenance projects by the Coso partnerships,  due to non-payment by Edison for
energy  delivered  during the period  November 1, 2000  through  March 26, 2001.
These projects have been resumed,  as Edison has resumed  payment for production
starting in late March 2001.

                                       16

Results of Operations for the years ended December 31, 2002, 2001, and 2000.
----------------------------------------------------------------------------

     The following  discusses the results of operations of the Coso partnerships
for the years ended December 31, 2002,  2001 and 2000 (dollar  amounts in tables
are in thousands, except per kWh data):


Revenue
<TABLE>
<CAPTION>
                                             2002                         2001                          2000
                                             ----                         ----                          ----

                                      $           cents/kWh         $           cents/kWh         $           cents/kWh
                                      -           ---------         -           ---------         -           ---------

<S>                                  <C>          <C>              <C>          <C>              <C>          <C>
Total Operating Revenues
Navy I partnership                  92,065           12.5         53,400           7.0          52,419           6.7
BLM partnership                     81,252           12.4         44,041           6.1          42,174           5.5
Navy II partnership                 79,592           11.3         36,389           5.0          43,054           5.5

Capacity & Bonus Revenues
Navy I partnership                  16,159            2.2         13,210           1.7          13,429           1.7
BLM partnership                     15,763            2.4         12,908           1.8          13,122           1.7
Navy II partnership                 15,836            2.2         12,978           1.8          13,195           1.7

Energy Revenues
Navy I partnership                  75,906           10.3         40,190           5.3          38,990           5.0
BLM partnership                     65,489           10.0         31,133           4.3          29,052           3.8
Navy II partnership                 63,756            9.1         23,411           3.2          29,859           3.8
</TABLE>


     Total  operating  revenues  for the Navy I,  BLM and Navy II  partnerships,
which consist of capacity payments, capacity bonus payments and energy payments,
were $92.1 million, $81.3 million and $79.6 million,  respectively, for 2002, as
compared to $53.4 million,  $44.0 million and $36.4 million,  respectively,  for
2001, increases of 72.5%, 84.8% and 118.7%, respectively.  Capacity and capacity
bonus revenues for the Navy I, BLM and Navy II partnerships  were $16.2 million,
$15.8 million and $15.8  million,  respectively,  for 2002, as compared to $13.2
million, $12.9 million and $13.0 million,  respectively,  for 2001, increases of
22.7%, 22.5%, and 21.5%,  respectively.  Energy revenues for the Navy I, BLM and
Navy II  partnerships  were $75.9  million,  $65.5  million  and $63.8  million,
respectively,  for 2002, as compared to $40.2  million,  $31.1 million and $23.4
million,  respectively,  for 2001, increases of $35.7 million, $34.4 million and
$40.4  million,  respectively.  The Coso  partnerships'  increases  in operating
revenues,  capacity and bonus revenues and energy revenues for 2002, as compared
to 2001,  were  primarily  due to  recognition  of  revenues  generated  but not
recognized for the period from November 1, 2000 through March 26, 2001 discussed
above.  On March 1,  2002,  the  Navy I, BLM and Navy II  partnerships  received
payment  and  recognized  revenue  of $37.3  million,  $37.1  million  and $38.0
million,  respectively.  The  Navy I,  BLM  and  Navy  II  partnerships  had not
recognized  revenues  of  $22.0  million,   $21.8  million  and  $22.7  million,
respectively,  for 2001.  These increases were partially offset by a decrease in
production during 2002 as compared to 2001.

     Total  operating  revenues for the Navy II  partnership,  which  consist of
capacity  payments,  capacity  bonus  payments and energy  payments,  were $36.4
million for 2001,  as compared  to $43.1  million in 2000,  a decrease of 15.5%.
Total energy  revenues for the Navy II partnership  were $23.4 million for 2001,
as compared to $29.9  million in 2000,  a decrease of 21.7%.  The  decreases  in
total  operating  revenues and energy  revenues for 2001 were  primarily  due to
nonpayment  by Edison for  electricity  delivered  from  January 1, 2001 through
March 26, 2001, as compared to non-recognition of November and December revenues
in 2000, resulting from the Edison's liquidity crisis discussed above, partially
offset by decreases in steam  transfer  revenues  and the  previously  discussed
decrease in power generation.

                                       17


Interest and Other Income
<TABLE>
<CAPTION>
                                             2002                         2001                          2000
                                             ----                         ----                          -----
                                       $           cents/kWh         $           cents/kWh         $           cents/kWh
                                       -           ---------         -           ---------         -           ---------

<S>                                   <C>          <C>              <C>          <C>              <C>          <C>
Navy I partnership                    1,574           0.2           2,928           0.4           2,506           0.3
BLM partnership                       1,455           0.2           3,766           0.5           8,125           1.1
Navy II partnership                     894           0.1           2,883           0.4           2,868           0.4
</TABLE>


     The Navy I  partnership's  interest  and other  income was $1.6  million in
2002,  as compared to $2.9  million in 2001, a decrease of 44.8% The decrease in
interest and other income for 2002,  as compared to 2001,  was  primarily due to
interest on amounts in arrears,  owed by Edison in 2001,  that were  settled and
paid by Edison on March 1, 2002.  The amount  was also  partially  offset by the
collection of insurance proceeds in 2002 of $0.8 million for lost revenue caused
by equipment failure.

     The BLM and Navy II  partnerships  interest  and  other  income  were  $1.5
million and $0.9 million for 2002, respectively, as compared to $3.8 million and
$2.9 million, respectively for 2001, decreases of 60.5% and 69.0%, respectively.
The decreases in interest and other income for 2002,  as compared to 2001,  were
primarily  due to interest on amounts in arrears,  owed by Edison in 2001,  that
were settled and paid by Edison on March 1, 2002.

     The Navy I  partnership's  interest  and other  income was $2.9  million in
2001,  as compared to $2.5 million in 2000,  an increase of 16.0%.  The increase
was primarily due to interest on amounts in arrears owed by Edison in 2001.  The
BLM  partnership's  interest  and other  income  was $3.8  million  in 2001,  as
compared  to $8.1  million  in 2000,  a decrease  of 53.1%.  This  decrease  was
primarily  due to legal  settlements  paid during 2000, of $6.1 million from Dow
Chemical  Company and $600,000 for legal fees related to the Edison  litigation,
partially offset by an increase in interest income on amounts in arrears owed by
Edison in 2001.


Plant Operations
<TABLE>
<CAPTION>
                                            2002                          2001                          2000
                                            ----                          ----                          ----
                                     $           cents/kWh         $           cents/kWh           $           cents/kWh
                                     -           ---------         -           ---------           -           ---------

<S>                                 <C>          <C>              <C>          <C>                <C>          <C>
Navy I partnership                  9,832           1.3           9,010           1.2             8,609           1.1
BLM partnership                    11,748           1.8          10,221           1.4            12,008           1.6
Navy II partnership                10,304           1.5           9,679           1.3             9,409           1.2
</TABLE>

     Operating  expenses,  including  operating  and general and  administrative
expense for the Navy I, BLM and Navy II  partnerships  were $9.8 million,  $11.7
million and $10.3 million,  respectively, for 2002, as compared to $9.0 million,
$10.2 million and $9.7 million, respectively, for 2001, increases of 8.9%, 14.7%
and 6.2%, respectively.  The Coso partnerships' increases in operating expenses,
including  operating  and  general  and  administrative  expenses  for 2002,  as
compared to 2001, were primarily due to increases in insurance  costs,  property
taxes and repair and maintenance  projects that had been deferred in 2001 due to
Edison's non-payment,  partially offset by a reduction in legal costs associated
with the Edison's non-payment. The increases in 2002 property taxes for the Navy
I,  BLM  and  Navy  II   partnerships   of  $670,000,   $720,000  and  $610,000,
respectively, resulted from a correction by Inyo county to the 2001 assessment.

     The BLM partnership's  operating expenses,  including operating and general
and  administrative  expenses  were $10.2  million in 2001, as compared to $12.0
million in 2000, a decrease of 15.0%.  The  decrease in  operating  expenses for
2001 as compared to 2000,  was primarily due to a reduction in current  property
taxes by an offset of a partial  refund of an  appealed  amount  and lower  well
maintenance and workover costs during 2001.

                                       18


Royalty Expenses
<TABLE>
<CAPTION>
                                            2002                          2001                        2000
                                            ----                          ----                        ----
                                     $           cents/kWh         $           cents/kWh         $           cents/kWh
                                     -           ---------         -           ---------         -           ---------

<S>                                 <C>          <C>              <C>          <C>              <C>          <C>
Navy I partnership                 12,914           1.8           9,950           1.3          10,921           1.4
BLM partnership                     2,436           0.4           5,203           0.7           4,045           0.5
Navy II partnership                 6,961           1.0           9,377           1.3          10,104           1.3
</TABLE>

     The Navy I  partnership's  royalty  expense was $12.9  million for 2002, as
compared  to $10.0  million in 2001,  an  increase of 29.0%.  The  increase  was
primarily due to a $6.5 million royalty reimbursement in 2001 that resulted from
the modification to the calculation of the Unit 1 royalty  reimbursement pricing
formula.  The increase was partially offset by reduced royalties  resulting from
the  decrease  in the rate of energy from 7.5 cents per kWh in 2001 to 4.7 cents
per kWh in 2002, and a $1.3 million royalty reimbursement in 2002 resulting from
the final  modification to the  calculation of the Unit 1 royalty  reimbursement
pricing formula.

     The BLM  partnership's  royalty  expense  was $2.4  million  for  2002,  as
compared  to $5.2  million  in 2001,  a  decrease  of 53.8%.  The  decrease  was
primarily due to reduced  royalties  resulting  from the decrease in the rate of
energy  from  7.5  cents  per  kWh in 2001 to 4.7  cents  per kWh in 2002  and a
decrease in production in 2002 as compared to 2001.

     The Navy II  partnership's  royalty  expense was $7.0 million for 2002,  as
compared  to $9.4  million  in 2001,  a  decrease  of 25.5%.  The  decrease  was
primarily due to reduced  royalties  resulting  from the decrease in the rate of
energy from 7.5 cents per kWh in 2001 to 4.7 cents per kWh in 2002.

     The Navy I partnership's  royalty  expenses were $10.0 million for 2001, as
compared  to $10.9  million  in 2000,  a  decrease  of 8.3%.  The  decrease  was
primarily  due  to a $6.5  million  royalty  reimbursement  resulting  from  the
modification  to the  calculation  of the Unit 1 royalty  reimbursement  pricing
formula.  The decrease was  partially  offset by higher  royalty  charges due to
increased  energy revenues caused by the increase in the average avoided cost of
energy  from 5.8  cents per kWh in 2000,  to 7.5 cents per kWh in 2001.  The BLM
partnership's  royalty  expenses were $5.2 million for 2001, as compared to $4.0
million in 2000,  an increase of 30.0%.  The  increase was due to an increase in
energy  revenues  caused by the  increase in the average  avoided cost of energy
from  5.8  cents  per kWh in 2000,  to 7.5  cents  per kWh in 2001.  The Navy II
partnership's  royalty expenses were $9.4 million for 2001, as compared to $10.1
million in 2000,  a decrease  of 6.9%.  The  decrease  was due to a decrease  in
internally-produced steam over the same period in 2000.


Depreciation and Amortization
<TABLE>
<CAPTION>
                                            2002                          2001                        2000
                                            ----                          ----                        ----
                                     $           cents/kWh         $           cents/kWh         $           cents/kWh
                                     -           ---------         -           ---------         -           ---------

<S>                                 <C>          <C>              <C>          <C>              <C>          <C>
Navy I partnership                 10,630           1.4          10,222           1.3           9,594           1.2
BLM partnership                    14,342           2.2          15,972           2.2          15,361           2.0
Navy II partnership                12,163           1.7          15,352           2.1          15,070           1.9
</TABLE>

     The BLM  partnership's  depreciation  and  amortization  expense  was $14.3
million for 2002, as compared to $16.0 million in 2001, a decrease of 10.6%. The
Navy II partnership's  depreciation  and amortization  expense was $12.2 million
for 2002,  as compared  to $15.4  million in 2001,  a decrease  of 20.8%.  These
decreases in depreciation and amortization  expense for 2002, as compared to the
same period in 2001,  were due to older wells  being  fully  depreciated  during
2002.

     The Navy I partnership's  depreciation and  amortization  expense was $10.2
million for 2001, as compared to $9.6 million in 2000, an increase of 6.3%.  The
Navy I Partnership's increase in depreciation and amortization expense for 2001,
as  compared  to the same period in 2000,  was  primarily  due to an increase in
capitalized assets in 2001.

                                       19

Interest Expense
<TABLE>
<CAPTION>
                                            2002                          2001                        2000
                                            ----                          ----                        ----
                                     $           cents/kWh         $           cents/kWh         $           cents/kWh
                                     -           ---------         -           ---------         -           ---------

<S>                                 <C>          <C>              <C>          <C>              <C>          <C>
Navy I partnership                 10,836           1.5          11,732           1.5          12,493           1.6
BLM partnership                     8,567           1.3           8,958           1.2           9,174           1.2
Navy II partnership                 7,538           1.1           8,128           1.1           9,130           1.2
</TABLE>

     The Navy I  partnership's  interest  expense was $10.8 million for 2002, as
compared to $11.7 million in 2001, a decrease of 7.7%. The Navy II partnership's
interest expense was $7.5 million for 2002, as compared to $8.1 million in 2001,
a decrease of 7.4%. These decreases in interest expense for 2002, as compared to
the same period in 2001,  were due to reductions in the principal  amount of the
project loan from Funding Corp.

     The Navy I  partnership's  interest  expense was $11.7 million for 2001, as
compared to $12.5 million in 2000, a decrease of 6.4%. The Navy II partnership's
interest expense was $8.1 million for 2001, as compared to $9.1 million in 2000,
a decrease of 11.0%.  These decreases in interest  expense for 2001, as compared
to the same period in 2000,  were due to reductions  in the principal  amount of
the project loan from Funding Corp.


Liquidity and Capital Resources

     Each of the  Navy I  partnership,  the  BLM  partnership  and  the  Navy II
partnership derive  substantially all of their cash flow from Edison under their
power purchase  agreements and from interest  income earned on funds on deposit.
As of December 2001, the 6.8% notes were repaid,  subsequently  leaving the Coso
partnerships with more cash flow annually. The Coso partnerships have used their
cash primarily for capital  expenditures for power plant improvements,  resource
and operating costs,  distributions to partners and payments with respect to the
project debt.

     The Coso  partnerships  ability to meet their  obligations as they come due
will depend upon the ability of Edison to meet its  obligations  under the terms
of the standard offer No. 4 power purchase agreements and ability to continue to
generate electricity.  Edison's shortfall in collections,  coupled with its near
term capital  requirements,  materially  and  adversely  affected its  liquidity
during 2000 and 2001. In resolution of that issue,  Edison settled with the CPUC
on  October  2,  2001,  enabling  it to  recover  in retail  electric  rates its
historical  shortfall in electric  purchase  costs.  On September 23, 2002,  the
United States Court of Appeals for the Ninth Circuit issued an opinion and order
on appeal from the  district  court's  stipulated  judgment  which  affirmed the
stipulated judgment in part and referred questions based on California state law
to the  Supreme  Court of  California.  The  appeals  court  stated  that if the
Agreement violated California state law then the appeals court would be required
to void the stipulated judgment.  Pending a response from the California Supreme
Court, the Agreement  remains in full force and effect.  Immediately  after this
settlement,  Edison and each of the Coso partnerships  entered into an amendment
of their respective  Agreement  (referenced above) pertaining to partial payment
and interest  payments  relating to Edison's past due obligations for the period
from November 1, 2000 through March 26, 2001.  The  Agreement,  as amended,  was
approved by CPUC in January of 2002,  and  established  the fixed  energy  rates
discussed  above and set payment terms for the past due amounts owed to the Coso
partnerships by Edison.  Edison's failure to pay its future obligations may have
a material adverse effect on the Coso partnerships  ability to make debt service
payments to Funding Corp., as they come due under the Funding Corp. notes.

     On March 1, 2002, Edison reached certain financing  milestones and paid the
Coso  partnerships for revenue  generated but not recognized for the period from
November 1, 2000 through March 26, 2001. In the first quarter of 2002,  the Navy
I, BLM and Navy II partnerships  recognized  revenue for energy delivered during
that period of $37.3 million, $37.1 million and $38.0 million, respectively.

                                       20

     The following  table sets forth a summary of each Coso  partnership's  cash
flows for the years ended December 31, 2002, December 31, 2001, and December 31,
2000.
<TABLE>
<CAPTION>
                                                                2002             2001             2000
                                                                ----             ----             ----
<S>                                                          <C>              <C>              <C>
Navy I partnership (stand alone)
 Net cash provided by operating activities                   $ 64,399         $ 17,112         $ 29,168
 Net cash provided by (used in) investing activities          (12,724)           1,235           (1,638)
 Net cash (used in) financing activities                      (47,724)         (21,589)         (31,845)
                                                              --------         --------         --------
   Net change in cash and cash equivalents                   $  3,951         $ (3,242)        $ (4,315)
                                                              ========         ========         ========

BLM partnership (stand alone)
 Net cash provided by operating activities                   $ 49,215         $ 24,722         $ 32,806
 Net cash provided by (used in) investing activities              101           (2,431)          (6,876)
 Net cash (used in) financing activities                      (47,893)         (28,153)         (26,491)
                                                              --------         --------         --------
   Net change in cash and cash equivalents                   $  1,423         $ (5,862)        $   (561)
                                                              ========         ========         ========

Navy II partnership (stand alone)
 Net cash provided by operating activities                   $ 30,881         $ 18,504         $ 36,887
 Net cash provided by (used in) investing activities           (6,096)           4,551           42,556
 Net cash (used in) financing activities                      (23,961)         (30,796)         (77,722)
                                                              --------         --------         --------
   Net change in cash and cash equivalents                   $    824         $ (7,741)        $  1,721
                                                              ========         ========         ========
</TABLE>

     The Navy I partnership's cash flows from operating  activities increased by
$47.3 million in 2002, as compared to 2001,  primarily due to an increase in net
income resulting from Edison's  payment  received for revenue  generated but not
recognized  for the period from  November 1, 2000  through  March 26, 2001 and a
decrease in amounts due from related parties.

     Cash used in investing  activities at the Navy I  partnership  increased by
$13.9  million in 2002,  as  compared to 2001,  primarily  due to an increase in
restricted cash requirements associated with the project loan from Funding Corp.
and an increase in capital expenditures in 2002.

     The Navy I  partnership's  cash used in financing  activities  increased by
$26.1  million in 2002,  as  compared  to 2001,  due to an  increase  in partner
distributions in 2002.

     The BLM  partnership's  cash flows from operating  activities  increased by
$24.5 million in 2002, as compared to 2001,  primarily due to an increase in net
income resulting from Edison's  payment  received for revenue  generated but not
recognized  for the  period  from  November  1, 2000  through  March  26,  2001,
partially  offset by  increases  in  amounts  due to related  parties  and trade
payables.

     Cash used in investing activities at the BLM partnership  decreased by $2.5
million in 2002,  as  compared to 2001,  primarily  due to a decrease in capital
expenditures  partially  offset by an increase in restricted  cash  requirements
associated with the project loan from Funding Corp.

     The BLM partnership's cash used in financing  activities increased by $19.7
million  in  2002,  as  compared  to  2001,   due  to  an  increase  in  partner
distributions in 2002.

     The Navy II partnership's cash flows from operating activities increased by
$12.4 million in 2002, as compared to 2001,  primarily due to an increase in net
income resulting from Edison's  payment  received for revenue  generated but not
recognized  for the  period  from  November  1, 2000  through  March  26,  2001,
partially  offset by  increases  in  amounts  due to related  parties  and trade
payables.

                                       21

     Cash used in investing  activities at the Navy II Partnership  increased by
$10.6  million in 2002,  as  compared to 2001,  primarily  due to an increase in
restricted cash requirements associated with the project loan from Funding Corp.
and an increase in capital expenditures in 2002.

     The Navy II partnership's  cash used in financing  activities  decreased by
$6.8  million in 2002,  as  compared  to 2001,  due to lower  repayments  of the
project loan from Funding Corp.

     The Navy I partnership's cash flows from operating  activities decreased by
$12.1  million  in 2001 as  compared  to 2000,  primarily  due to  increases  in
accounts receivable and related parties receivables.

     Cash from investing activities at the Navy I partnership  increased by $2.9
million in 2001 as  compared  to 2000,  primarily  due to a decrease  in capital
expenditures in 2001.

     The Navy I partnership's cash flows used in financing  activities decreased
by $10.3 million in 2001 as compared to 2000, primarily due to a decrease in the
payment  amount on the project loan from Funding  Corp.,  and a reduction in the
distributions paid in 2001.

     The BLM  partnership's  cash flows from operating  activities  decreased by
$8.1  million in 2001 as  compared  to 2000,  primarily  due to an  increase  in
accounts receivable, partially offset by increases in related parties payables.

     Cash used in investing activities at the BLM partnership  decreased by $4.4
million in 2001 as compared to 2000,  primarily  due to a decrease in restricted
cash requirements associated with the project loan from Funding Corp., partially
offset by an increase in capital expenditures in 2001.

     The BLM partnership's cash used in financing  activities  increased by $1.7
million  in  2001  as  compared  to  2000,  primarily  due  to  an  increase  in
distributions in 2001,  partially offset by lower repayments of the project loan
from Funding Corp.

     The Navy II partnership's cash flows from operating activities decreased by
$18.4  million in 2001 as compared  to 2000,  primarily  due to the  increase in
accounts  receivable,  partially offset by an increase in amounts due to related
parties.

     Cash flows from investing  activities at the Navy II partnership  decreased
by $38.0 million in 2001 as compared to 2000,  primarily due to lower repayments
of  the  project  loan  from  Funding  Corp.,  and  decreases  in  2001  capital
expenditures.

     The Navy II partnership's  cash used in financing  activities  decreased by
$46.9 million in 2001 as compared to 2000,  primarily due to lower repayments of
the project loan from Funding Corp.

     The following is a summary of the Coso  partnerships  material  contractual
obligations (in millions):
<TABLE>
<CAPTION>
                                                         Less than        1-3            4-5           More than
        Contractual Obligations           Total           1 Year         Years          Years           5 Years
        -----------------------           -----           ------         -----          -----           -------
<S>                                    <C>              <C>           <C>            <C>              <C>
Project Loans....................      $ 281,231        $  27,618     $  66,812      $  85,705        $ 101,096
Other long-term obligations......          5,040              720         1,440          1,440            1,440
                                         -------           ------        ------         ------          -------
                                       $ 286,271        $  28,338     $  68,252      $  87,145        $ 102,536
</TABLE>

     The project  loans were issued under an indenture  dated as of May 28, 1999
between Funding Corp. and the trustee, U.S. Bank Trust NA. (see Item 8).

     Other long-term  obligations relate to Unit 1 at Navy 1, whereby the Navy I
partnership  is  obligated to pay the U.S.  Navy the sum of $25.0  million on or
before  December  31, 2009,  the  expiration  date of the term of the U.S.  Navy
contract.  Payment of this obligation  will be made from an established  sinking
fund which the Navy I partnership  has been making  payments to since 1987.  The
payment is secured by funds placed on deposit monthly,  which funds plus accrued
interest will  aggregate  $25.0  million.  Currently,  the monthly  amount to be
deposited is approximately $60,000 (see Item 8).

                                       22

Critical Accounting Policies and Estimates

     Preparation   of  this  Annual  Report  on  Form  10-K  requires  the  Coso
partnerships to make estimates and  assumptions  that affect the reported amount
of assets and  liabilities,  disclosure of contingent  assets and liabilities at
the  date of the  Coso  partnerships'  financial  statements,  and the  reported
amounts  of  revenue  and  expenses  during  the  reporting  period.   The  Coso
partnerships'  critical  accounting  policies,  including  the  assumptions  and
judgments   underlying  them,  are  disclosed  under  the  caption  "Summary  of
Significant  Accounting  Policies"  under  Item  8.  These  policies  have  been
consistently   applied  and  address  such   matters  as  revenue   recognition,
depreciation methods and asset impairment recognition. While policies associated
with  estimates  and  judgments  may be  affected  by  different  assumption  or
condition,   the  Coso  partnerships'   believes  its  estimates  and  judgments
associated with the reported amounts are appropriate.  Actual results may differ
from those estimates.

     The  Company  considers  the  policies  discussed  below as  critical to an
understanding of the Coso partnerships'  financial  statements as application of
these policies places the most  significant  demands on  management's  judgment,
with financial  reporting  results relying on the estimation of matters that are
uncertain.

     Accounts  Receivable  and  Revenue  Recognition  - Operating  revenues  are
recognized  as income  during the period in which  electricity  is  delivered to
Edison. In the event that Edison is not able to make payment on amounts due, and
collection is not reasonably assured,  the Coso partnerships' will not recognize
revenue for energy delivered, until payment is collected.

     Impairment of Long-Lived  Assets - Recoverability  of assets to be held and
used is measured by a comparison of the carrying amount of an asset to estimated
undiscounted  future cash flows  expected to be generated  by the asset.  If the
carrying  amount  of an asset  exceeds  its  estimated  future  cash  flows,  an
impairment  charge is recognized  by the amount by which the carrying  amount of
the asset exceeds the fair value of the asset.

     Asset  Retirement  Obligations - The fair value of a liability for an asset
retirement obligation should be recognized in the period in which it is incurred
if a reasonable  estimate of a fair value can be made,  and that the  associated
asset  retirement  costs be  capitalized  as part of the carrying  amount of the
long-lived  asset.  This policy will be applied to the financial  statements for
the Coso partnerships' for the fiscal year beginning January 1, 2003.


Item 7A. Quantitative and Qualitative Disclosures about Market Risk.


Risk Factors

     Operating the Coso projects involves, among other things, general economic,
financial,  competitive,  legislative,  regulatory  and other  factors  that are
beyond  management's  control.  Changes  in  these  factors  could  make it more
expensive  to  operate  the  Coso  projects,   or  require   additional  capital
expenditures,  or  reduce  certain  benefits  currently  available  to the  Coso
partnerships.  There are a variety of other risks that affect the Coso projects,
some of which are beyond management's control, including:

     *    One or more of the Coso projects could perform below  expected  levels
          of output or efficiency;

     *    In light of the  uncertainty of the Western energy  markets,  Edison's
          financial  viability  may be considered  uncertain.  If Edison were to
          enter into bankruptcy proceedings,  the power purchase contracts could
          be amended and any accounts receivable from Edison could be reduced or
          eliminated;

                                       23

     *    The Coso geothermal resource could be interrupted or unavailable;

     *    Operating and royalty costs could increase;

     *    Changes  in  the  regulatory   structure   which  govern  the  current
          operations of the Coso partnerships.

     *    Future  competition  may  lead  to an  accelerated  depletion  of  the
          resource;

     *    Energy prices paid by Edison could decrease or terminate;

     *    Delivery of electrical energy to Edison could be disrupted;

     *    Environmental  problems  could  arise  which  could lead to fines or a
          shutdown of one or more plants;

     *    Plant units and  equipment  have broken down or failed in the past and
          could break down or fail in the future;

     *    The operators of the Coso projects could suffer labor disputes;

     *    The   government   could  change  permit  or   governmental   approval
          requirements restricting operations;

     *    Third parties could fail to perform their  contractual  obligations to
          the Coso partnerships; and

     *    Catastrophic events, such as fires, earthquakes,  explosions,  floods,
          severe storms or other occurrences  including  terrorism or war, could
          affect one or more of the Coso projects, the Navy or Edison.

     In  addition,   the  Coso  partnerships  must  meet  specified  performance
requirements under their respective power purchase  agreements during the months
of June through  September  to continue to qualify for the maximum  capacity and
capacity  bonus  payments.  If one or more of the events  listed above occur and
substantially  affect the  performance of one or more of the plants during these
months, operating revenues would be significantly decreased.


Item 8. Financial Statements and Supplementary Data.


                        CAITHNESS COSO FUNDING CORP. AND
                          COSO OPERATING PARTNERSHIPS

                                           Index                           Page
                                           -----                           ----

Caithness Coso Funding Corp:
----------------------------
KPMG LLP Independent Auditors' Report                                      F-1
Balance Sheets as of December 31, 2002 and 2001                            F-2
Statement of Income for the years ended
   December 31, 2002, 2001 and 2000                                        F-3
Statement of Cash Flows for the years
   ended December 31, 2002, 2001 and 2000                                  F-4
Notes to Financial Statements                                              F-5

Coso Finance Partners:
----------------------
KPMG LLP Independent Auditors' Report                                      F-6
Balance Sheets as of December 31, 2002 and 2001                            F-7
Statement of Operations for the years ended
   December 31, 2002, 2001 and 2000                                        F-8
Statement of Partners' Capital for the years ended
   December 31, 2002, 2001 and 2000                                        F-9
Statement of Cash Flows for the years
   ended December 31, 2002, 2001 and 2000                                  F-10
Notes to Financial Statements                                              F-11

Coso Energy Developers:
-----------------------
KPMG LLP Independent Auditors' Report                                      F-12
Balance Sheets as of December 31, 2002 and 2001                            F-13
Statement of Operations for the years ended
   December 31, 2002, 2001 and 2000                                        F-14
Statement of Partners' Capital for the years ended
   December 31, 2002, 2001 and 2000                                        F-15
Statement of Cash Flows for the years
   ended December 31, 2002, 2001 and 2000                                  F-16
Notes to Financial Statements                                              F-17

Coso Power Developers:
----------------------
KPMG LLP Independent Auditors' Report                                      F-18
Balance Sheets as of December 31, 2002 and 2001                            F-19
Statement of Operations for the years ended
   December 31, 2002, 2001 and 2000                                        F-20
Statement of Partners' Capital for the years ended
   December 31, 2002, 2001 and 2000                                        F-21
Statement of Cash Flows for the years
   ended December 31, 2002, 2001 and 2000                                  F-22
Notes to Financial Statements                                              F-23

Supplemental Unaudited Condensed quarterly Financial
information for 2002, 2001 and 2000                                        F-24

Coso Partnerships:
------------------
Supplemental Condensed Combined Financial
   Information for the Coso Partnerships:
Unaudited Condensed Combined Balance Sheets as
   of December 31, 2002 and 2001                                           F-25
Unaudited Condensed Combined Statements of
   Operations for the years ended
   December 31, 2002, 2001 and 2000                                        F-26
Unaudited Condensed Combined Statements of
   Cash Flows for the years ended
   December 31, 2002, 2001 and 2000                                        F-27
Notes to the Unaudited Condensed Combined
   Financial Statements                                                    F-28

<PAGE>




                          Independent Auditors' Report


The Partners
Caithness Coso Funding Corp.:


We have audited the accompanying  balance sheets of Caithness Coso Funding Corp.
as of December 31,  2002 and 2001, and the related statements of income and cash
flows for each of the years in the three-year  period ended  December 31,  2002.
These financial  statements are the responsibility of the Company's  management.
Our responsibility is to express an opinion on these financial  statements based
on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audit to obtain  reasonable  assurance  about  whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects, the financial position of Caithness Coso Funding Corp. as
of  December 31,  2002 and 2001,  and the results of its operations and its cash
flows for each of the years in the three-year period ended December 31, 2002, in
conformity with accounting principles generally accepted in the United States of
America.


February 28, 2003


/s/ KPMG, LLP
-------------
    KPMG, LLP





                                      F-1
<PAGE>
                                                    CAITHNESS COSO FUNDING CORP.

                                                           Balance Sheets

                                                     December 31, 2002 and 2001

                                                       (Dollars in thousands)
<TABLE>
<CAPTION>

                 Assets                                                     2002                  2001
                                                                        ------------          ------------
<S>                                                                    <C>                   <C>
Accrued interest receivable                                         $       1,130                 1,225
Project loan to Coso Finance Partners                                     110,955               122,550
Project loan to Coso Energy Developers                                     89,875                96,250
Project loan to Coso Power Developers                                      80,401                84,200
                                                                        ------------          ------------

               Total assets                                         $     282,361               304,225
                                                                        ============          ============
                 Liabilities and Stockholders' Equity
Senior secured notes:
     Accrued interest payable                                       $       1,130                 1,225
     9.05% notes due December 15, 2009                                    281,231               303,000
                                                                        ------------          ------------

               Total liabilities                                          282,361               304,225

Stockholders' equity (note 5)                                                 --                    --
                                                                        ------------          ------------

               Total liabilities and stockholders' equity           $     282,361               304,225
                                                                        ============          ============
</TABLE>

See accompanying notes to financial statements.





                                                                F-2

<PAGE>
<TABLE>
<CAPTION>
                                                CAITHNESS COSO FUNDING CORP.

                                                    Statements of Income

                                        Years ended December 31, 2002, 2001, and 2000

                                                   (Dollars in thousands)



                                                                     2002                  2001                  2000
                                                                --------------        --------------        --------------
<S>                                                            <C>                       <C>                   <C>
Revenue:
     Interest income                                        $        26,931               28,820                30,799

Expense:
     Interest expense                                               (26,931)             (28,820)              (30,799)
                                                                 --------------       --------------        --------------

Net income                                                  $           --                   --                    --
                                                                 ==============       ==============        ==============
</TABLE>

See accompanying notes to financial statements.





                                                               F-3

<PAGE>
<TABLE>
<CAPTION>
                                                  CAITHNESS COSO FUNDING CORP.

                                                    Statements of Cash Flows

                                          Years ended December 31, 2002, 2001, and 2000

                                                     (Dollars in thousands)



                                                                    2002                   2001                 2000
                                                               ---------------       ---------------       ---------------
<S>                                                            <C>                   <C>                   <C>
Cash flows from investing activities                      $        21,864                 27,128                83,039
                                                               ---------------       ---------------       ---------------

Cash flows from financing activities                              (21,864)               (27,128)              (83,039)
                                                               ---------------       ---------------       ---------------
             Net changes in cash                                      --                     --                    --

Cash at beginning of year                                             --                     --                    --
                                                               ---------------       ---------------       ---------------

Cash at end of year                                       $           --                     --                    --
                                                               ===============       ===============       ===============
Supplemental cash flow disclosures:
     Interest paid                                        $        27,026                 28,881                30,905
</TABLE>


See accompanying notes to financial statements.





                                                                F-4

<PAGE>

                          CAITHNESS COSO FUNDING CORP.

                          Notes to Financial Statements

                        December 31, 2002, 2001, and 2000

                             (Dollars in thousands)




(1)  Organization of the Corporation

     Caithness Coso Funding Corp.  (Funding  Corp.),  which was  incorporated on
     April 22, 1999, is a single-purpose  Delaware  corporation  formed to issue
     senior  secured notes (Notes) for its own account and as an agent acting on
     behalf of Coso Finance Partners (CFP),  Coso Energy  Developers  (CED), and
     Coso  Power  Developers  (CPD),   collectively,   the  "Partnerships."  The
     Partnerships are California general partnerships.

     On May 28,  1999,  Funding  Corp.  sold  $413,000  of Notes  (see  note 4).
     Pursuant to separate  credit  agreements  between  Funding  Corp.  and each
     partnership (Credit Agreements),  the net proceeds from the offering of the
     Notes were loaned to the Partnerships. Payment of the Notes is provided for
     by payments made by the Partnerships  under their respective  project loans
     (see note 3). Funding Corp. has no material assets,  other than the project
     loans, and does not conduct any operations apart from issuing the Notes and
     making the project loans to the Partnerships.

(2)  Summary of Significant Accounting Policies

     (a)  Use of Estimates

          The preparation of financial  statements in conformity with accounting
          principles generally accepted in the United States of America requires
          management to make estimates and assumptions  that affect the reported
          amounts of assets,  liabilities,  stockholders' equity, and disclosure
          of  contingent  assets and  liabilities  at the date of the  financial
          statements  and the reported  amounts of revenues and expenses  during
          the  reporting   period.   Actual  results  could  differ  from  those
          estimates.

     (b)  Fair Value of Financial Instruments

          Based on  quoted  market  rates of the  Notes,  the fair  value of the
          project loans and underlying Notes as of December 31, 2002 and 2001 is
          $281,231 and $303,000, respectively.

     (c)  New Accounting Pronouncements

          The Financial  Accounting  Standards Board (FASB) issued  Statement of
          Financial Accounting  Standards (SFAS) No. 143,  Accounting for Assets
          Retirement Obligations.  This Statement addresses financial accounting
          and  reporting  for  obligations  associated  with the  retirement  of
          tangible  long-lived  assets and the associated asset retirement costs
          and amends FASB No. 19,  Financial Accounting and Reporting by Oil and
          Gas Producing Companies. The Statement requires that the fair value of
          a liability  for an asset  retirement  obligation be recognized in the
          period in which it is  incurred  if a  reasonable  estimate  of a fair
          value can be made, and that the associated  asset  retirement costs be
          capitalized as part of the carrying  amount of the  long-lived  asset.
          The Statement is effective for financial  statements issued for fiscal
          years  beginning  after June 15, 2002.  The effect of this standard on
          Funding Corp.'s results of operations and financial  position is being
          evaluated.  Funding  Corp.  cannot  currently  estimate the  financial
          impact at the date of adoption as Funding Corp.  has not yet completed
          its evaluation.

          The FASB  issued  FAS  Interpretation  No.  45 (FIN  45),  Guarantor's
          Accounting  and  Disclosure  Requirements  for  Guarantees,  Including
          Indirect   Guarantees   of   Indebtedness   of  Others.   This  is  an
          interpretation of FASB Statements No. 5, Accounting for Contingencies,
          No. 57, Related Party Disclosures, and No. 107, Disclosures about Fair
          Value of Financial  Instruments and rescission of FASB  Interpretation
          No. 34, Disclosures of Indirect  Guarantees of Indebtedness of Others.
          The  Interpretation  elaborates  on the  disclosures  to be  made by a
          guarantor  in its interim and annual  financial  statements  about its
          obligations under certain guarantees that it has issued. The Statement
          is being applied prospectively, to guarantees issued or modified after
          December  31,  2002.  At  December   31,2002,   Funding  Corp.'s  only
          guarantees relate to the project loans (see note 4). This guarantee is
          not within the scope of FIN 45. Adoption of the  Interpretation is not
          expected  to  have  an  impact  on  the  Funding  Corp.'s  results  of
          operations or financial position.

(3)  Project Loans to the Partnerships

     Pursuant to each Credit Agreement, each partnership shall make project loan
     payments in scheduled  installment  amounts which,  in the  aggregate,  are
     sufficient to enable Funding Corp. to pay scheduled  principal and interest
     on the Notes (see note 4).

     The Notes are general  obligations  of Funding  Corp.,  and are secured and
     perfected by: (1) first  priority pledge of the promissory notes evidencing
     each partnership's obligation to repay the loan; (2) first priority lien on
     the  funds in the debt  service  cash  accounts  of the  Partnerships;  and
     (3) first  priority  pledge  of all of the  outstanding  capital  stock  of
     Funding  Corp.  These  obligations  are  unconditionally  guaranteed by the
     Partnerships and are secured and perfected by  substantially  all assets of
     the  Partnerships  and the equity  interests in the  Partnerships.  Funding
     Corp., CPD, CED, and CFP are jointly and severally liable for the repayment
     of the Notes.

(4)  Senior Secured Notes

     On May 28,  1999, Funding Corp.  completed a $413,000  underwritten  public
     debt offering consisting of $110,000 6.8% Notes due 2001 and $303,000 9.05%
     Notes due 2009.  The  Notes  were  issued  under an  indenture  dated as of
     May 28,  1999 between  Funding Corp.  and the trustee,  U.S. Bank Trust NA.
     Payment  of the  Notes  is  provided  for by  payments  to be  made  by the
     Partnerships on their  respective  project loans (see note 3).  Interest is
     payable each June 15 and December 15.

     The annual  maturity  of the Notes for each year ending  December 31  is as
     follows:

                                                  Amount
                                               ------------
                      2003                  $     27,618
                      2004                        31,332
                      2005                        35,480
                      2006                        38,286
                      2007                        47,419
                      Thereafter                 101,096
                                               ------------
                                            $    281,231
                                               ============

     The Note indentures contain certain restrictive covenants that, among other
     things, limit the ability to incur additional  indebtedness,  release funds
     from reverse accounts, make distributions, create loans, and enter into any
     transaction, merger, or consolidation.

(5)  Stockholders' Equity

     Funding Corp. is authorized to issue 1,000 shares of common stock, one cent
     par value per share.  Upon  incorporating  in 1999,  Funding  Corp.  issued
     100 common shares to CFP, CED, and CPD.

(6)  Risks and Uncertainties

     The  Partnership's  future results of operations  involve a number of risks
     and uncertainties.  Periodic increases in natural gas prices and imbalances
     between  supply and demand,  among other  factors,  have led to significant
     increases  in  wholesale   electricity   prices  in  California.   Southern
     California Edison (Edison) is the only customer of the Partnerships. During
     those periods, Edison had fixed tariffs with its retail customers that were
     significantly  below  the  wholesale  prices  it paid in  California.  That
     resulted  in  significant  under-recoveries  by Edison  of its  electricity
     purchase  costs.  On  January  16,  2001,  Edison  announced  that  it  was
     temporarily  suspending  payment for energy provided,  including the energy
     provided by the Partnerships, pending a permanent solution to its liquidity
     crisis. Subsequently,  pursuant to a California Public Utilities Commission
     (CPUC) order, Edison resumed making payments to the Partnerships  beginning
     with power generated on March 27, 2001.  Edison also made payments equal to
     10% of the unpaid  balance  for power  generated  from  November 1, 2000 to
     March 26,  2001,  and paid  interest  on the  outstanding  amount at 7% per
     annum.  That  payment was made  pursuant to an agreement  (the  Agreement),
     which Edison entered into on June 19, 2001 that addressed  renewable energy
     pricing and issues concerning  California's  energy crisis.  The Agreement,
     which was  amended on  November  30,  2001 and  received  CPUC  approval in
     January  2002,  established  May 1, 2002 as the date when the  Partnerships
     will begin receiving a fixed energy rate of 5.37 cents per kwh for five (5)
     years.  Subsequent to the five-year period, Edison will be required to make
     energy  payments to the  Partnerships  based on its avoided  cost of energy
     until  their  respective  power  purchase  agreement  expires.  Beyond  the
     five-year  period,  the  Partnerships  cannot  predict the likely  level of
     avoided  cost of  energy  prices  under  their  respective  power  purchase
     contract and, accordingly, the revenues generated by the Partnerships could
     fluctuate significantly.

     As of December 31, 2001, the Partnerships were unable to determine the time
     frame  during  which any  future  payments  would be  received.  Due to the
     uncertainty  surrounding  Edison's  ability  to make  payment  on past  due
     amounts, collection was not reasonably assured and the Partnerships did not
     recognize  revenue  from  Edison  for  energy  delivered  during the period
     January 1,  2001 through  March 26,  2001. On March 1, 2002, Edison reached
     certain  financing  milestones and paid the  Partnerships  for  electricity
     generated  during the period  November 1, 2000 through March 26, 2001.  The
     Partnerships  recognized revenue for such electricity  deliveries in March,
     2002.
                                      F-5
<PAGE>




                          Independent Auditors' Report


The Partners and Management Committee
Coso Finance Partners:


We have audited the  accompanying  balance sheets of Coso Finance Partners as of
December 31, 2002 and 2001, and the related statements of operations,  partners'
capital,  and cash flows for each of the years in the  three-year  period  ended
December 31,  2002.  These financial  statements are the  responsibility  of the
Partnership's  management.  Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audit to obtain  reasonable  assurance  about  whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the financial  position of Coso Finance  Partners as of
December 31,  2002 and 2001, and the results of their  operations and their cash
flows for each of the years in the three-year period ended December 31,  2002 in
conformity with accounting principles generally accepted in the United States of
America.


February 28, 2003



/s/ KPMG, LLP
-------------
    KPMP, LLP






                                      F-6
<PAGE>

                                                      COSO FINANCE PARTNERS

                                                         Balance Sheets

                                                   December 31, 2002 and 2001

                                                     (Dollars in thousands)
<TABLE>
<CAPTION>
                  Assets                                                          2002                  2001
                                                                             ---------------       ---------------

<S>                                                                      <C>                    <C>
Cash and cash equivalents                                                $         4,215                   264
Restricted cash and investments (note 2)                                          28,692                21,325
Accounts receivable, net (note 2)                                                  7,431                 3,454
Prepaid expenses and other assets                                                  1,068                   650
Amounts due from related parties (note 7)                                          1,190                 9,362
Property, plant, and equipment, net (note 4)                                     136,313               140,437
Advances to New CLPSI Company, LLC (note 3)                                        4,010                 4,005
Power purchase contract, net (note 2)                                              9,945                11,093
Deferred financing costs, net (note 2)                                             2,208                 2,524
                                                                             ---------------       ---------------

              Total assets                                                $      195,072               193,114
                                                                             ===============       ===============

                  Liabilities and Partners' Capital

Accounts payable and accrued liabilities (notes 5 and 8)                  $       18,242                17,578
Amounts due to related parties (note 7)                                              467                   561
Project loans (note 6)                                                           110,955               122,550
                                                                             ---------------       ---------------

              Total liabilities                                                  129,664               140,689

Commitments and contingencies (notes 5, 6, and 9)

Partners' capital                                                                 65,408                52,425
                                                                             ---------------       ---------------

              Total liabilities and partners' capital                     $      195,072               193,114
                                                                             ===============       ===============
</TABLE>

See accompanying notes to financial statements.





                                                                F-7
<PAGE>
<TABLE>
<CAPTION>
                                                    COSO FINANCE PARTNERS

                                                  Statements of Operations

                                        Years ended December 31, 2002, 2001, and 2000

                                                   (Dollars in thousands)



                                                                 2002                  2001                  2000
                                                           ------------------    ------------------    ------------------
<S>                                                       <C>                   <C>                   <C>
Revenue:
  Energy revenues (notes 2, 7, and 9)                     $      75,906                40,190                38,990
  Capacity and bonus payments                                    16,159                13,210                13,429
  Interest and other income                                       1,574                 2,928                 2,506

                                                           ------------------    ------------------    ------------------

              Total revenue                                      93,639                56,328                54,925
                                                           ------------------    ------------------    ------------------

Operating expenses:
  Plant operating expenses                                        9,832                 9,010                 8,609
  Royalty expense (note 5)                                       12,914                 9,950                10,921
  Depreciation and amortizatio                                   10,630                10,222                 9,594
                                                           ------------------    ------------------    ------------------

              Total operating expenses                           33,376                29,182                29,124
                                                           ------------------    ------------------    ------------------

              Operating income                                   60,263                27,146                25,801
                                                           ------------------    ------------------    ------------------

Other expenses:
  Interest expense                                               10,836                11,732                12,493
  Amortization of deferred financing costs                          315                   705                   520
                                                           ------------------    ------------------    ------------------

              Total other expenses                               11,151                12,437                13,013
                                                           ------------------    ------------------    ------------------

              Net income                                  $      49,112                14,709                12,788
                                                           ==================    ==================    ==================
</TABLE>

See accompanying notes to financial statements.





                                                              F-8


<PAGE>
<TABLE>
<CAPTION>
                                                    COSO FINANCE PARTNERS

                                               Statements of Partner'S Capital

                                        Years ended December 31, 2002, 2001, and 2000

                                                   (Dollars in thousands)



                                                                                   New CLOC
                                                                ESCA               Company,
                                                                 LLC                  LLC                 Total
                                                          ------------------   ------------------   -------------------
<S>                                                       <C>                  <C>                  <C>
Balance at December 31, 1999                              $     27,943               21,419                49,362

Net income                                                       6,854                5,934                12,788

Distributions to partners                                       (8,190)              (7,089)              (15,279)
                                                          ------------------   ------------------   -------------------

Balance at December 31, 2000                                    26,607               20,264                46,871

Net income                                                       7,884                6,825                14,709

Distributions to partners                                       (4,907)              (4,248)               (9,155)
                                                          ------------------   ------------------   -------------------

Balance at December 31, 2001                                    29,584               22,841                52,425

Net income                                                      26,324               22,788                49,112

Distributions to partners                                      (19,365)             (16,764)              (36,129)
                                                          ------------------   ------------------   -------------------

Balance at December 31, 2002                              $     36,543               28,865                65,408
                                                          ==================   ==================   ===================
</TABLE>

See accompanying notes to financial statements.





                                                                F-9
<PAGE>
<TABLE>
<CAPTION>
                                                     COSO FINANCE PARTNERS

                                                   Statements of Cash Flows

                                         Years ended December 31, 2002, 2001, and 2000

                                                    (Dollars in thousands)



                                                                     2002                 2001                 2000
                                                               ------------------   -----------------    -----------------
<S>                                                            <C>                  <C>                  <C>
Cash flows from operating activities:
  Net income                                                   $     49,112              14,709               12,788
  Adjustments to reconcile net income to net
    cash provided by operating activities:
       Depreciation and amortization                                 10,630              10,222                9,594
       Amortization of deferred financing costs                         315                 705                  520
       Changes in operating assets and liabilities:
         Accounts receivable, prepaid expenses,
           and other assets                                          (4,395)             (2,774)               4,304
         Advances to New CLPSI Company, LLC                              (5)                 67                  140
         Accounts payable and accrued liabilities                       664               1,721                 (859)
         Amounts due from related parties                             8,172              (7,402)               2,548
         Amounts due to related parties                                 (94)               (136)                 133
                                                               ------------------   -----------------    -----------------

           Net cash provided by operating activities                 64,399              17,112               29,168
                                                               ------------------   -----------------    -----------------
Cash flows from investing activities:
  Capital expenditures                                               (5,357)               (436)              (3,643)
  Decrease (increase) in restricted cash                             (7,367)              1,671                2,005
                                                               ------------------   -----------------    -----------------
           Net cash provided by (used in)
             investing activities                                   (12,724)              1,235               (1,638)
                                                               ------------------   -----------------    -----------------
Cash flows from financing activities:
  Distributions to partners                                         (36,129)             (9,155)             (15,279)
  Repayment of project financing loans                              (11,595)            (12,434)             (16,566)
                                                               ------------------   -----------------    -----------------
           Net cash used in financing
             activities                                             (47,724)            (21,589)             (31,845)
                                                               ------------------   -----------------    -----------------

           Net change in cash and cash equivalents                    3,951              (3,242)              (4,315)

Cash and cash equivalents at beginning of year                          264               3,506                7,821
                                                               ------------------   -----------------    -----------------

Cash and cash equivalents at end of year                       $      4,215                 264                3,506
                                                               ==================   =================    =================

Supplemental cash flow disclosure:
  Cash paid for interest                                       $     10,880              11,763               12,532
</TABLE>


See accompanying notes to financial statements.





                                                              F-10
<PAGE>

                              COSO FINANCE PARTNERS

                          Notes to Financial Statements

                        December 31, 2002, 2001, and 2000

                             (Dollars in thousands)




(1)  Organization, Operation, and Business of the Partnership

     Coso Finance Partners (CFP or the Partnership) and Coso Finance Partners II
     (CFP II) were formed on July 7,  1987 in connection with the refinancing of
     the construction of a 30-net-megawatt  (NMW) geothermal power plant and the
     expansion  of  that  power  plant  from  30 NMW  to  approximately  80 NMW,
     constructed  on behalf of China  Lake Joint  Venture  (CLJV) on land at the
     China  Lake  Naval Air  Weapons  Station,  Coso Hot  Springs,  China  Lake,
     California.

     CFP acquired the assets and assumed the liabilities of CLJV insofar as they
     related  to the first  turbine  generator  set of the  power  plant and the
     related  geothermal  resources.  CFP II acquired the assets and assumed the
     liabilities of CLJV insofar as they related to the second and third turbine
     generator sets, together with the related geothermal  resources.  The three
     turbine  generators  that  comprise  the power  plant have the  capacity to
     produce an aggregate of approximately  80 NMWs.  CFP and CFP II were formed
     as separate entities in order to facilitate bank financing of the completed
     power plant and power plants  under  construction,  respectively.  In 1988,
     CFP II assigned its assets and liabilities to CFP in exchange for a royalty
     of 5% of the value of the steam produced.

     In May of 1999,  CFP merged with  CFP II,  with CFP  surviving as a general
     partnership  owned by ESCA LLC (ESCA) and New CLOC Company, LLC (New CLOC),
     both of which are affiliated Delaware limited liability companies.

     The  Partnership  sells all  electricity  produced to  Southern  California
     Edison  (Edison) under a 24-year power purchase  contract (PPC) expiring in
     2011. Under the terms of the PPC, Edison makes payments to CFP as follows:

*    Contractual  payments for energy delivered  escalated at an average rate of
     approximately 7.6% for the first ten years after the date of firm operation
     (scheduled  energy price period).  After the scheduled energy price period,
     the energy payment  adjusted to the actual avoided energy cost  experienced
     by Edison.  In August 1997,  the  Partnership  completed the first ten-year
     period.  At that time, Edison ceased paying the scheduled energy rates. The
     average  rate  of  energy  paid to the  Partnership  for  the  years  ended
     December 31,  2002,  2001,  and 2000 was 4.66,  7.46,  and  5.80 cents  per
     kilowatt (kWh),    respectively.   Edison   entered   into   an   agreement
     (the Agreement)  with the  Partnership  on  June 19,  2001  that  addressed
     renewable energy pricing and issues concerning  California's energy crisis.
     The Agreement,  which was amended on November 30,  2001, established May 1,
     2002 as the date from which the Partnership receives a fixed energy rate of
     5.37 cents  per  kWh  for  five (5) years.  From  January 1,  2002  through
     April 30,  2002,  CFP elected to receive from Edison a fixed energy rate of
     3.25 cents per kWh. Starting May 1,  2002, CFP received 5.37 cents per kWh,
     pursuant to the  Agreement  discussed  above.  Subsequent  to the five-year
     period,  Edison will be required to make energy payments to the Partnership
     based on its  avoided  cost of energy  until its PPC  expires.  Beyond  the
     five-year  period,  the  Partnership  cannot  predict  the likely  level of
     avoided cost of energy prices under the PPC and, accordingly,  the revenues
     generated by the Partnership could fluctuate significantly;

*    Capacity payments which remain fixed over the life of the PPC to the extent
     that actual energy  delivered  exceeds minimum levels of the plant capacity
     defined in the PPC; and

*    Bonus  payments to the extent that actual energy  delivered  exceeds 85% of
     the plant  capacity  stated in the PPC. In 2002,  2001, and 2000, the bonus
     payments aggregated $2,176, $2,237, and $2,250, respectively.

Coso  Operating  Company LLC (COC),  an affiliated  Delaware  limited  liability
company,  provides for the operation and  maintenance  of the  geothermal  power
facilities and all administrative services through December 31, 2009 pursuant to
certain operation and maintenance agreements with New CLOC, the managing general
partner.

The partnership  agreement  provides that  distributable  cash flow is allocated
53.6% and 46.4% to ESCA and New CLOC,  respectively.  For purposes of allocating
net income to partner's capital accounts, profits and losses are allocated based
on the aforementioned  cash flow percentages.  For income tax purposes,  certain
deductions  and  credits are  subject to special  allocations  as defined in the
partnership agreements.

(2)  Summary of Significant Accounting Policies

     Accounts Receivable and Revenue Recognition

     Accounts  receivable  primarily  consist  of  receivables  from  Edison for
     electricity  delivered  and sold under the PPC. In addition,  the U.S. Navy
     (Navy) reimburses CFP for electricity paid on their behalf (see note 5). As
     of December 31, 2002 and 2001, the balance due from the Navy was $1,300 and
     $1,218, respectively.

     Operating  revenues  are  recognized  as income  during the period in which
     electricity  is delivered to Edison.  Revenue was  recognized  based on the
     payment rates scheduled in CFP's PPC with Edison through August 1997.  From
     August 1997 through  December 31,  2001,  and  subsequent  to the five-year
     period  stated in the  Agreement,  except  for the period  January 1,  2002
     through April 30, 2002, as discussed in note 1, revenue is recognized based
     on Edison's avoided energy cost until the Partnership's PPC expires.

     Periodic  increases in natural gas prices and imbalances between supply and
     demand, among other factors,  have at times led to significant increases in
     wholesale  electricity prices in California.  During those periods,  Edison
     had fixed tariffs with their retail customers that were significantly below
     the wholesale  prices it paid in  California.  That resulted in significant
     under-recoveries   by  Edison  of  its   electricity   purchase  costs.  On
     January 16,  2001,  Edison  announced  that it was  temporarily  suspending
     payments  for  energy  provided,  including  the  energy  provided  by  the
     Partnership,   pending  a  permanent  solution  to  its  liquidity  crisis.
     Subsequently,  pursuant to a California Public Utilities  Commission (CPUC)
     order,  Edison resumed making  payments to the  Partnership  beginning with
     power generated on March 27,  2001. Edison also made a payment equal to 10%
     of the  unpaid  balance  for  power  generated  from  November 1,  2000  to
     March 26,  2001,  and paid  interest  on the  outstanding  amount at 7% per
     annum.  That payment was made pursuant to the Agreement  between Edison and
     the  Partnership  described in note 1.  The  Agreement,  as amended,  which
     received  CPUC  approval in January of 2002,  established  the fixed energy
     rates  discussed  above and set payment  terms for past due amounts owed to
     the  Partnership by Edison.  Due to the  uncertainty  surrounding  Edison's
     ability to make payment on past due amounts,  collection was not reasonably
     assured  and the  Partnership  did not  recognize  revenue of $37,253  from
     Edison for energy  delivered  during the period  November 1,  2000  through
     March 26,  2001. The provision for doubtful accounts previously recorded as
     of December 31,  2000 of $15,234 was reclassified as a reduction of revenue
     to conform with the 2001  presentation.  On March 1,  2002,  Edison reached
     certain  financing   milestones  and  paid  the  Partnership   $37,253  for
     electricity  generated during the period November 1, 2000 through March 26,
     2001. The Partnership recognized revenue for such electricity deliveries in
     March 2002.

     Fixed Assets and Depreciation

     The  costs  of major  additions  and  betterments  are  capitalized,  while
     replacements,  maintenance,  and repairs which do not improve or extend the
     lives of the respective assets are expensed as incurred.

     Depreciation of the operating power plant and transmission line is computed
     on a straight-line basis over their estimated useful lives of 30 years and,
     for  significant  additions,  the  remainder  of the 30-year  life from the
     plant's commencement of operations.

     Impairment of Long-Lived Assets

     Statement of Financial  Accounting Standards (SFAS) No. 144, Accounting for
     the  Impairment  or  Disposal  of  Long-Lived  Assets,  provides  a  single
     accounting model for long-lived assets to be disposed of. SFAS No. 144 also
     changes  the  criteria  for  classifying  an asset as held  for  sale;  and
     broadens  the  scope of  businesses  to be  disposed  of that  qualify  for
     reporting as discontinued  operations and changes the timing of recognizing
     losses  on  such  operations.  The  Partnership  adopted  SFAS  No.  144 on
     January 1,  2002.  The  adoption  of SFAS No.  144 did not have a  material
     impact on the Partnership's financial statements.

     In  accordance  with SFAS No. 144,  long-lived  assets,  such as  property,
     plant, and equipment,  and purchased  intangibles  subject to amortization,
     are reviewed for  impairment  whenever  events or changes in  circumstances
     indicate  that the  carrying  amount  of an asset  may not be  recoverable.
     Recoverability of assets to be held and used is measured by a comparison of
     the carrying amount of an asset to estimated undiscounted future cash flows
     expected to be generated by the asset.  If the carrying  amount of an asset
     exceeds its estimated future cash flows, an impairment charge is recognized
     by the amount by which the  carrying  amount of the asset  exceeds the fair
     value of the asset. Assets to be disposed of would be separately  presented
     in the balance  sheet and reported at the lower of the  carrying  amount or
     fair value less costs to sell,  and are no longer  depreciated.  The assets
     and  liabilities of a disposed  group  classified as held for sale would be
     presented separately in the appropriate asset and liability sections of the
     balance sheet.

     Prior to the  adoption  of SFAS No.  144,  the  Partnership  accounted  for
     long-lived  assets  in  accordance  with  SFAS  No.  121,   Accounting  for
     Impairment of Long-Lived  Assets and for  Long-Lived  Assets to Be Disposed
     Of.

     Wells and Resource Development Costs

     Wells and resource  development  costs include costs incurred in connection
     with the  exploration  and  development of geothermal  resources.  All such
     costs,  which  include dry hole costs,  the cost of drilling and  equipping
     production   wells,   and   administrative   and  interest  costs  directly
     attributable  to the project,  are  capitalized  and  amortized  over their
     estimated  useful lives when  production  commences.  The estimated  useful
     lives of  production  wells  are ten  years  each;  exploration  costs  and
     development costs, other than production wells, are amortized over 30 years
     and, for significant additions,  the remainder of the 30-year life from the
     plant's commencement of operations.

     Deferred Plant Overhaul Costs and Well Rework Costs

     Plant overhaul  costs are deferred and amortized over the estimated  period
     between overhauls,  as these costs extend the useful life of the respective
     assets.  These  deferred  costs of $215 and $490 at  December 31,  2002 and
     2001,  respectively,  are  included  in  property,  plant,  and  equipment.
     Currently,  plant overhauls are amortized over three to four years from the
     point of completion.

     Production  and  injection  rework costs are expensed as incurred.  For the
     years ended December 31,  2002, 2001, and 2000, such costs were $305, $561,
     and $42, respectively.

     Reclassifications

     Certain  balances in prior years have been  reclassified  to conform to the
     presentation adopted in the current year.

     Deferred Financing Costs

     Deferred  financing costs as of December 31,  2002 and 2001 consist of loan
     fees and other costs of financing  that are amortized  over the term of the
     related financing.  Accumulated amortization at December 31,  2002 and 2001
     was $1,913 and $1,598, respectively.

     Intangible Asset

     Intangible asset as of December 31,  2002 and 2001 consists of the PPC that
     is amortized on a  straight-line  basis over the remaining term of the PPC,
     which will expire in 2011.  Annual  amortization of the PPC is $1,148.  The
     PPC  consists  of a gross  carrying  amount  of  $14,344,  and  accumulated
     amortization  at  December 31,   2002  and  2001  was  $4,399  and  $3,251,
     respectively.

     Income Taxes

     There  is  no  provision   for  income  taxes  since  such  taxes  are  the
     responsibility  of the partners.  The net difference  between the tax bases
     and the reported amounts of property, plant, and equipment, net at December
     31, 2002 and 2001 was $133,736 and $136,746, respectively.

     Cash and Cash Equivalents

     For purposes of the statements of cash flows, the Partnership considers all
     money market instruments  purchased with initial maturities of three months
     or less to be cash equivalents.

     Restricted Cash and Investments

     As of  December 31,  2002 and 2001, all of the  Partnership's  investments,
     totaling  $2,100 in each year,  were  classified  as held to  maturity  and
     reported at  amortized  cost.  Restricted  cash and  investments  include a
     capital  expenditure  reserve  and a sinking  fund  related  to a  lump-sum
     royalty  payment  of  $25,000  to be paid to the Navy in 2009  (see note 5)
     totaling $11,957 and $10,894 at December 31,  2002 and 2001,  respectively.
     This  sinking  fund  account  includes  $2,100 of  various  mortgage-backed
     securities with maturities in 2007. These mortgage-backed securities mature
     as  follows:  $1,620 on  October  24,  2007 and $480 on  November  5, 2007.
     Restricted  cash and  investments  also  includes  a  sinking  fund for the
     project  debt  service  required  by the  project  loan  (see note 6).  The
     carrying amount of restricted cash and investments at December 31, 2002 and
     2001  approximated  fair value,  which is based on quoted  market prices as
     provided by the financial institution which holds the investments.

     Use of Estimates

     The  preparation  of financial  statements  in conformity  with  accounting
     principles  generally  accepted  in the United  States of America  requires
     management  to make  estimates  and  assumptions  that affect the  reported
     amounts of assets,  liabilities,  and partners'  capital and  disclosure of
     contingent assets and liabilities at the date of the financial  statements,
     and the reported amounts of revenues,  expenses,  and allocation of profits
     and losses during the period.  Actual  results  could differ  significantly
     from those estimates.

     Fair Value of Financial Instruments

     The  carrying  amount of cash and cash  equivalents,  accounts  receivable,
     prepaid  expenses  and other  assets,  amounts  due from  related  parties,
     accounts  payable  and  accrued  liabilities,  and  amounts  due to related
     parties  approximated fair value as of December 31,  2002 and 2001, because
     of the relatively short maturities of these  instruments.  The project loan
     as of  December 31,  2002 and 2001 has an estimated  fair value of $110,955
     and $122,550,  respectively, based on the quoted market price of the senior
     secured notes (see note 6).

     The advances to New CLPSI  Company, LLC  (see note 3)  approximate the fair
     value.

     New Accounting Pronouncements

     In June 2001, the Financial  Accounting  Standards Board (FASB) issued SFAS
     No.  143,  Accounting  for Asset  Retirement  Obligations.  This  Statement
     addresses  financial  accounting and reporting for  obligations  associated
     with the retirement of tangible  long-lived assets and the associated asset
     retirement costs and amends SFAS No. 19, Financial Accounting and Reporting
     by Oil and Gas Producing  Companies.  The Statement  requires that the fair
     value of a liability  for an asset  retirement  obligation be recognized in
     the period in which it is incurred if a reasonable estimate of a fair value
     can be made, and that the associated  asset retirement costs be capitalized
     as part of the carrying  amount of the long-lived  asset.  The Statement is
     effective for financial  statements issued for fiscal years beginning after
     June 15,  2002. The effect of this standard on the Partnership's results of
     operations and financial  position is being  evaluated.  While it is likely
     there  will  ultimately  be  material  obligations  related  to the  future
     retirement of assets such as geothermal plants and transmission  lines, the
     Partnership  cannot currently  estimate the financial impact at the date of
     adoption as the Partnership has not yet completed its evaluation.

     The FASB issued FASB Interpretation No. 45 (FIN 45), Guarantor's Accounting
     and Disclosure  Requirements for Guarantees,  Including Indirect Guarantees
     of Indebtedness of Others. This is an interpretation of FASB Statements No.
     5, Accounting for Contingencies, No. 57, Related Party Disclosures, and No.
     107, Disclosures about Fair Values of Financial Instruments, and rescission
     of FASB  Interpretation  No. 34,  Disclosures  of  Indirect  Guarantees  of
     Indebtedness of Others. The Interpretation elaborates on the disclosures to
     be made by a guarantor in its interim and annual financial statements about
     its obligations under certain  guarantees that it has issued. The Statement
     is being  applied  prospectively,  to guarantees  issued or modified  after
     December 31, 2002. At December 31,  2002, the Partnerships' only guarantees
     relate to the project loans (see note 6). This  guarantee is not within the
     scope of FIN 45. Adoption of the  Interpretation is not expected to have an
     impact on the Partnership's results of operations or financial position.

(3)  Advances to New CLPSI Company, LLC

     New CLPSI  Company, LLC  (CLPSI) is a wholly owned  subsidiary of Caithness
     Acquisition  Company,  LLC (CAC). CLPSI purchases,  stores, and distributes
     spare parts to CFP, Coso Energy  Developers (CED) and Coso Power Developers
     (CPD),  collectively  known as the Coso  Partnerships.  Also, certain other
     maintenance  facilities  utilized  by the Coso  Partnerships  are  owned by
     CLPSI.  CFP's advances to CLPSI fund the purchase of spare parts  inventory
     and other  assets.  CLPSI  bills the Coso  Partnerships  for spare parts as
     utilized and for use of other facilities at amounts sufficient for CLPSI to
     recover its operating costs.

(4)  Property, Plant, and Equipment

     Property, plant, and equipment at December 31, 2002 and 2001 consist of the
     following:

                                                         2002          2001
                                                         ----          ----
       Power plant and gathering system           $    155,714       154,506
       Transmission line                                 5,746         5,746
       Wells and resource development costs             72,982        68,832
                                                       -------       -------
                                                       234,442       229,084
       Less accumulated depreciation and
           amortization                                (98,129)      (88,647)
                                                       -------       -------
                                                  $    136,313       140,437
                                                       =======       =======

     The transmission line costs represent the Partnership's  share of the costs
     of  construction  of  transmission  lines from Inyokern,  California to the
     Edison  substation  at  Kramer,  California  and from  Kramer to the Edison
     substation at Victorville, California.

(5)  Royalty Expense

     Royalty expense for the years ended  December 31,  2002,  2001, and 2000 is
     summarized as follows:

                               2002          2001          2000
                               ----          ----          ----
     Unit 1                $   6,281         4,889         3,824
     Units 2 and 3             6,633         5,061         7,097
                              ------         -----        ------
     Total                 $  12,914         9,950        10,921
                              ======         =====        ======

     The  Partnership  pays  a  royalty  for  Unit I  through  reimbursement  of
     electricity  supplied to the Navy by Edison from  electricity  generated at
     the CFP plant.  The  reimbursement  is based on a pricing  formula  that is
     included  in the Navy  contract.  This  formula is  largely  based upon the
     tariff rates charged by Edison,  which have recently been  increased by the
     CPUC. In October 2002 and November 2001, a modification  to the calculation
     of  the  reimbursement  pricing  formula  was  made  to the  Navy  contract
     resulting  in  a  reduction  of  accrued   royalties  of  $1.3 million  and
     $6.5 million,  respectively.  For Units 2 and 3, the Partnership's  royalty
     expense paid to the Navy is a fixed percentage of electricity  sales at 15%
     of revenue  received by the Partnership  through 2003, and will increase to
     20% from 2004 through  2009.  Discussions  with the Navy are  continuing to
     readjust the formula to reflect recent activity in the local energy market.

     In addition,  CFP is required to pay the Navy $25,000 in December 2009, the
     date the  contract  expires.  The  payment is  secured  by funds  placed on
     deposit monthly,  which funds plus accrued interest will aggregate $25,000.
     Currently,  the monthly  amount to be deposited is  approximately  $60. The
     balance   included  in  accounts   payable  and  accrued   liabilities   at
     December 31, 2002 and 2001 was $12,076 and $11,098, respectively.

(6)  Project Loans

     On May 28,  1999,  Caithness Coso Funding Corp.  (Funding  Corp.), a wholly
     owned subsidiary of the Coso Partnerships, raised $413,000 from an offering
     of senior secured notes. Funding Corp. loaned approximately $151,550 to CFP
     from the $413,000 debt raised from the offering of senior  secured notes on
     terms consistent with those of the senior secured notes. The loan consisted
     of one note of $29,000 at 6.80%  which was paid off on  December 15,  2001,
     and another of $122,550 at 9.05% which has  payments  due at various  dates
     through December 15, 2009.

     The annual maturity of the project loan for each year ending December 31 is
     as follows:

                                                     Amount
                                                     ------
                  2003                           $   13,408
                  2004                               10,694
                  2005                               15,100
                  2006                               16,160
                  2007                               17,337
               Thereafter                            38,256
                                                    -------
                                                 $  110,955
                                                    =======



     The loan contains certain  restrictive  covenants that, among other things,
     limit the Partnership's ability to incur additional  indebtedness,  release
     funds from reserve accounts,  make  distributions,  create liens, and enter
     into any transaction of merger or consolidation.

     The  Partnership,  Funding  Corp.,  CPD, and CED are jointly and  severally
     liable for the repayment of the senior secured notes.

     The  annual  maturity  of the  senior  secured  notes for each year  ending
     December 31 is as follows:

                                                     Amount
                                                     ------
                  2003                           $   27,618
                  2004                               31,332
                  2005                               35,480
                  2006                               38,286
                  2007                               47,419
               Thereafter                           101,096
                                                    -------
                                                 $  281,231
                                                    =======



(7)  Related Party Transactions

     The amounts due from and to related parties at  December 31,  2002 and 2001
     consist of the following:

                                                        2002           2001
                                                        ----           ----
     Amounts due from related parties:
       Coso Operating Company, LLC                  $    208            231
       CPD for steam sharing                             563          7,376
       CED for steam sharing                             419          1,755
                                                       -----          -----
                                                    $  1,190          9,362
                                                       =====          =====
     Amounts due to related parties:
       Caithness Coso Funding Corp.                 $    446            494
       Caithness Operating Company, LLC                   21             67
                                                       -----          -----
                                                    $    467            561
                                                       =====          =====

     COC is reimbursed  monthly for  nonthird-party  costs incurred on behalf of
     CFP. These costs are comprised principally of direct operating costs of the
     CFP geothermal facility, allocable general and administrative costs, and an
     operator  fee.  The amount due from COC relates to advances for payments of
     operating  expenses.  The amount due to COC relates to  reimbursements  for
     payment of operating expenses.

     CFP is charged a nonmanaging  fee payable to ESCA or its assignee.  For the
     years ended  December 31,  2002,  2001, and 2000, CFP paid $241,  $237, and
     $234, respectively.

     The amount due to Funding Corp. is accrued interest for 15 days in December
     related to the project loan (see note 6).

     CFP is charged by CLPSI for both its inventory usage and its portion of the
     expenses of operating  CLPSI.  The charges to CFP from CLPSI in 2002, 2001,
     and  2000,   which  are  included  in  plant   operating   expenses,   were
     approximately $96, $147, and $43, respectively.

     During 1994, the Coso  Partnerships  entered into steam sharing  agreements
     under  which  the  partnerships  may  transfer  steam,  with the  resulting
     incremental revenue and royalty expense shared equally by the partnerships.
     In the second half of 1995,  interconnection  facilities between the plants
     were  completed  and the  transfer of steam  commenced.  CFP steam  sharing
     revenue,  net of royalties  and other  related  costs,  amounted to $5,801,
     $7,938, and $5,962 in 2002, 2001, and 2000, respectively.

(8)  Settlement of Litigation

     In February 2000, the Coso  Partnerships  reached a settlement with Edison,
     subject to the  approval of the CPUC.  Approval of the CPUC was received in
     December  2000. On March 1,  2002, the cost of the settlement was paid when
     the case was dismissed based upon completion of certain  obligations  under
     the settlement agreement.

(9)  Commitments and Contingencies

     Settlement  Agreement  Between Edison and the California  Public  Utilities
     Commission

     On  September  23, 2002,  the United  States Court of Appeals for the Ninth
     Circuit  issued an opinion  and order on appeal from the  district  court's
     stipulated  judgment  which  affirmed the  stipulated  judgment in part and
     referred  questions based on California state law to the California Supreme
     Court. The appeals court stated that if the Agreement  violated  California
     state law then the appeals  court would be required to void the  stipulated
     judgment.  The California  Supreme Court has accepted the 9th Circuit Court
     of Appeals  request to address the issues  referred to it in the  September
     23rd ruling.  Pending the findings of the  California  Supreme Court on the
     matters  relating  to state law,  the  Agreement  remains in full force and
     effect.

     Court of Appeals Decision on Line Loss Factor

     Edison  filed a  petition  for a writ of  review of the  January  2001 CPUC
     decision,  claiming that the "floor" line loss factor of 0.95 for renewable
     generators  violated  Public  Utility  Regulatory  Policies  Act  of  1978.
     Subsequently,  the  California  Court  of  Appeals  issued  a  decision  on
     August 20,  2002 in response to the writs  affirming  the January 2001 CPUC
     decision, except for the 0.95  "floor,"  which it  rejected  as an abuse of
     discretion by the CPUC.  The  Partnership  plans to appeal this decision in
     the  California  Court  of  Appeals.  Based on  these  decisions  it may be
     determined that payments between January 2001 and May 2002 that applied the
     0.95  minimum  line  loss  factor  resulted  in  overpayments  to the  Coso
     Partnerships  and  that  the  Coso  Partnerships  may  have to have  future
     payments offset by such amounts deemed overpayments.  While this matter was
     appealed to the  California  Supreme  Court,  the  petition  for review was
     denied. The Coso Partnerships are currently evaluating potential actions to
     redress this issue. The Coso  Partnerships'  Agreements set the loss factor
     at 1.0 for  energy  sold  between  May 2002  through  May 2007.  CFP cannot
     predict  whether  any  subsequent  action  regarding  this  matter  will be
     successful.

     Court of Appeals  Decision on Retroactive  Application of Short Run Avoided
     Cost Rates

     On March 27,  2001, the CPUC  instituted a new formula to measure  Edison's
     short run  avoided  costs  (SRAC),  which is the basis for a portion of the
     payments that Edison makes to the Partnership  under the PPC. In a decision
     dated  September 4,  2002, the  California  Court of Appeals ruled that the
     CPUC erred in not considering the possible  retroactive  application of the
     revised  SRAC formula to  deliveries  beginning on  December 1,  2000.  The
     California  Court of Appeals  remanded  the matter back to the CPUC to make
     such a consideration.



                                      F-11
<PAGE>



                          Independent Auditors' Report


The Partners and Management Committee
Coso Energy Developers:


We have audited the accompanying  balance sheets of Coso Energy Developers as of
December 31, 2002 and 2001, and the related statements of operations,  partners'
capital,  and cash flows for each of the years in the  three-year  period  ended
December 31,  2002.  These financial  statements are the  responsibility  of the
Partnership's  management.  Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audit to obtain  reasonable  assurance  about  whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the financial  position of Coso Energy Developers as of
December 31, 2002 and 2001, and the results of its operations and its cash flows
for each of the years in the  three-year  period  ended  December 31,  2002,  in
conformity with accounting principles generally accepted in the United States of
America.



February 28, 2003


/S/ KPMG, LLP
-------------
    KPMG, LLP






                                      F-12
<PAGE>
                                                       COSO ENERGY DEVELOPERS

                                                           Balance Sheets

                                                     December 31, 2002 and 2001

                                                       (Dollars in thousands)
<TABLE>
<CAPTION>
                   Assets                                                           2002                   2001
                                                                              ---------------        ---------------
<S>                                                                           <C>                    <C>
Cash and cash equivalents                                                 $         1,423                     --
Restricted cash and investments                                                     6,646                  7,368
Accounts receivable, net (note 2)                                                   6,681                  2,939
Prepaid expenses and other assets                                                   1,370                    849
Amounts due from related parties (note 7)                                             421                    401
Property, plant, and equipment (note 5)                                           135,853                148,417
Advances to New CLPSI Company, LLC (note 4)                                           674                    789
Investment in Coso Transmission Line Partners (note 3)                              2,653                  2,738
Power purchase contract, net (note 2)                                              17,365                 18,437
Deferred financing costs, net (note 2)                                              1,785                  2,040
                                                                              ---------------        --------------

              Total assets                                                $       174,871                183,978
                                                                              ===============        ==============

                   Liabilities and Partners' Capital

Accounts payable and accrued liabilities (note 8)                         $         2,076                  7,699
Amounts due to related parties (note 7)                                            26,317                 27,267
Project loan (note 6)                                                              89,875                 96,250
                                                                              ---------------        --------------

              Total liabilities                                                   118,268                131,216

Commitments and contingencies (notes 6 and 9)

Partners' capital                                                                  56,603                 52,762
                                                                              ---------------        --------------

              Total liabilities and partners' capital                     $       174,871                183,978
                                                                              ===============        ==============
</TABLE>

See accompanying notes to financial statements.





                                                               F-13
<PAGE>
<TABLE>
<CAPTION>
                                                      COSO ENERGY DEVELOPERS

                                                    Statements of Operations

                                          Years ended December 31, 2002, 2001, and 2000

                                                     (Dollars in thousands)


                                                                2002               2001                2000
                                                             ----------         ----------          ----------
<S>                                                       <C>                   <C>                   <C>
Revenues:
  Energy revenues (notes 2, 7, and 9)                     $    65,489             31,133              29,052
  Capacity and bonus payments                                  15,763             12,908              13,122
  Interest and other income                                     1,455              3,766               8,125
                                                             -----------        ----------          ----------

              Total revenues                                   82,707             47,807              50,299
                                                             -----------        ----------          ----------

Operating expenses:
  Plant operating expense                                      11,748             10,221              12,008
  Royalty expense                                               2,436              5,203               4,045
  Depreciation and amortization                                14,342             15,972              15,361
                                                             -----------        ----------          ----------

              Total operating expenses                         28,526             31,396              31,414
                                                             -----------        ----------          ----------

              Operating income                                 54,181             16,411              18,885
                                                             -----------        ----------          ----------

Other expenses:
  Interest expense                                              8,567              8,958               9,174
  Amortization of deferred financing costs                        255                440                 318
                                                             -----------        ----------          ----------

              Total other expenses                              8,822              9,398               9,492
                                                             -----------        ----------          ----------

              Net income                                  $    45,359              7,013               9,393
                                                             ===========        ==========          ==========
</TABLE>

See accompanying notes to financial statements.





                                                               F-14
<PAGE>

<TABLE>
<CAPTION>
                                                      COSO ENERGY DEVELOPERS

                                                  Statements of Partners' Capital

                                          Years ended December 31, 2002, 2001, and 2000

                                                     (Dollars in thousands)

                                                                   Caithness
                                                                     Coso                  New
                                                                   Holdings,               CHIP
                                                                      LLC              Company, LLC            Total
                                                                 ------------          ------------         ------------
<S>                                                            <C>                  <C>                   <C>
Balance at December 31, 1999                                   $    48,233                31,117               79,350

Distributions to partners                                          (10,139)               (9,359)             (19,498)

Net income                                                           4,884                 4,509                9,393
                                                                 ------------          ------------         -------------

Balance at December 31, 2000                                        42,978                26,267               69,245

Distributions to partners                                          (12,218)              (11,278)             (23,496)

Net income                                                           3,647                 3,366                7,013
                                                                 ------------          ------------         -------------

Balance at December 31, 2001                                        34,407                18,355               52,762

Distributions to partners                                          (21,589)              (19,929)             (41,518)

Net income                                                          23,587                21,772               45,359
                                                                 ------------          ------------         -------------

Balance at December 31, 2002                                   $    36,405                20,198               56,603
                                                                 ============          ============         =============
</TABLE>

See accompanying notes to financial statements.





                                                               F-15
<PAGE>
<TABLE>
<CAPTION>
                                                      COSO ENERGY DEVELOPERS

                                                     Statements of Cash Flows

                                           Years ended December 31, 2002, 2001, and 2000

                                                      (Dollars in thousands)


                                                                         2002              2001               2000
                                                                     -----------        -----------        -----------
<S>                                                              <C>                  <C>                  <C>
Cash flows from operating activities:
  Net income                                                     $     45,359              7,013               9,393
  Adjustments to reconcile net income to
    net cash provided by operating activities:
       Depreciation and amortization                                   14,342             15,972              15,361
       Amortization of deferred financing costs                           255                440                 318
       Changes in operating assets and liabilities:
         Accounts receivable, prepaid expenses,
           and other assets                                            (4,263)            (2,735)              5,142
         Advances to New CLPSI Company, LLC                               115                262                 177
         Accounts payable and accrued liabilities                      (5,623)               860                 158
         Amounts due from related parties                                 (20)               (36)                396
         Amounts due to related parties                                  (950)             2,946               1,861
                                                                     -----------        -----------        ------------

           Net cash provided by operating activities                   49,215             24,722              32,806
                                                                     -----------        -----------        ------------
Cash flows from investing activities:
  Capital expenditures                                                   (706)            (9,698)             (2,290)
  Investment in Coso Transmission Line Partners                            85                133                 110
  Decrease (increase) in restricted cash                                  722              7,134              (4,696)
                                                                     -----------        -----------        ------------
           Net cash provided by (used in)
             investing activities                                         101             (2,431)             (6,876)
                                                                     -----------        -----------        ------------
Cash flows from financing activities:
  Distributions to partners                                           (41,518)           (23,496)            (19,498)
  Repayment of project financing loans                                 (6,375)            (4,657)             (6,993)
                                                                     -----------        -----------        ------------

           Net cash used in financing activities                      (47,893)           (28,153)            (26,491)
                                                                     -----------        -----------        ------------

           Net change in cash and cash equivalents                      1,423             (5,862)               (561)

Cash and cash equivalents at beginning of year                            --               5,862               6,423
                                                                     -----------        -----------        ------------

Cash and cash equivalents at end of year                         $      1,423                --                5,862
                                                                     ===========        ===========        ============
Supplemental cash flow disclosure:
  Cash paid for interest                                         $      8,595              8,964               9,187
</TABLE>


See accompanying notes to financial statements.





                                                             F-16
<PAGE>

                             COSO ENERGY DEVELOPERS

                          Notes to Financial Statements

                        December 31, 2002, 2001, and 2000

                             (Dollars in thousands)




(1)  Organization, Operation, and Business of the Partnership

     Coso Energy  Developers (CED or the  Partnership)  was founded on March 31,
     1988, in connection with financing the  construction of a geothermal  power
     plant on land leased from the U.S. Bureau of Land Management  (BLM) at Coso
     Hot Springs, China Lake, California.  CED is a general partnership owned by
     Caithness Coso Holdings, LLC (CCH), a California limited liability company,
     and New CHIP Company, LLC (New CHIP), a Delaware limited liability company.
     Both CCH and New CHIP are affiliates of CED.

     The CED  power  plants  are  located  on land  owned by the BLM.  There are
     turbine  generators located at both the East and West power locks. CED pays
     royalties to BLM of 10% of the net value of the steam produced.

     The primary BLM geothermal lease had an initial term of ten years ending in
     1998 and  thereafter is subject to automatic  extension  until  October 31,
     2035, so long as geothermal  steam is commercially  produced.  In addition,
     the  lease may be  extended  to 2075 at the  option  of the BLM.  Coso Land
     Company (CLC), the original  leaseholder,  retained a 5% overriding royalty
     interest based on the value of the steam produced.  CLC was a joint venture
     between Caithness Acquisition Company, LLC (CAC) and an affiliate to CCH.

     The  Partnership  sells all  electricity  produced to  Southern  California
     Edison (Edison) under a 30-year power purchase contract  (the PPC) expiring
     in 2019.  Under  the  terms of the PPC,  Edison  makes  payments  to CED as
     follows:

     *    Contractual payments for energy delivered escalated at an average rate
          of  approximately  7.6% for the first ten years after the date of firm
          operation (scheduled energy price period).  After the scheduled energy
          price period, the energy payment adjusted to the actual avoided energy
          cost experienced by Edison. In March 1999,  the Partnership  completed
          the ten-year  fixed price payment  period and Edison ceased paying the
          scheduled  energy  rates.  The  average  rate  of  energy  paid to the
          Partnership for the years ended December 31,  2002, 2001, and 2000 was
          4.66,  7.46, and 5.80 cents per kilowatt (kWh),  respectively.  Edison
          entered  into an agreement  (the Agreement)  with the  Partnership  on
          June 19,  2001 that  addressed  renewable  energy  pricing  and issues
          concerning  California's  energy  crisis.  The  Agreement,  which  was
          amended on November 30, 2001, established May 1, 2002 as the date when
          the Partnership will begin receiving a fixed energy rate of 5.37 cents
          per kwh for five  (5) years.  From January 1, 2002  through  April 30,
          2002,  CED elected to receive  from Edison a fixed energy rate of 3.25
          cents per kWh.  Starting May 1, 2002, CED received 5.37 cents per kWh,
          pursuant to the Agreement discussed above. Subsequent to the five-year
          period,  Edison  will be  required  to  make  energy  payments  to the
          Partnership based on its avoided cost of energy until its PPC expires.
          Beyond the five-year period, the Partnership cannot predict the likely
          level of avoided cost of energy prices under the PPC and, accordingly,
          the   revenues   generated   by  the   Partnership   could   fluctuate
          significantly;

     *    Capacity  payments  which remain fixed over the life of the PPC to the
          extent that actual  energy  delivered  exceeds  minimum  levels of the
          plant capacity defined in the PPC; and

     *    Bonus payments to the extent that actual energy  delivery  exceeds 85%
          of the plant capacity stated in the PPC. In 2002,  2001, and 2000, the
          bonus payments aggregated $2,126, $2,194, and $2,230, respectively.

     Coso Operating Company LLC (COC), an affiliated  Delaware limited liability
     company, provides for the operation and maintenance of the geothermal power
     facilities  and all  administrative  services  through  December  31,  2009
     pursuant to certain operation and maintenance agreements, with New CHIP the
     managing general partner.

     The partnership agreement provides that distributable cash is allocated 48%
     to New CHIP and 52% to CCH.  For  purposes  of  allocating  net  income  to
     partners' capital  accounts,  profits and losses are allocated based on the
     aforementioned  cash flow  percentages.  For income tax  purposes,  certain
     deductions and credits are subject to special allocations as defined in the
     partnership agreement.

(2)  Summary of Significant Accounting Policies

     Accounts Receivable and Revenue Recognition

     Accounts  receivable  primarily  consist  of  receivables  from  Edison for
     electricity  delivered  and sold  under  the PPC.  Operating  revenues  are
     recognized as income during the period in which electricity is delivered to
     Edison.  Revenue was  recognized  based on the payment  rates  scheduled in
     CED's PPC with Edison through March 1999.  From March 1999 through December
     31, 2001, and  subsequent to the five-year  period stated in the Agreement,
     except for the period January 1,  2002 through April 30, 2002, as discussed
     in note 1,  revenue is recognized  based on Edison's  avoided  energy cost,
     until the Partnership's PPC expires.

     Periodic  increases in natural gas prices and imbalances between supply and
     demand, among other factors,  have at times led to significant increases in
     wholesale  electricity prices in California.  During those periods,  Edison
     had fixed tariffs with their retail customers that were significantly below
     the wholesale  prices it paid in  California.  That resulted in significant
     under-recoveries   by  Edison  of  its   electricity   purchase  costs.  On
     January 16,  2001,  Edison  announced  that it was  temporarily  suspending
     payments  for  energy  provided,  including  the  energy  provided  by  the
     Partnership,   pending  a  permanent  solution  to  its  liquidity  crisis.
     Subsequently,  pursuant to a California Public Utilities  Commission (CPUC)
     order,  Edison resumed making  payments to the  Partnership  beginning with
     power generated on March 27,  2001. Edison also made a payment equal to 10%
     of the  unpaid  balance  for  power  generated  from  November 1,  2000  to
     March 26, 2001 and paid interest on the outstanding amount at 7% per annum.
     That  payment was made  pursuant to the  Agreement  between  Edison and the
     Partnership described in note 1. The Agreement,  as amended, which received
     CPUC approval in January 2002, established the fixed energy rates discussed
     above and set payment terms for past due amounts owed to the Partnership by
     Edison. Due to the uncertainty surrounding Edison's ability to make payment
     on  past  due  amounts,  collection  was  not  reasonably  assured  and the
     Partnership  did not  recognize  revenue of $37,068  from Edison for energy
     delivered during the period  November 1,  2000 through March 26,  2001. The
     provision for doubtful accounts previously recorded as of December 31, 2000
     of $15,279 was  reclassified  as a reduction of revenue to conform with the
     2001  presentation.  On March 1, 2002,  Edison  reached  certain  financing
     milestones  and paid the  Partnership  $37,068  for  electricity  generated
     during the period  November 1, 2000 through March 26, 2001. The Partnership
     recognized revenue for such electricity deliveries in March 2002.

     Fixed Assets and Depreciation

     The  costs  of major  additions  and  betterments  are  capitalized,  while
     replacements,  maintenance and repairs,  which do not improve or extend the
     life of the respective assets, are expensed as incurred.

     Depreciation  of the power  plant and  transmission  line is  computed on a
     straight-line  basis over their estimated useful lives of 30 years and, for
     significant  additions,  the remainder of the 30-year life from the plant's
     commencement of operations.

     Impairment of Long-Lived Assets

     Statement of Financial  Accounting Standards (SFAS) No. 144, Accounting for
     the  Impairment  or  Disposal  of  Long-Lived  Assets,  provides  a  single
     accounting model for long-lived assets to be disposed of. SFAS No. 144 also
     changes  the  criteria  for  classifying  an asset as held  for  sale;  and
     broadens  the  scope of  businesses  to be  disposed  of that  qualify  for
     reporting as discontinued  operations and changes the timing of recognizing
     losses  on  such  operations.  The  Partnership  adopted  SFAS  No.  144 on
     January 1,  2002.  The  adoption  of SFAS No.  144 did not have a  material
     impact on the Partnership's financial statements.

     In  accordance  with SFAS No. 144,  long-lived  assets,  such as  property,
     plant, and equipment,  and purchased  intangibles  subject to amortization,
     are reviewed for  impairment  whenever  events or changes in  circumstances
     indicate  that the  carrying  amount  of an asset  may not be  recoverable.
     Recoverability of assets to be held and used is measured by a comparison of
     the carrying amount of an asset to estimated undiscounted future cash flows
     expected to be generated by the asset.  If the carrying  amount of an asset
     exceeds its estimated future cash flows, an impairment charge is recognized
     by the amount by which the  carrying  amount of the asset  exceeds the fair
     value of the asset. Assets to be disposed of would be separately  presented
     in the balance  sheet and reported at the lower of the  carrying  amount or
     fair value less costs to sell,  and are no longer  depreciated.  The assets
     and  liabilities of a disposed  group  classified as held for sale would be
     presented separately in the appropriate asset and liability sections of the
     balance sheet.

     Prior to the  adoption  of SFAS No.  144,  the  Partnership  accounted  for
     long-lived  assets  in  accordance  with  SFAS  No.  121,   Accounting  for
     Impairment of Long-Lived  Assets and for  Long-Lived  Assets to Be Disposed
     Of.

     Wells and Resource Development Costs

     Wells and resource  development  costs include costs incurred in connection
     with the  exploration  and  development of geothermal  resources.  All such
     costs,  which  include dry hole costs,  the cost of drilling and  equipping
     production   wells,   and   administrative   and  interest  costs  directly
     attributable  to the  project  are  capitalized  and  amortized  over their
     estimated  useful lives when  production  commences.  The estimated  useful
     lives  of  production  wells  are  10 years  each;  exploration  costs  and
     development costs, other than production wells, are amortized over 30 years
     and, for significant additions,  the remainder of the 30-year life from the
     plant's commencement of operations.

     Deferred Plant Overhaul Costs and Well Rework Costs

     Plant overhaul  costs are deferred and amortized over the estimated  period
     between overhauls as these costs extend the life of the respective  assets.
     These  deferred  costs  of $641  and $519 at  December 31,  2002 and  2001,
     respectively,  are included in property,  plant, and equipment.  Currently,
     plant  overhauls  are  amortized  over   three years   from  the  point  of
     completion.

     Production and injection  rework costs are expensed as incurred  during the
     year. For the years ended  December 31,  2002,  2001, and 2000,  such costs
     were $0, $160, and $653, respectively.

     Reclassifications

     Certain  balances in prior years have been  reclassified  to conform to the
     presentation adopted in the current year.

     Deferred Financing Costs

     Deferred  financing costs as of December 31,  2002 and 2001 consist of loan
     fees and other costs of financing  that are amortized  over the term of the
     related financing.  Accumulated amortization at December 31,  2002 and 2001
     was $1,247 and $992, respectively.

     Intangible Asset

     Intangible asset as of December 31,  2002 and 2001 consists of the PPC that
     is amortized on a  straight-line  basis over the remaining term of the PPC,
     which will expire in 2019.  Annual  amortization of the PPC is $1,072.  The
     PPC  consists  of a gross  carrying  amount  of  $21,443,  and  accumulated
     amortization  at  December 31,   2002  and  2001  was  $4,078  and  $3,006,
     respectively.

     Income Taxes

     There  is  no  provision   for  income  taxes  since  such  taxes  are  the
     responsibility  of the partners.  The net difference  between the tax bases
     and the reported amounts of property, plant, and equipment, net at December
     31, 2002 and 2001 was $129,298 and $139,797, respectively.

     Cash and Cash Equivalents

     For  purposes of the  statements  of cash flows,  CED  considers  all money
     market  instruments  purchased with an initial  maturity of three months or
     less to be cash equivalents.

     Restricted Cash and Investments

     As of December 31, 2002 and 2001, all of the Partnership's investments were
     classified as held to maturity and reported at amortized cost.  Included in
     restricted  cash and  investments  are  capital  expenditure  reserves  and
     sinking fund  requirements  for the project  debt  service  required by the
     project loan  (see note 6).  The  carrying  amount of  restricted  cash and
     investments at December 31, 2002 and 2001 approximated fair value, which is
     based on quoted  market  prices as  provided by the  financial  institution
     which holds the investments.

     Use of Estimates

     The  preparation  of financial  statements  in conformity  with  accounting
     principles  generally  accepted  in the United  States of America  requires
     management  to make  estimates  and  assumptions  that affect the  reported
     amounts of assets,  liabilities,  and partners'  capital and  disclosure of
     contingent  assets and liabilities at the date of the financial  statements
     and the  reported  amounts of revenues,  expenses,  and the  allocation  of
     profits  and  losses  during  the  period.   Actual  results  could  differ
     significantly from those estimates.

     Fair Value of Financial Instruments

     The  carrying  amount of cash and cash  equivalents,  accounts  receivable,
     prepaid  expenses  and other  assets,  amounts  due from  related  parties,
     accounts  payable  and  accrued  liabilities,  and  amounts  due to related
     parties  approximated fair value as of December 31,  2002 and 2001, because
     of the relatively short maturity of these instruments.  The project loan as
     of  December 31,  2002 and 2001 has an estimated  fair value of $89,875 and
     $96,250,  respectively,  based on the  quoted  market  price of the  senior
     secured notes (see note 6).

     The investment in Coso Transmission Line Partners (see note 3) and advances
     to New CLPSI Company, LLC (see note 4) approximate the fair value.

     New Accounting Pronouncements

     In June 2001, the Financial  Accounting  Standards Board (FASB) issued SFAS
     No.  143,  Accounting  for Asset  Retirement  Obligations.  This  Statement
     addresses  financial  accounting and reporting for  obligations  associated
     with the retirement of tangible  long-lived assets and the associated asset
     retirement costs and amends SFAS No. 19, Financial Accounting and Reporting
     by Oil and Gas Producing  Companies.  The Statement  requires that the fair
     value of a liability  for an asset  retirement  obligation be recognized in
     the period in which it is incurred if a reasonable estimate of a fair value
     can be made, and that the associated  asset retirement costs be capitalized
     as part of the carrying  amount of the long-lived  asset.  The Statement is
     effective for financial  statements issued for fiscal years beginning after
     June 15, 2002. The effect of this standard on the Partnership's  results of
     operations and financial  position is being  evaluated.  While it is likely
     there  will  ultimately  be  material  obligations  related  to the  future
     retirement of assets such as geothermal plants and transmission  lines, the
     Partnership  cannot currently  estimate the financial impact at the date of
     adoption as the Partnership has not yet completed its evaluation.

     The FASB issued FASB Interpretation No. 45 (FIN 45), Guarantor's Accounting
     and Disclosure  Requirements for Guarantees,  Including Indirect Guarantees
     of Indebtedness of Others.  This is an  interpretation  of FASB SFAS No. 5,
     Accounting for Contingencies,  SFAS No. 57, Related Party Disclosures,  and
     SFAS No. 107,  Disclosures about Fair Value of Financial  Instruments,  and
     rescission  of  FASB   Interpretation   No.  34,  Disclosures  of  Indirect
     Guarantees of Indebtedness of Others. The Interpretation  elaborates on the
     disclosures  to be made by a guarantor in its interim and annual  financial
     statements  about its  obligations  under  certain  guarantees  that it has
     issued.  The  Interpretation  is being applied  prospectively to guarantees
     issued or modified  after  December  31, 2002.  At December  31, 2002,  the
     Partnership's only guarantees relate to the project loan (see note 6). This
     guarantee is not within the scope of FIN 45. Adoption of the Interpretation
     is not  expected  to  have  an  impact  on  the  Partnership's  results  of
     operations or financial position.

(3)  Investment in Coso Transmission Line Partners

     Coso Transmission Line Partners (CTLP) is a partnership owned 46.67% by CED
     and 53.33% by Coso Power Developers (CPD) which owns the transmission  line
     and  facilities  connecting  the power  plants  owned by CED and CPD to the
     transmission  line  owned  by  Edison,  at  Inyokern,  California,  located
     28 miles  south of the plants.  CTLP charges CED and CPD for the use of the
     transmission  line at amounts  sufficient for CTLP to recover its operating
     costs.  These  charges  are  recorded  by CED  as  operating  expenses  and
     reflected as a reduction in CED's investment in CTLP.

(4)  Advances to New CLPSI Company, LLC

     New CLPSI Company,  LLC (CLPSI) is a wholly owned  subsidiary of CAC. CLPSI
     purchases,  stores,  and  distributes  spare  parts to CED,  CPD,  and Coso
     Finance Partners (CFP), collectively known as the Coso Partnerships.  Also,
     certain other maintenance  facilities utilized by the Coso Partnerships are
     owned by CLPSI.  CED's  advances to CLPSI fund the  purchase of spare parts
     inventory and other  assets.  CLPSI bills the Coso  Partnerships  for spare
     parts as utilized and for use of the other facilities at amounts sufficient
     for CLPSI to recover its operating costs.

(5)  Property, Plant, and Equipment

     Property, plant, and equipment at December 31, 2002 and 2001 consist of the
     following:

                                                          2002          2001
                                                        --------      --------
     Power plant and gathering system                 $  147,896       146,631
     Transmission line                                     9,120         9,120
     Wells and resources development costs                90,896        91,452
                                                         -------       -------
                                                         247,912       247,203
     Less accumulated depreciation and amortization     (112,059)      (98,786)
                                                         -------       -------
                                                      $  135,853       148,417
                                                         =======       =======

     The transmission line costs represent the Partnership's  share of the costs
     of  construction  of  transmission  lines from Inyokern,  California to the
     Edison  substation  at  Kramer,  California  and from  Kramer to the Edison
     substation at Victorville, California.

(6)  Project Loans

     On May 28,  1999,  Caithness Coso Funding Corp.  (Funding  Corp.), a wholly
     owned subsidiary of the Coso Partnerships  raised $413,000 from an offering
     of senior secured notes. Funding Corp. loaned approximately $107,900 to CED
     from the $413,000 debt raised from the offering of senior  secured notes on
     terms consistent with those of the senior secured notes. The loan consisted
     of one note of $11,650 at 6.80% which was paid off on December 15, 2001 and
     another of  $96,250  at 9.05%,  which has  payments  due at  various  dates
     through December 15, 2009.

     The annual maturity of the project loan for each year ending December 31 is
     as follows:

                                                      Amount
                                                      ------
                  2003                            $    5,055
                  2004                                 9,920
                  2005                                 8,683
                  2006                                10,388
                  2007                                17,552
               Thereafter                             38,277
                                                      ------
                                                  $   89,875
                                                      ======

     The loan contains certain  restrictive  covenants that, among other things,
     limit the Partnership's ability to incur additional  indebtedness,  release
     funds from reserve accounts,  make  distributions,  create liens, and enter
     into any transaction of merger or consolidation.

     The  Partnership,  Funding  Corp.,  CPD, and CFP are jointly and  severally
     liable for the repayment of the senior secured notes.

     The  annual  maturity  of the  senior  secured  notes for each year  ending
     December 31 is as follows:

                                                      Amount
                                                      ------
                  2003                            $   27,618
                  2004                                31,332
                  2005                                35,480
                  2006                                38,286
                  2007                                47,419
               Thereafter                            101,096
                                                     -------
                                                  $  281,231
                                                     =======



(7)  Related Party Transactions

     The amounts due from and to related parties at  December 31,  2002 and 2001
     consist of the following:
                                                      2002              2001
                                                      ----              ----
     Amounts due from related parties:
       Coso Land Company:
         Principal                                $    141               141
         Accrued interest                              280               260
                                                    ------            ------
                                                  $    421               401
                                                    ======            ======
     Amounts due to related parties:
       CPD for steam sharing                      $     15               283
       CFP for steam sharing                           563             1,755
       Coso Land Company                            24,995            24,214
       Caithness Coso Funding Corp.                    361               392
       Coso Operating Company, LLC                     337               555
       Caithness Operating Company, Inc.                46                68
                                                    ------            ------
                                                  $ 26,317            27,267
                                                    ======            ======

     COC is reimbursed  monthly for  nonthird-party  costs incurred on behalf of
     CED. These costs are comprised principally of direct operating costs of CED
     geothermal  facility,  allocable general and  administrative  costs, and an
     operator fee. The amount due to COC relates to reimbursements  for payments
     of operating expenses.

     CED is charged a nonmanaging  fee payable to CCH or its  assignee.  For the
     years ended  December 31,  2002,  2001, and 2000, CED paid $241,  $237, and
     $234, respectively.

     As indicated in note 1,  CLC is entitled to a royalty of 5% of the value of
     steam used by CED to produce the  electricity  sold to Edison.  The royalty
     due CLC for the years ended  December 31,  2002,  2001,  and 2000 was $781,
     $1,684,  and  $1,195,  respectively.  Payment  of  royalties  due to CLC is
     subordinated to payment of the project loan (see note 6).

     CED is charged  for its use of the  transmission  line  owned by CTLP.  The
     amount of such net charges, which are included in plant operating expenses,
     were $113, $114, and $157 for the years ended December 31,  2002, 2001, and
     2000, respectively.

     CED is charged by CLPSI for both its inventory usage and its portion of the
     expenses of operating  CLPSI. The 2002, 2001, and 2000 costs charged to CED
     from  CLPSI,  which  are  included  in  plant  operating   expenses,   were
     approximately $126, $324, and $359, respectively.

     The amount due to Funding Corp.  represents accrued interest for 15 days in
     December related to the project loan (see note 6).

     On  December 16,  1992,  CED retired  CLC's  promissory  note due CalEnergy
     Company,  Inc., resulting in the loan from CED to CLC of $141. Interest was
     accrued on this loan for the years ended December 31,  2002, 2001, and 2000
     at 5%, 10%, and 10%,  respectively.  Interest on the note was $20, $36, and
     $34 in 2002, 2001, and 2000, respectively.

     During 1994, the Coso  Partnerships  entered into steam sharing  agreements
     under  which  the  partnerships  may  transfer  steam,  with the  resulting
     incremental revenue and royalty expense shared equally by the partnerships.
     In the second half of 1995,  interconnection  facilities between the plants
     were  completed  and the  transfer of steam  commenced.  CED steam  sharing
     resulted in an expense,  net of royalties,  and other related costs for the
     years ended December 31,  2002, 2001, and 2000 of $546, $1,085, and $2,712,
     respectively.

(8)  Settlement of Litigation

     In February 2000,  the Coso Partnerships  reached a settlement with Edison,
     subject to the  approval of the CPUC.  Approval of the CPUC was received in
     December 2000.  On March 1, 2002,  the cost of the settlement was paid when
     the case was dismissed based upon completion of certain  obligations  under
     the settlement agreements.

(9)  Commitments and Contingencies

     Settlement  Agreement  between Edison and the California  Public  Utilities
     Commission

     On  September  23, 2002,  the United  States Court of Appeals for the Ninth
     Circuit  issued an opinion  and order on appeal from the  district  court's
     stipulated  judgment  which  affirmed the  stipulated  judgment in part and
     referred  questions based on California state law to the California Supreme
     Court. The appeals court stated that if the Agreement  violated  California
     state law then the appeals  court would be required to void the  stipulated
     judgment.  The California  Supreme Court has accepted the 9th Circuit Court
     of Appeals  request to address the issues  referred to it in the  September
     23rd  ruling.  Pending the  findings  of the  California  Supreme  Court on
     matters  relating  to state law,  the  Agreement  remains in full force and
     effect.

     Court of Appeals Decision on Line Loss Factor

     Edison  filed a  petition  for a writ of  review of the  January  2001 CPUC
     decision,  claiming that the "floor" line loss factor of 0.95 for renewable
     generators  violated  Public  Utility  Regulatory  Policies  Act  of  1978.
     Subsequently,  the California  Court of Appeals issued a decision on August
     20, 2002 in response to the writs affirming the January 2001 CPUC decision,
     except for the 0.95 "floor," which it rejected as an abuse of discretion by
     the CPUC.  Based on these  decisions  it may be  determined  that  payments
     between  January  2001 and May 2002 that applied the 0.95 minimum line loss
     factor resulted in overpayments to the Coso  Partnerships and that the Coso
     Partnerships  may  have  future  payments  offset  by such  amounts  deemed
     overpayments.  While this  matter was  appealed to the  California  Supreme
     Court,  the  petition  for review was  denied.  The Coso  Partnerships  are
     currently  evaluating  potential  actions to redress  this issue.  The Coso
     Partnerships' Agreements set the loss factor at 1.0 for energy sold between
     May 2002 through May 2007. CED cannot predict whether any subsequent action
     regarding this matter will be successful.

     Court of Appeals  Decision on Retroactive  Application of Short Run Avoided
     Cost Rates

     On March 27,  2001, the CPUC  instituted a new formula to measure  Edison's
     short run  avoided  costs  (SRAC),  which is the basis for a portion of the
     payments that Edison makes to the Partnership  under the PPC. In a decision
     dated  September 4,  2002, the  California  Court of Appeals ruled that the
     CPUC erred in not considering the possible  retroactive  application of the
     revised  SRAC formula to  deliveries  beginning on  December 1,  2000.  The
     California  Court of Appeals remanded the matter to the CPUC to make such a
     consideration.



                                      F-17

<PAGE>





                          Independent Auditors' Report


The Partners and Management Committee
Coso Power Developers:


We have audited the  accompanying  balance sheets of Coso Power Developers as of
December 31, 2002 and 2001, and the related statements of operations,  partners'
capital,  and cash flows for each of the years in the  three-year  period  ended
December 31,  2002.  These financial  statements are the  responsibility  of the
Partnership's  management.  Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audit to obtain  reasonable  assurance  about  whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the financial  position of Coso Power  Developers as of
December 31, 2002 and 2001, and the results of its operations and its cash flows
for each of the  years  in the  three-year  period  ended  December 31,  2002 in
conformity with accounting principles generally accepted in the United States of
America.


February 28, 2003



/s/ KPMG, LLP
-------------
    KPMG, LLP





                                      F-18
<PAGE>
                                                      COSO POWER DEVELOPERS

                                                         Balance Sheets

                                                   December 31, 2002 and 2001

                                                     (Dollars in thousands)
<TABLE>
<CAPTION>
                  Assets                                                                    2002                 2001
                                                                                       --------------       --------------
<S>                                                                                <C>                      <C>
Cash and cash equivalents                                                          $          824                  --
Restricted cash and investments                                                            10,855                5,517
Accounts receivable, net (note 2)                                                           7,234                3,210
Prepaid expenses and other assets                                                           1,111                  660
Amounts due from related parties (note 7)                                                   5,902                6,139
Property, plant, and equipment, net (note 5)                                              116,192              124,665
Advances to New CLPSI Company, LLC (note 4)                                                 1,911                1,913
Investment in Coso Transmission Line Partners (note 3)                                      3,260                3,398
Power purchase contract, net (note 2)                                                      20,026               22,820
Deferred financing costs, net (note 2)                                                      1,519                1,736
                                                                                       --------------       --------------

              Total assets                                                         $      168,834              170,058
                                                                                      ===============       ==============

                  Liabilities and Partners' Capital

Accounts payable and accrued liabilities (note 8)                                  $        2,314               15,860
Amounts due to related parties (note 7)                                                       758                7,778
Project loans (note 6)                                                                     80,401               84,200
                                                                                      ---------------       --------------

              Total liabilities                                                            83,473              107,838

Commitments and contingencies (notes 6 and 9)

Partners' capital                                                                          85,361               62,220
                                                                                      ---------------       --------------

              Total liabilities and partners' capital                              $      168,834              170,058
                                                                                      ===============       ==============
</TABLE>

See accompanying notes to financial statements.





                                                                 F-19
<PAGE>
<TABLE>
<CAPTION>
                                                    COSO POWER DEVELOPERS

                                                  Statements of Operations

                                        Years ended December 31, 2002, 2001, and 2000

                                                    (Dollars in thousands)



<S>                                                           <C>                   <C>                   <C>
                                                                     2002                  2001                  2000
                                                              ------------------    ------------------    ------------------
Revenues:
  Energy revenues (notes 2, 7, and 9)                         $      63,756                23,411                29,859
  Capacity and bonus payments                                        15,836                12,978                13,195
  Interest and other income                                             894                 2,883                 2,868
                                                              ------------------    ------------------    ------------------

              Total revenues                                         80,486                39,272                45,922
                                                              ------------------    ------------------    ------------------
Operating expenses:
  Plant operating expense                                            10,304                 9,679                 9,409
  Royalty expense                                                     6,961                 9,377                10,104
  Depreciation and amortization                                      12,163                15,352                15,070
                                                              ------------------    ------------------    ------------------

              Total operating expenses                               29,428                34,408                34,583
                                                              ------------------    ------------------    ------------------

              Operating income                                       51,058                 4,864                11,339
                                                              ------------------    ------------------    ------------------
Other expenses:
  Interest expense                                                    7,538                 8,128                 9,130
  Amortization of deferred financing costs                              217                 1,119                   769
                                                              ------------------    ------------------    ------------------

              Total other expenses                                    7,755                 9,247                 9,899
                                                              ------------------    ------------------    ------------------

              Net income (loss)                               $      43,303                (4,383)                1,440
                                                              ==================    ==================    ==================
</TABLE>

See accompanying notes to financial statements.






                                                                F-20
<PAGE>
<TABLE>
<CAPTION>

                                                    COSO POWER DEVELOPERS

                                               Statements of Partners' Capital

                                         Years ended December 31, 2002, 2001, and 2000

                                                   (Dollars in thousands)


                                                             Caithness
                                                              Navy II                    New
                                                               Group,                    CTC
                                                                LLC                 Company, LLC             Total
                                                         -------------------      ------------------   -------------------
<S>                                                      <C>                      <C>                  <C>
Balance at December 31, 1999                             $      53,395.5                50,935.5             104,331.0

Distributions to partners                                       (9,174.0)               (9,174.0)            (18,348.0)

Net income                                                         720.0                   720.0               1,440.0
                                                         -------------------      ------------------   -------------------

Balance at December 31, 2000                                    44,941.5                42,481.5              87,423.0

Distributions to partners                                      (10,410.0)              (10,410.0)            (20,820.0)

Net loss                                                        (2,191.5)               (2,191.5)             (4,383.0)
                                                         -------------------      ------------------   -------------------

Balance at December 31, 2001                                    32,340.0                29,880.0              62,220.0

Distributions to partners                                      (10,081.0)              (10,081.0)            (20,162.0)

Net income                                                      21,651.5                21,651.5              43,303.0
                                                         -------------------      ------------------   -------------------

Balance at December 31, 2002                             $      43,910.5                41,450.5              85,361.0
                                                         ===================      ==================   ===================
</TABLE>

See accompanying notes to financial statements.





                                                             F-21
<PAGE>
<TABLE>
<CAPTION>
                                                    COSO POWER DEVELOPERS

                                                  Statements of Cash Flows

                                         Years ended December 31, 2002, 2001, and 2000

                                                   (Dollars in thousands)


                                                                             2002              2001               2000
                                                                       ----------------  ----------------   ----------------
<S>                                                                    <C>               <C>                <C>
Cash flows from operating activities:
  Net income (loss)                                                    $     43,303            (4,383)             1,440
  Adjustments to reconcile net income (loss) to
    net cash provided by operating activities:
       Depreciation and amortization                                         12,163            15,352             15,070
       Amortization of deferred financing costs                                 217             1,119                769
       Changes in operating assets and liabilities:
         Accounts receivable, prepaid expenses, and other assets             (4,475)           (2,992)            19,662
         Advances to New CLPSI Company, LLC                                       2                50                135
         Accounts payable and accrued liabilities                           (13,546)            3,582                115
         Amounts due from related parties                                       237              (186)             1,105
         Amounts due to related parties                                      (7,020)            5,962             (1,409)
                                                                       ----------------  ----------------   ----------------

           Net cash provided by operating activities                         30,881            18,504             36,887
                                                                       ----------------  ----------------   ----------------
Cash flows from investing activities:
  Capital expenditures                                                         (896)             (276)            (1,700)
  Investment in Coso Transmission Line Partners                                 138               130                132
  (Increase) decrease in restricted cash                                     (5,338)            4,697             44,124
                                                                       ----------------  ----------------   ----------------

           Net cash (used in) provided by investing activities               (6,096)            4,551             42,556
                                                                       ----------------  ----------------   ----------------
Cash flows from financing activities:
  Distributions to partners                                                 (20,162)          (20,820)           (18,348)
  Repayment of project financing loan                                        (3,799)           (9,976)           (59,374)
                                                                       ----------------  ----------------   ----------------

           Net cash used in financing activities                            (23,961)          (30,796)           (77,722)
                                                                       ----------------  ----------------   ----------------

           Net change in cash and cash equivalents                              824            (7,741)             1,721

Cash and cash equivalents at beginning of year                                   --             7,741              6,020
                                                                       ----------------  ----------------   ----------------

Cash and cash equivalents at end of year                               $        824                --              7,741
                                                                       ================  ================   ================
Supplemental cash flow disclosure:
  Cash paid for interest                                               $      7,551             8,154              9,183
</TABLE>


See accompanying notes to financial statements.





                                                               F-22
<PAGE>

                              COSO POWER DEVELOPERS

                          Notes to Financial Statements

                        December 31, 2002, 2001, and 2000

                             (Dollars in thousands)



(1)  Organization, Operation, and Business of the Partnership

     Coso Power Developers (CPD or the Partnership) was formed on July 31,  1989
     in connection with financing the  construction of a geothermal  power plant
     on land at the China Lake Naval Air  Weapons  Station at Coso Hot  Springs,
     China Lake,  California.  CPD is a general  partnership  between  Caithness
     Navy II Group LLC (Navy II),  and New CTC Company,  LLC (New CTC),  both of
     which are affiliated Delaware limited liability companies.

     The power plant is located on land owned by the U.S. Navy.  Under the terms
     of a 30-year  contract with the U.S. Navy to develop  geothermal  energy on
     its land,  CPD pays a royalty to the U.S.  Navy which was  initially  4% of
     revenues,  increased  to 10%  of  revenues  at  December 31,  1998,  and is
     currently  18% of revenues  (as of  December 24,  1999).  The royalty  will
     increase to 20% of revenues after December 15, 2004. The U.S. Navy contract
     will expire in 2010.

     The  Partnership  sells all  electricity  produced to  Southern  California
     Edison (Edison) under a 20-year power purchase contract  (the PPC) expiring
     in 2010.  Under  the  terms of the PPC,  Edison  makes  payments  to CPD as
     follows:

*    Contractual  payments for energy delivered  escalated at an average rate of
     approximately 7.6% for the first ten years after the date of firm operation
     (scheduled energy price period). The scheduled energy price period extended
     until January 2000.  After the  scheduled  energy price period,  the energy
     payment  adjusted to the actual avoided energy cost  experienced by Edison.
     The average energy paid to the Partnership for the years ended December 31,
     2002,  2001, and 2000, was 4.66,  7.46, and 5.80 cents per kilowatt  (kWh),
     respectively.  Edison  entered into an agreement  (the Agreement)  with the
     Partnership on June 19,  2001 that addressed  renewable  energy pricing and
     issues  concerning  California's  energy crisis.  The Agreement,  which was
     amended on  November 30,  2001,  established  May 1,  2002 as the date from
     which the  Partnership  receives a fixed energy rate of 5.37 cents  per kWh
     for five (5)  years.  From  January 1,  2002 through  April 30,  2002,  CPD
     elected to receive  from Edison a fixed  energy rate of 3.25 cents per kWh.
     Starting  May 1  2002,  CPD  received  5.37 cents per kWh,  pursuant to the
     Agreement discussed above.  Subsequent to the five-year period, Edison will
     be required to make energy payments to the Partnership based on its avoided
     cost of energy  until its PPC expires.  Beyond the  five-year  period,  the
     Partnership  cannot  predict  the likely  level of  avoided  cost of energy
     prices  under  the PPC and,  accordingly,  the  revenues  generated  by the
     Partnership could fluctuate significantly;

*    Capacity payments which remain fixed over the life of the PPC to the extent
     that actual energy  delivered  exceeds minimum levels of the plant capacity
     defined in the PPC; and

*    Bonus  payments to the extent that actual energy  delivered  exceeds 85% of
     the plant  capacity  stated in the PPC. In 2002,  2001, and 2000, the bonus
     payments aggregated $2,138, $2,248, and $2,248, respectively.

     Coso Operating Company LLC (COC), an affiliated  Delaware limited liability
     company  provides for the operation and maintenance of the geothermal power
     facilities  and  all  administrative  services  through  December 31,  2009
     pursuant to certain operation and maintenance  agreements with New CTC, the
     managing general partner.

     The partnership  agreement  provides that cash flows are allocated 50% each
     to New CTC and Navy II.  For purposes of allocating net income to partners'
     capital  accounts  and for  income  tax  purposes,  profits  and losses are
     allocated based on the aforementioned cash flow percentages.

(2)  Summary of Significant Accounting Policies

     Accounts Receivable and Revenue Recognition

     Accounts  receivable  primarily  consists  of  receivables  from Edison for
     electricity  delivered  and sold  under  the PPC.  Operating  revenues  are
     recognized as income during the period in which electricity is delivered to
     Edison.  Revenue was  recognized  based on the payment  rates  scheduled in
     CPD's PPC with  Edison,  through  January  2000.  From January 2000 through
     December 31,  2001,  and  subsequent to the five-year  period stated in the
     Agreement except for the period January 1,  2002 through April 30, 2002, as
     discussed in note 1, revenue is recognized based on Edison's avoided energy
     cost, until the Partnership's PPC expires.

     Periodic  increases in natural gas prices and imbalances between supply and
     demand, among other factors,  have at times led to significant increases in
     wholesale  electricity prices in California.  During those periods,  Edison
     had fixed tariffs with its retail customers that were  significantly  below
     the wholesale  prices it paid in  California.  That resulted in significant
     under-recoveries   by  Edison  of  its   electricity   purchase  costs.  On
     January 16,  2001,  Edison  announced  that it was  temporarily  suspending
     payments  for  energy  provided,  including  the  energy  provided  by  the
     Partnership,   pending  a  permanent  solution  to  its  liquidity  crisis.
     Subsequently,  pursuant to a California Public Utilities  Commission (CPUC)
     order,  Edison resumed making  payments to the  Partnership  beginning with
     power generated on March 27,  2001. Edison also made a payment equal to 10%
     of the  unpaid  balance  for  power  generated  from  November 1,  2000  to
     March 26, 2001 and paid interest on the outstanding amount at 7% per annum.
     That  payment was made  pursuant to the  Agreement  between  Edison and the
     Partnership described in note 1. The Agreement,  as amended, which received
     CPUC approval in January 2002, established the fixed energy rates discussed
     above and set payment terms for past due amounts owed to the Partnership by
     Edison. Due to the uncertainty surrounding Edison's ability to make payment
     on  past  due  amounts,  collection  was  not  reasonably  assured  and the
     Partnership  did not  recognize  revenue of $38,045  from Edison for energy
     delivered during the period  November 1,  2000 through March 26,  2001. The
     provision for doubtful accounts previously recorded as of December 31, 2000
     of $15,312 was  reclassified  as a reduction of revenue to conform with the
     2001  presentation.  On March 1,  2002,  Edison reached  certain  financing
     milestones  and paid the  Partnership  $38,045  for  electricity  generated
     during the period November 1, 2000 through March 26,  2001. The Partnership
     recognized revenues for such electricity deliveries in March 2002.

     Fixed Assets and Depreciation

     The  costs  of major  additions  and  betterments  are  capitalized,  while
     replacements,  maintenance,  and repairs which do not improve or extend the
     life of the respective assets are expensed as incurred.

     Depreciation  of the power  plant and  transmission  line is  computed on a
     straight-line  basis over their estimated  useful life of 30 years and, for
     significant  additions,  the remainder of the 30-year life from the plant's
     commencement of operations.

     Impairment of Long-Lived Assets

     Statement of Financial  Accounting Standards (SFAS) No. 144, Accounting for
     the  Impairment  or  Disposal  of  Long-Lived  Assets,  provides  a  single
     accounting model for long-lived assets to be disposed of. SFAS No. 144 also
     changes  the  criteria  for  classifying  an asset as held  for  sale;  and
     broadens  the  scope of  businesses  to be  disposed  of that  qualify  for
     reporting as discontinued  operations and changes the timing of recognizing
     losses  on  such  operations.  The  Partnership  adopted  SFAS  No.  144 on
     January 1,  2002.  The  adoption  of SFAS No.  144 did not have a  material
     impact on the Partnership's financial statements.

     In  accordance  with SFAS No. 144,  long-lived  assets,  such as  property,
     plant, and equipment,  and purchased  intangibles  subject to amortization,
     are reviewed for  impairment  whenever  events or changes in  circumstances
     indicate  that the  carrying  amount  of an asset  may not be  recoverable.
     Recoverability of assets to be held and used is measured by a comparison of
     the carrying amount of an asset to estimated undiscounted future cash flows
     expected to be generated by the asset.  If the carrying  amount of an asset
     exceeds its estimated future cash flows, an impairment charge is recognized
     by the amount by which the  carrying  amount of the asset  exceeds the fair
     value of the asset. Assets to be disposed of would be separately  presented
     in the balance  sheet and reported at the lower of the  carrying  amount or
     fair value less costs to sell,  and are no longer  depreciated.  The assets
     and  liabilities of a disposed  group  classified as held for sale would be
     presented separately in the appropriate asset and liability sections of the
     balance sheet.

     Prior to the  adoption  of SFAS No.  144,  the  Partnership  accounted  for
     long-lived  assets  in  accordance  with  SFAS  No.  121,   Accounting  for
     Impairment of Long-Lived  Assets and for  Long-Lived  Assets to Be Disposed
     Of.

     Wells and Resource Development Costs

     Wells and resource  development  costs include costs incurred in connection
     with the  exploration  and  development of geothermal  resources.  All such
     costs,  which  include dry hole costs,  the costs of drilling and equipping
     production   wells,   and   administrative   and  interest  costs  directly
     attributable  to the project,  are  capitalized  and  amortized  over their
     estimated  useful lives when  production  commences.  The estimated  useful
     lives of  production  wells  are ten  years  each;  exploration  costs  and
     development costs, other than production wells, are amortized over 30 years
     and, for significant additions,  the remainder of the 30-year life from the
     plant's commencement of operations.

     Deferred Plant Overhaul Costs and Well Rework Costs

     Plant overhaul  costs are deferred and amortized over the estimated  period
     between overhauls, as these costs extend the useful lives of the respective
     assets.  These  deferred  costs of $102 and $281 at  December 31,  2002 and
     2001,  respectively,  are  included  in  property,  plant,  and  equipment.
     Currently, plant overhauls are amortized over three years from the point of
     completion.

     Production  and  injection  rework costs are expensed as incurred.  For the
     years ended December 31,  2002, 2001, and 2000, such costs were $328, $533,
     and $32, respectively.

     Reclassifications

     Certain  balances in prior years have been  reclassified  to conform to the
     presentation adopted in the current year.

     Deferred Financing Costs

     Deferred  financing costs as of December 31,  2002 and 2001 consist of loan
     fees and other costs of financing  that are amortized  over the term of the
     related financing.  Accumulated amortization at December 31,  2002 and 2001
     was $2,656 and $2,439, respectively.

     Intangible Assets

     Intangible assets as of December 31, 2002 and 2001 consist of the PPC which
     is amortized on a  straight-line  basis over the remaining term of the PPC,
     which will expire in 2010.  Annual  amortization of the PPC is $2,794.  The
     PPC  consists  of a gross  carrying  amount  of  $30,738,  and  accumulated
     amortization  at  December 31,  2002  and  2001  was  $10,712  and  $7,918,
     respectively.

     Income Taxes

     There  is  no  provision   for  income  taxes  since  such  taxes  are  the
     responsibility  of the partners.  The net difference  between the tax bases
     and the reported amounts of property, plant, and equipment, net at December
     31, 2002 and 2001 was $112,584 and $119,671, respectively.

     Cash and Cash Equivalents

     For  purposes of the  statements  of cash flows,  CPD  considers  all money
     market  instruments  purchased  with initial  maturities of three months or
     less to be cash equivalents.

     Restricted Cash and Investments

     As of December 31, 2002 and 2001, all of the Partnership's investments were
     classified as held to maturity and reported at amortized cost.  Included in
     restricted  cash and  investments  are  capital  expenditure  reserves  and
     sinking fund  requirements  for the project  debt  service  required by the
     project loans (see  note 6).  The carrying  amount of  restricted  cash and
     investments at December 31, 2002 and 2001 approximated fair value, which is
     based on quoted  market  prices as  provided by the  financial  institution
     which holds the investments.

     Use of Estimates

     The  preparation  of financial  statements  in conformity  with  accounting
     principles  generally  accepted  in the United  States of America  requires
     management  to make  estimates  and  assumptions  that affect the  reported
     amounts  of assets,  liabilities,  partners'  capital,  and  disclosure  of
     contingent  assets and liabilities at the date of the financial  statements
     and the  reported  amounts of revenues,  expenses,  and the  allocation  of
     profits and losses  during the  reportable  period.  Actual  results  could
     differ significantly from those estimates.

     Fair Value of Financial Instruments

     The  carrying  amount of cash and cash  equivalents,  accounts  receivable,
     prepaid  expenses  and other  assets,  amounts  due from  related  parties,
     accounts  payable  and  accrued  liabilities,  and  amounts  due to related
     parties  approximated fair value as of December 31,  2002 and 2001, because
     of the relatively short maturity of these instruments. The project loans as
     of  December 31,  2002 and 2001 have an estimated fair value of $80,401 and
     $84,200,  respectively,  based on the  quoted  market  price of the  senior
     secured notes (see note 6).

     The  investments  in Coso  Transmission  Line  Partners  (see  note 3)  and
     advances to New CLPSI Company, LLC (see note 4) approximate fair value.

     New Accounting Pronouncements

     In June 2001, the Financial  Accounting  Standards Board (FASB) issued SFAS
     No. 143,  Accounting  for  Asset  Retirement  Obligations.  This  Statement
     addresses  financial  accounting and reporting for  obligations  associated
     with the retirement of tangible  long-lived assets and the associated asset
     retirement costs and amends FASB No. 19, Financial Accounting and Reporting
     by Oil and Gas Producing  Companies.  The Statement  requires that the fair
     value of a liability  for an asset  retirement  obligation be recognized in
     the period in which it is incurred if a reasonable estimate of a fair value
     can be made, and that the associated  asset retirement costs be capitalized
     as part of the carrying  amount of the long-lived  asset.  The Statement is
     effective for financial  statements issued for fiscal years beginning after
     June 15,  2002. The effect of this standard on the Partnerships' results of
     operations and financial  position is being  evaluated.  While it is likely
     there  will  ultimately  be  material  obligations  related  to the  future
     retirement of assets such as geothermal plants and transmission  lines, the
     Partnership  cannot currently  estimate the financial impact at the date of
     adoption as the Partnership has not yet completed its evaluation.

     The FASB issued FASB Interpretation No. 45 (FIN 45), Guarantor's Accounting
     and Disclosure  Requirements for Guarantees,  Including Indirect Guarantees
     of Indebtedness of Others. This is an interpretation of FASB Statements No.
     5, Accounting for Contingencies, No. 57, Related Party Disclosures, and No.
     107,  Disclosures about Fair Value of Financial  Instruments and rescission
     of FASB  Interpretation  No. 34,  Disclosures  of  Indirect  Guarantees  of
     Indebtedness of Others. The Interpretation elaborates on the disclosures to
     be made by a guarantor in its interim and annual financial statements about
     its obligations under certain  guarantees that it has issued. The Statement
     is being  applied  prospectively,  to guarantees  issued or modified  after
     December 31, 2002. At December 31, 2002, the Partnerships'  only guarantees
     relate to the project loans (see note 6). This  guarantee is not within the
     scope of FIN 45. Adoption of the  Interpretation is not expected to have an
     impact on the Partnerships' results of operations or financial position.

(3)  Investment in Coso Transmission Line Partners

     Coso Transmission Line Partners (CTLP) is a partnership owned 53.33% by CPD
     and 46.67% by Coso Energy Developers (CED) which owns the transmission line
     and  facilities  connecting  the power  plants  owned by CPD and CED to the
     transmission  line owned by Edison,  at  Inyokern,  California,  located 28
     miles  south of the  plants.  CTLP  charges  CPD and CED for the use of the
     transmission  line at amounts  sufficient for CTLP to recover its operating
     costs.  These  charges  are  recorded  by CPD  as  operating  expenses  and
     reflected as a reduction in CPD's investment in CTLP.

(4)  Advances to New CLPSI Company, LLC

     New CLPSI  Company,  LLC (CLPSI) is a wholly owned  subsidiary of Caithness
     Acquisition  Company,  LLC (CAC). CLPSI purchases,  stores, and distributes
     spare parts to CPD,  CED, and Coso  Finance  Partners  (CFP),  collectively
     known as the Coso Partnerships.  Also, certain other maintenance facilities
     utilized by the Coso  Partnerships  are owned by CLPSI.  CPD's  advances to
     CLPSI fund the purchase of spare parts  inventory and other  assets.  CLPSI
     bills the Coso  Partnerships for spare parts as utilized and for use of the
     other  facilities at amounts  sufficient for CLPSI to recover its operating
     costs.

(5)  Property, Plant, and Equipment

     Property, plant, and equipment at December 31, 2002 and 2001 consist of the
     following:

                                                        2002          2001
                                                       -------       -------
     Power, plant, and gathering system             $  143,542       142,712
     Transmission line                                   7,245         7,245
     Wells and resources development costs              59,761        59,695
                                                       -------       -------
                                                       210,548       209,652
     Less accumulated depreciation
     and amortization                                  (94,356)      (84,987)
                                                       -------       -------
                                                    $  116,192       124,665
                                                       =======       =======

     The transmission line costs represent the Partnership's  share of the costs
     of  construction  of  transmission  lines from Inyokern,  California to the
     Edison  substation  at Kramer,  California,  and from  Kramer to the Edison
     substation at Victorville, California.

(6)  Project Loans

     On May 28,  1999,  Caithness  Coso  Funding  Corp.  (Funding Corp.)  raised
     $413,000 from an offering of senior  secured  notes.  Funding Corp.  loaned
     approximately  $153,550  to CPD  from the  $413,000  debt  raised  from the
     offering  of senior  secured  notes on terms  consistent  with those of the
     senior  secured  notes.  The loan consisted of one note of $69,350 at 6.80%
     which was paid off on  December 15,  2001 and  another  note of  $84,200 at
     9.05% which has payments due at various dates through December 15, 2009.

     The annual  maturity of the project loans for each year ending  December 31
     is as follows:



             Year ending December 31:                    Amount
             ------------------------                    ------
                  2003                              $     9,155
                  2004                                   10,718
                  2005                                   11,697
                  2006                                   11,738
                  2007                                   12,530
               Thereafter                                24,563
                                                         ------
                                                    $    80,401
                                                         ======



     The loans contain certain  restrictive  covenants that, among other things,
     limit the Partnership's ability to incur additional  indebtedness,  release
     funds from reserve  amounts,  make  distributions,  create loans, and enter
     into any transaction of merger or consolidation.

     The  Partnership,  Funding  Corp.,  CED, and CFP are jointly and  severally
     liable for the repayment of the senior secured notes.

     The  annual  maturity  of the  senior  secured  notes for each year  ending
     December 31 is as follows:



             Year ending December 31:                    Amount
             ------------------------                    ------
                  2003                              $    27,618
                  2004                                   31,332
                  2005                                   35,480
                  2006                                   38,286
                  2007                                   47,419
               Thereafter                               101,096
                                                        -------
                                                    $   281,231
                                                        =======


(7)  Related Party Transactions

     The amounts due from and to related parties at  December 31,  2002 and 2001
     consist of the following:

                                                     2002             2001
                                                   --------         --------
     Amounts due from related parties:
       CED for steam sharing                     $      15               283
       Coso Operating Company, LLC                   1,211             1,409
       China Lake Joint Venture:
         Principal                                   1,562             1,562
         Accrued interest                            3,114             2,885
                                                     -----             -----
                                                 $   5,902             6,139
                                                     =====             =====
     Amounts due to related parties:
       CFP for steam sharing                     $     419             7,376
       Caithness Coso Funding Corp.                    323               339
       Caithness Operating Company, LLC                 16                63
                                                     -----             -----
                                                 $     758             7,778
                                                     =====             =====

     COC is reimbursed  monthly for  nonthird-party  costs incurred on behalf of
     CPD. These costs are comprised principally of direct operating costs of the
     CPD geothermal facility, allocable general and administrative costs, and an
     operator  fee.  The amount due from COC relates to advances for payments of
     operating expenses.

     CPD is charged a nonmanaging  fee payable to Navy II or its  assignee.  For
     the years ended December 31, 2002, 2001, and 2000, CPD paid $241, $237, and
     $234, respectively.

     CPD is charged for its use of the transmission  line owned by CTLP. For the
     years  ended  December 31,  2002,  2001,  and 2000,  the amount of such net
     charges was $155, $129, and $179, respectively.

     CPD is charged by CLPSI for both its inventory usage and its portion of the
     expenses of operating  CLPSI.  The charges to CPD from CLPSI in 2002, 2001,
     and  2000,   which  are  included  in  plant   operating   expenses,   were
     approximately $82, $148, and $318, respectively.

     On  December 16,  1992,  CPD  retired  China  Lake Joint  Venture's  (CLJV)
     promissory  note due  CalEnergy,  resulting in the loan from CPD to CLJV of
     $1,562 at December 31,  1992. CLJV is an affiliated  venture.  Interest has
     been accrued on this loan for the years ended December 31,  2002, 2001, and
     2000 at 5%, 10.0%, and 10.0%, respectively.  Interest on the loan was $229,
     $405,  and $371 in 2002,  2001, and 2000,  respectively.

     The amount due to Funding Corp.  represents accrued interest for 15 days in
     December, related to the project loans (see note 6).

     During 1994, the Coso  Partnerships  entered into steam sharing  agreements
     under  which  the  partnerships  may  transfer  steam,  with the  resulting
     incremental revenue and royalty expense shared equally by the partnerships.
     In the second half of 1995,  interconnection  facilities between the plants
     were  completed  and the  transfer of steam  commenced.  CPD steam  sharing
     resulted  in an expense,  net of  royalties  and other  related  costs,  of
     $5,255, $9,634, and $5,751 for the years ended December 31, 2002, 2001, and
     2000, respectively.

(8)  Settlement of Litigation

     In February 2000, the Coso  Partnerships  reached a settlement with Edison,
     subject to the  approval of the CPUC.  Approval of the CPUC was received in
     December  2000. On March 1,  2002, the cost of the settlement was paid when
     the case was dismissed based upon completion of certain  obligations  under
     the settlement Agreements.

(9)  Commitments and Contingencies

     Settlement  Agreement  between Edison and the California  Public  Utilities
     Commission

     On  September 23,  2002,  the United  States Court of Appeals for the Ninth
     Circuit  issued an opinion  and order on appeal from the  district  court's
     stipulated  judgment  which  affirmed the  stipulated  judgment in part and
     referred  questions based on California state law to the California Supreme
     Court. The appeals court stated that if the Agreement  violated  California
     state law then the appeals  court would be required to void the  stipulated
     judgment.  The California  Supreme Court has accepted the 9th Circuit Court
     of Appeals  request to address the issues  referred to it in the  September
     23rd ruling.  Pending the findings of the  California  Supreme Court on the
     matters  relating  to state law,  the  Agreement  remains in full force and
     effect.

     Court of Appeals Decision on Line Loss Factor

     Edison  filed a  petition  for a writ of  review of the  January  2001 CPUC
     decision,  claiming that the "floor" line loss factor of 0.95 for renewable
     generators   violated  Public  Utility  Regulator  Policies  Act  of  1978.
     Subsequently,   the  California  Court  of  Appeal  issued  a  decision  on
     August 20,  2002 in response to the writs  affirming  the January 2001 CPUC
     decision, except for the 0.95  "floor,"  which it  rejected  as an abuse of
     discretion by the CPUC.  The  Partnership  plans to appeal this decision in
     the  California  Court  of  Appeals.  Based on  these  decisions  it may be
     determined that payments between January 2001 and May 2002 that applied the
     0.95  minimum  line  loss  factor  resulted  in  overpayments  to the  Coso
     Partnerships  and  that  the  Coso  Partnerships  may  have to have  future
     payments offset by such amounts deemed overpayments.  While this matter was
     appealed to the  California  Supreme  Court,  the  petition  for review was
     denied. The Coso Partnerships are currently evaluating potential actions to
     redress this issue. The Coso  Partnerships'  Agreements set the loss factor
     at 1.0 for  energy  sold  between  May 2002  through  May 2007.  CPD cannot
     predict  whether  any  subsequent  action  regarding  this  matter  will be
     successful.

     Court of Appeals  Decision on Retroactive  Application of Short Run Avoided
     Cost Rates

     On March 27,  2001, the CPUC  instituted a new formula to measure  Edison's
     short run  avoided  costs  (SRAC),  which is the basis for a portion of the
     payments that Edison makes to the Partnership  under the PPC. In a decision
     dated  September 4,  2002, the  California  Court of Appeals ruled that the
     CPUC erred in not considering the possible  retroactive  application of the
     revised  SRAC formula to  deliveries  beginning on  December 1,  2000.  The
     California  Court of Appeals  remanded  the matter back to the CPUC to make
     such a consideration.




                                      F-23
<PAGE>



<TABLE>
<CAPTION>
Quarterly Data (Unaudited)

                                           March 31(a)(b)      June 30(a)(c)     September 30(a)     December 31(a)
                                           --------------      -------------     ---------------     --------------
<S>                                        <C>                 <C>               <C>                 <C>
Caithness Coso Funding Corp:

        2002
        Total revenues                     $    6,854             6,856             6,659               6,562
        Operating income                          --                --                --                  --
          Net income                       $      --                --                --                  --

        2001
        Total revenues                     $    8,601             5,997             7,105               7,117
        Operating income                          --                --                --                  --
          Net income                       $      --                --                --                  --

        2000
        Total revenues                     $    9,221             7,708             7,671               6,199
        Operating income                          --                --                --                  --
          Net income                       $      --                --                --                  --


Coso Finance Partners:

        2002
        Total revenues                     $   45,972            15,373            19,897              12,397
        Operating income (loss)                38,917             7,152             8,275               5,919
          Net income (loss)                $   36,063             4,300             5,528               3,221

        2001
        Total revenues                     $    6,188            24,835            16,833               8,472
        Operating income                       (1,843)           16,498             5,126               7,365
          Net income (loss)                $   (4,957)           13,397             2,100               4,169

        2000
        Total revenues                     $    9,303            13,483            22,929               9,210
        Operating income                        3,689             6,958            13,781               1,373
         Net income (loss)                 $      386             3,709            10,556              (1,863)


Coso Energy Developers:

        2002
        Total revenues                     $   44,122           11,450             16,858              10,277
        Operating income (loss)                37,447            3,965              8,145               4,624
          Net income (loss)                $   35,203            1,725              5,961               2,470

        2001
        Total revenues                     $    1,445           23,529             15,095               7,738
        Operating income                       (7,730)          15,595              7,735                 811
          Net income (loss)                $  (10,066)          13,264              5,431              (1,616)

        2000
        Total revenues                     $   12,495           11,628             20,311               5,865
        Operating income                        6,015            4,699             11,880              (3,709)
          Net income (loss)                $    3,627            2,345              9,514              (6,093)


Coso Power Developers:

        2002
        Total revenues                     $   44,904            9,940             16,075               9,567
        Operating income (loss)                38,047            1,899              8,721               2,391
          Net income (loss)                $   36,085              (60)             6,796                 482

        2001
        Total revenues                     $   (2,196)          20,133             13,934               7,401
        Operating income                      (11,636)          11,246              5,388                (134)
          Net income (loss)                $  (13,903)           8,991              3,193              (2,664)

        2000
        Total revenues                     $   10,317           11,812             20,207               3,586
        Operating income                        2,739            3,577             10,827              (5,804)
          Net income                       $      193            1,077              8,349              (8,179)
</TABLE>

(a)  In the opinion of the Caithness  Coso Funding Corp.  and the  Partnerships,
     all adjustments,  which consist of normal  recurring  accruals to present a
     fair statement of the amounts shown for such periods, have been made.

(b)  The provision  for doubtful  accounts  previously  recorded for the quarter
     ended March 31, 2001 for Coso Finance Partners, Coso Energy Developers, and
     Coso Power Developers of $25,817,  $25,950 and $26,998,  respectively,  has
     been  reclassified  as a  reduction  of revenue  to  conform  with the 2001
     financial statements presentation.

(c)  The income  from the  reduction  in the  provision  for  doubtful  accounts
     previously  recorded  for the quarter  ended June 30, 2001 for Coso Finance
     Partners,  Coso  Energy  Developers,  and Coso Power  Developers  of $4,204
     $4,120  and  $4,265,  respectively,  has been  reclassified  to  revenue to
     conform with the 2001 financial statements presentation.


Supplemental Condensed Combined Financial Information for Coso Partnerships

The  following  information  presents  unaudited  condensed  combined  financial
statements of the Coso  Partnerships.  These  financial  statements  represent a
compilation of the financial  statements of Caithness  Coso Funding Corp.,  Coso
Finance  Partners,  Coso Energy  Developers  and Coso Power  Developers  for the
periods indicated.  This supplemental  financial  information is not required by
GAAP and has been provided to facilitate a more  comprehensive  understanding of
the  financial   position,   operating  results  and  cash  flows  of  the  Coso
partnerships as a whole, which jointly and severally  guarantee the repayment of
Caithness Coso Funding  Corp's senior notes.  The unaudited  condensed  combined
financial  statements  should  be  read  in  conjunction  with  each  individual
partnerships financial statements and their accompanying notes.




                                      F-24
<PAGE>
<TABLE>
<CAPTION>

                                                       COSO PARTNERSHIPS

                                          UNAUDITED CONDENSED COMBINED BALANCE SHEETS

                                                    (Dollars in thousands)



                                                                              December 31,       December 31,
                                                                                  2002               2001
<S>                                                                            <C>               <C>
              Assets:

Cash and cash equivalents........................                            $   6,462               264
Restricted cash and investments..................                               46,193            34,210
Accounts receivable, net.........................                               21,346             9,603
Prepaid expenses and other assets................                                3,549             2,159
Amounts due from related parties.................                                6,516             6,488
Property, plant and equipment, net...............                              388,358           413,519
Power purchase agreement, net....................                               47,336            52,350
Investments and Advances.........................                               12,508            12,843
Deferred financing costs, net....................                                5,512             6,300
                                                                               -------           -------

          Total assets...........................                            $ 537,780         $ 537,736
                                                                               =======           =======


              Liabilities and Partners' Capital:

Accounts payable and accrued liabilities........                             $  23,762         $  42,362
Amounts due to related parties..................                                25,415            24,967
Project loans...................................                               281,231           303,000
                                                                               -------           -------

          Total liabilities......................                              330,408           370,329


Partners' capital................................                              207,372           167,407
                                                                               -------           -------

          Total liabilities and partners' capital                            $ 537,780         $ 537,736
                                                                               =======           =======





                  See accompanying notes to the unaudited condensed combined financial statements.



</TABLE>

                                                                      F-25
<PAGE>
<TABLE>
<CAPTION>
                                                      COSO PARTNERSHIPS

                                    UNAUDITED CONDENSED COMBINED STATEMENTS OF OPERATIONS

                                                   (Dollars in thousands)


                                                                Twelve Months        Twelve Months       Twelve Months
                                                                    Ended                Ended              Ended
                                                                 December 31,        December 31,        December 31,
                                                                     2002                2001                2000
                                                                 ------------        ------------        ------------
<S>                                                             <C>                  <C>                 <C>
Revenue:
  Energy revenues............................                     $ 205,151           $  94,734           $  97,901
  Capacity and bonus revenues................                        47,758              39,096              39,746
  Interest and other income..................                         3,923               9,577              13,499
                                                                    -------             -------             -------

       Total revenue.........................                       256,832             143,407             151,146
                                                                    -------             -------             -------
Operating expenses:
  Plant operating expenses...................                        31,884              28,910              30,026
  Royalty expense............................                        22,311              24,530              25,070
  Depreciation and amortization..............                        37,135              41,546              40,025
                                                                     ------              ------              ------

       Total operating expenses..............                        91,330              94,986              95,121
                                                                    -------             -------             -------

       Operating income......................                       165,502              48,421              56,025
                                                                    -------             -------             -------

Other expenses:
  Interest expense...........................                        26,941              28,818              30,797
  Amortization of deferred financing costs...                           787               2,264               1,607
                                                                     ------              ------              ------

       Total other expenses..................                        27,728              31,082              32,404
                                                                    -------              ------              ------

       Net income............................                     $ 137,774           $  17,339           $  23,621
                                                                    =======              ======              ======





                       See accompanying notes to the unaudited condensed combined financial statements.




</TABLE>
                                                               F-26

<PAGE>
<TABLE>
<CAPTION>
                                                         COSO PARTNERSHIPS

                                       UNAUDITED CONDENSED COMBINED STATEMENTS OF CASH FLOWS

                                                      (Dollars in thousands)


                                                              Twelve Months      Twelve Months        Twelve Months
                                                                  Ended              Ended               Ended
                                                               December 31,       December 31,         December 31,
                                                                   2002               2001                 2000
<S>                                                            <C>                <C>                  <C>

Net cash provided by (used in) operating activities...         $  144,495           $ 60,338           $   98,861
Net cash provided by (used in) investing activities...            (18,719)             3,355               34,042
Net cash provided by (used in) financing activities...           (119,578)           (80,538)            (136,058)
                                                                 ---------           --------            ---------

Net change in cash and cash equivalents...............         $    6,198         $  (16,845)          $   (3,155)
                                                                 =========           ========            =========
Supplemental cash flow disclosure:

            Cash paid for interest....................         $   27,026         $   28,881           $   39,902



                  See accompanying notes to the unaudited condensed combined financial statements.



</TABLE>

                                                         F-27
<PAGE>

                                COSO PARTNERSHIPS

                    NOTES TO THE UNAUDITED CONDENSED COMBINED

                              FINANCIAL STATEMENTS


(1)  Basis of Presentation

The accompanying  unaudited condensed combined financial statements were derived
from the stand alone unaudited condensed financial  statements of Caithness Coso
Funding  Corp.,  Coso Finance  Partners,  Coso Energy  Developers and Coso Power
Developers (the "Coso Partnerships"). All intercompany accounts and transactions
were  eliminated.  This financial  information has been provided to facilitate a
more comprehensive  understanding of the financial  position,  operating results
and cash flows of the Coso  Partnerships  as a whole.  The  unaudited  condensed
combined financial statements should be read in conjunction with each individual
Partnership's unaudited condensed financial statements.

(2)  Accounts Receivable and Revenue Recognition

The Coso  Partnerships  sell all  electricity  produced to  Southern  California
Edison (Edison) under long-term power purchase contracts. Due to the uncertainty
surrounding Edison's ability to make payment on past due amounts, collection was
not reasonably assured and the Coso Partnerships had not recognized revenue from
Edison for energy delivered during the period November 1, 2000 through March 26,
2001.

On March 1, 2002, the Coso Partnerships  recognized revenue for energy delivered
from  November 1, 2000  through  March 26, 2001 of $112.4  million,  when Edison
reached certain financing  milestones and paid the Coso Partnerships for revenue
generated but not recognized  for the period  November 1, 2000 through March 26,
2001.

(3)  Reclassifications

Certain  balances  in prior  years  have been  reclassified  to  conform  to the
presentation adopted in the current year.





                                      F-28
<PAGE>


Item 9.  Changes  in  and  Disagreements  with  Accountants  on  Accounting  and
         Financial Disclosure.

     Since 1991, Caithness Energy and CalEnergy, the then present co-sponsors of
the  Coso  projects,  had  engaged  PricewaterhouseCoopers,  LLP  to  audit  the
financial  statements  of the Coso  partnerships.  On  February  25,  1999,  CAC
purchased  all of  CalEnergy's  interests in the Coso  projects,  and  Caithness
Energy engaged KPMG, LLP, its own independent  certified public accountants,  to
audit future financial  statements of the Coso partnerships.  In connection with
the audits of the  financial  statements  of the Coso Finance  Partners and Coso
Finance  Partners II, Coso Energy  Developers and Coso Power  Developers for the
period ended February 25, 1999, (i) Caithness Energy had no  disagreements  with
PricewaterhouseCoopers, LLP on any matter of accounting principles or practices,
financial   statement   disclosure  or  auditing   scope  or  procedure,   which
disagreements if not resolved to the satisfaction of PricewaterhouseCoopers, LLP
would  have  caused  them to make  reference  thereto  in their  reports  on the
financial    statements   for   such   years,    and   (ii)   the   reports   of
PricewaterhouseCoopers, LLP on the Coso partnerships did not contain any adverse
opinion or disclaimer of opinion, and were not modified as to uncertainty, audit
scope  or   accounting   principles   except  for  the  reference  to  the  Coso
partnerships'  adoption in 1998 of Statement of Position No. 98-5, "Reporting on
the Costs of Start-up Activities."


                                    Part III


Item 10. Directors and Executive Officers of the Registrant.


     The following  table sets forth the persons who served as our directors and
executive officers as of December 31, 2002:
<TABLE>
<CAPTION>
        Name                       Age                    Position(s)
        ----                       ---                    -----------
<S>                                 <C>         <C>
James D. Bishop, Sr.                69          Director, Chairman and Chief Executive Officer

Leslie J. Gelber                    46          Director, President and Chief Operating Officer

James D. Bishop, Jr.                42          Director, Vice Chairman


Christopher T. McCallion            41          Director, Executive Vice President and Chief Financial
                                                Officer

Kenneth P. Hoffman                  50          Senior Vice President

Larry K. Carpenter                  53          Executive Vice President

Mark A. Ferrucci                    50          Director

David V. Casale                     39          Vice President and Controller

John A. McNamara                    43          Vice President Finance

Barbara Bishop Gollan               44          Vice President
</TABLE>

     James D. Bishop,  Sr., Chairman,  Chief Executive Officer and a Director of
Funding  Corp.  and of Caithness  Energy,  has served as a Director of Caithness
Corporation  since  its  inception  in 1975.  Mr.  Bishop  served  as  Caithness
Corporation's President from its inception until December 1986 and has served as
Chairman of Caithness  Corporation since January 1987. Mr. Bishop also serves as
a  director  for  various  other  entities  which  engage in  independent  power
production and natural resource exploration and development.  Mr. Bishop holds a
Master of Business  Administration  degree from  Harvard  Business  School and a
Bachelor of Arts degree from Yale University.  Mr. Bishop is the father of James
D. Bishop, Jr. and Barbara Bishop Gollan.

                                       25

     Leslie J.  Gelber,  President,  Chief  Operating  Officer and a Director of
Funding  Corp.  and of  Caithness  Energy,  has  served as  President  and Chief
Operating Officer of Caithness  Corporation since January 1999. Prior to joining
Caithness  Corporation,  Mr. Gelber  served as President of Cogen  Technologies,
Inc., which is also engaged in the field of independent power  production,  from
August 1998 until December 1998.  From July 1993 to July 1998, Mr. Gelber served
as President of ESI Energy,  Inc., the  non-regulated  independent power company
owned by FPL Group,  Inc. Mr.  Gelber holds a Master of Business  Administration
degree  from the  University  of Miami and holds a  Bachelor  of Arts  degree in
Economics from Alfred University.

     James D. Bishop,  Jr., Vice Chairman and a Director of Funding Corp. and of
Caithness Energy,  joined Caithness  Corporation in 1988 and served as President
and Chief Operating  Officer of Caithness  Corporation  from November 1995 until
December  1998.  Mr.  Bishop  also  serves on all the  boards of  directors  and
management  committees  of the  entities  and  joint  ventures  affiliated  with
Caithness  Corporation.  Mr.  Bishop  holds a Master of Business  Administration
degree from the Kellogg Graduate School of Management at Northwestern University
and holds a Bachelor of Science degree from Trinity  College.  Mr. Bishop is the
son of James D. Bishop, Sr. and the brother of Barbara Bishop Gollan.

     Christopher T. McCallion, Executive Vice President, Chief Financial Officer
and a  Director  of  Funding  Corp.  and of  Caithness  Energy,  served  as Vice
President  and  Controller of Caithness  Corporation  from July 1991 to November
1995, and has served as Executive Vice President and Chief Financial  Officer of
Caithness  Corporation  since November 1995. Mr.  McCallion  holds a Bachelor of
Science degree from Seton Hall University.

     Kenneth P. Hoffman a Senior Vice President of Funding Corp and of Caithness
Energy,  joined  Caithness  Corporation  in  March of  2000.  Prior  to  joining
Caithness,  Mr. Hoffman was a Vice President of FPL Energy, Inc. From 1989 until
1993 he was the Vice President of Business Management of ESI Energy, Inc. Before
1989,  Mr.  Hoffman was employed by Florida Power & Light  Company.  Mr. Hoffman
holds a Master of  Business  Administration  degree from  Florida  International
University  and a  Bachelor  of  Science  degree  from  Rochester  Institute  of
Technology.

     Larry K.  Carpenter,  Executive  Vice  President  of Funding  Corp.  and of
Caithness  Energy,  has  served as an  Executive  Vice  President  of  Caithness
Corporation  since January 1999.  Prior to joining  Caithness  Corporation,  Mr.
Carpenter  served as Vice  President of  Development  at ESI Energy,  Inc.,  the
non-regulated  independent  power company owned by FPL Group Inc.,  from 1985 to
December  1998. Mr.  Carpenter  holds a Bachelor of Science degree in Electrical
Engineering from the University of Florida.

     Mark  A.  Ferrucci,  a  Director  of  Funding  Corp.,  has  served  as  the
independent  director of Funding Corp. since May 1999. From 1977 until 2002, Mr.
Ferrucci  was an  employee  of CT  Corporation  System,  where he  served  as CT
Corporation  System's  Assistant  Secretary and as Assistant Vice President from
1992 to 2002.  At  present,  Mr.  Ferrucci  operates as a sole  proprietor  that
provides corporate staffing services to businesses and law firms.

     David V. Casale,  a Vice  President and the Controller of Funding Corp. and
of Caithness Energy joined Caithness Corporation in December 1991 and has served
as a Vice President and as its  Controller  since November 1995. Mr. Casale also
serves on the boards of directors of joint  ventures  affiliated  with Caithness
Corporation. Mr. Casale holds a Bachelor of Arts degree from Adelphi University.

                                       26

     John A. McNamara,  Vice President Finance of Funding Corp. and of Caithness
Energy, joined Caithness Corporation in September of 1990 and has served as Vice
President since 1999. Prior to joining Caithness, Mr. McNamara was a broker with
Bradley & Company, an account executive with First Georgetown  Securities,  Inc.
and a staff member of the United States Senate  Committee on Small Business.  He
received a Masters of Business  Administration degree from Georgetown University
and a Bachelor of Arts degree from Denison University.

     Barbara Bishop  Gollan,  a Vice President of Funding Corp. and of Caithness
Energy,  joined  Caithness  Corporation  as Vice  President in October 1990. Ms.
Gollan has authored and  co-authored a number of technical  papers on geothermal
systems,  which were presented to the Geothermal Resources Council, the Geologic
Society of America and the  Stanford  Geothermal  Workshop.  Ms.  Gollan holds a
Master of Science degree in Geology and  Geochemistry  from Stanford  University
and holds a Bachelor of Arts  degree from  Amherst  College.  Ms.  Gollan is the
daughter of Mr. James D. Bishop, Sr. and the sister of James D. Bishop, Jr.

     The Board of Directors  appointed Mr. Ferrucci as an independent  director.
The  unanimous  affirmative  vote  of our  Board  of  Directors  (including  Mr.
Ferrucci) is required  before certain actions can be taken,  including,  but not
limited to, (1)  engaging in any  business  or activity  other than  issuing the
senior secured notes and making the related loans to the Coso partnerships,  (2)
incurring  any debt, or assuming or  guaranteeing  any debt of any other entity,
(3)  dissolving or  liquidating,  (4)  consolidating,  merging or selling all or
substantially  all of our assets or (5) instituting any bankruptcy or insolvency
proceedings.


Item 11. Executive Compensation.

     None of the directors or executive  officers of Funding Corp.  receives any
compensation for his or her services, except Mr. Ferruci, who receives $8,400 in
compensation annually for services provided.


Item 12. Security Ownership of Certain Beneficial Owners and Management.

     The following table sets forth, as of December 31, 2002 certain information
regarding the beneficial ownership of Coso Funding Corp.'s voting securities and
the  beneficial  ownership  of  the  voting  securities  of  each  of  the  Coso
partnerships by:

(1)  Each person who is known by us and the Coso  partnerships  to  beneficially
     own 5% or more of Coso Funding  Corp.'s voting  securities or 5% or more of
     the voting securities of any Coso partnership,

(2)  Each of Coso Funding Corp.'s directors and executive  officers who also act
     in  similar  capacities  on behalf  of the  managing  partner  of each Coso
     partnership  and each of the delegates to the management  committee of each
     Coso partnership, and

(3)  All of Coso Funding Corp.'s  directors and executive  officers who also act
     in similar capacities for the managing partnership of each Coso partnership
     and  all  of the  delegates  to  the  management  committee  of  each  Coso
     partnership as a group.

     Beneficial  ownership has been  determined  in  accordance  with Rule 13d-3
under the  Securities  Exchange  Act of 1934,  as amended.  Except as  otherwise
noted, each person named below has an address in care of our principal executive
offices.

                                       27

<TABLE>
<CAPTION>
                                 Beneficial Ownership of Coso Funding Corp. and the Coso Partnerships

                                             Percent Indirect     Percent Indirect     Percent Indirect     Percent Indirect
                                                Beneficial           Beneficial           Beneficial           Beneficial
            Name and Address of                Ownership in         Ownership in         Ownership in         Ownership in
             Beneficial Owner                  Coso Funding          the Navy I            the BLM             The Navy II
             ----------------                      Corp.            Partnership          Partnership           Partnership
                                                   -----            -----------          -----------           -----------
<S>                                                <C>                 <C>                  <C>                   <C>

James D. Bishop, Sr. (1)(2)..............          --                  --                   --                    --

Leslie J. Gelber (1)(3)..................          --                  --                   --                    --

James D. Bishop, Jr. (1)(4)..............         25.6%               25.5%                28.0%                 23.3%

Christopher T. McCallion (1(3)...........          --                  --                   --                    --

Larry K. Carpenter (1)(3)................          --                  --                   --                    --

Mark A. Ferrucci.........................          --                  --                   --                    --

David V. Casale (1)(3)...................          --                  --                   --                    --

John A. McNamara (1)(3)..................          --                  --                   --                    --

Barbara Bishop Gollan (1)(3)(5),.........          --                  --                   --                    --

Dominion Energy, Inc. (6)................          *                   --                   7.8%                  2.8%
  901 East Byrd Street
  Richmond, VA 23219

Mojave Energy Company (7)................          6.1%                5.5%                 7.7%                  5.2%
  c/o Davenport Resources, Inc.
  200 Railroad Avenue, 3rd floor
  Greenwich, CT  06830

All directors, executive officers
and management committee delegates
as a group...............................         35.3%               31.0%                43.5%                 31.3%
</TABLE>


*     Less than 5.0%.
(1)  The address of such person is c/o Caithness Corporation,  565 Fifth Avenue,
     29th Floor, New York, New York 10017-2478.
(2)  James D. Bishop,  Sr. is the beneficiary of The James D. Bishop Trust--2002
     ( "Bishop,  Sr.  Trust "),  which owns shares of common  stock of Caithness
     Corporation,  Mojave Power, Inc., and Mojave Power II, Inc., and membership
     units in Caithness 1997, LLC.  Caithness  Corporation,  Mojave Power, Inc.,
     Mojave Power II Inc.,  and  Caithness  1997,  LLC own,  indirectly  through
     various entities,  general partnership interests in the Navy I partnership,
     the BLM partnership and the Navy II partnership, which collectively own all
     of the shares of common  stock of Funding  Corp.  The voting  rights to the
     shares of common stock of Caithness  Corporation,  Mojave Power,  Inc., and
     Mojave Power II, Inc. held by the Bishop,  Sr. Trust have been  transferred
     to The Caithness  Entities  Voting Trust,  the trustee of which is James D.
     Bishop,  Jr. The Bishop,  Sr. Trust is irrevocable.  James D. Bishop,  Sr.,
     therefore,  does not have voting or  investment  power over these shares of
     common stock of Caithness Corporation, Mojave Power, Inc., and Mojave Power
     II, Inc.

                                       28

(3)  Owner of economic  interests  in the Coso  partnerships  through  Caithness
     Corporation's  employee  incentive plans,  which economic interests are not
     listed on this table.
(4)  James D. Bishop,  Jr. is: (i) the  beneficiary of The James D. Bishop,  Jr.
     Irrevocable  Trust--1996  (the "Bishop,  Jr. Trust "), which owns shares of
     common stock of Caithness  Corporation,  and membership  units in Caithness
     1997,  LLC,  the  voting  rights  of which  have  been  transferred  to the
     Caithness  Entities Voting Trust,  the trustee of which is James D. Bishop,
     Jr.;  (ii) the owner of common  stock of Caithness  Corporation  and Mojave
     Power,  Inc., and membership  units in Caithness  1997,  LLC; and (iii) the
     trustee of The Caithness  Entities Voting Trust which possesses sole voting
     control over the shares of common stock of  Caithness  Corporation,  Mojave
     Power,  Inc., and Mojave Power II, Inc., held by the Bishop, Sr. Trust, The
     Barbara Bishop Gollan  Irrevocable  Trust--1996  (the "Gollan Trust "), The
     Elizabeth Bishop DeLuca Irrevocable  Trust--1996 and The Linda Bishop Fotiu
     Irrevocable Trust--1996. The interests listed in (i) and (ii) above entitle
     James  D.  Bishop,  Jr.  to the  following  indirect  beneficial  ownership
     interests: Funding Corp. (1.6%); Navy I partnership (1.6%); BLM partnership
     (1.5%);  and Navy II partnership  (1.6%).  James D. Bishop,  Jr.  disclaims
     beneficial ownership of the interests listed in (iii) above.
(5)  Barbara Bishop Gollan is the  beneficiary  of the Gollan Trust,  which owns
     shares of common stock of Caithness  Corporation,  and membership  units in
     Caithness  1997,  LLC.  The voting  rights to the shares of common stock of
     Caithness Corporation held by the Gollan Trust have been transferred to The
     Caithness  Entities Voting Trust,  the trustee of which is James D. Bishop,
     Jr. The Gollan Trust is irrevocable. Barbara Bishop Gollan, therefore, does
     not have voting or  investment  power over these  shares of common stock of
     Caithness Corporation.
(6)  Dominion  Energy,  Inc. owns: (i) a limited  liability  company  membership
     interest in Caithness BLM Group, LP, a Delaware limited partnership,  which
     owns a limited  liability  company  membership  interest in Caithness  Coso
     Holdings,  LLC,  which  owns a  general  partnership  interest  in the  BLM
     partnership;  and (ii) a limited liability company  membership  interest in
     Navy II Group  which  owns a general  partnership  interest  in the Navy II
     partnership.
(7)  Mojave Energy Company owns limited liability company  membership  interests
     in Caithness Power, LLC, which owns,  indirectly  through various entities,
     general partnership interests in each of the Coso partnerships.


Item 13. Certain Relationships and Related Transactions.


The Coso Partnerships

     Each of the Coso partnerships has two general partners,  a managing partner
and  a  non-managing  partner.   Under  the  amended  and  restated  partnership
agreement,   the  managing   partner  of  each  Coso  partnership  is  generally
responsible  for the  management  and  control of the  day-to-day  business  and
affairs.  The managing  partner of the Navy I  partnership  is New CLOC Company,
LLC, a Delaware  limited  liability  company,  the  managing  partner of the BLM
partnership is New CHIP Company,  LLC, a Delaware limited  liability company and
the  managing  partner of the Navy II  partnership  is New CTC  Company,  LLC, a
Delaware  limited  liability  company.  The  non-managing  partner of the Navy I
partnership is ESCA, LLC, a Delaware limited liability company, the non-managing
partner of the BLM  partnership  is  Caithness  Coso  Holdings,  LLC, a Delaware
limited  liability  company,  and  the  non-managing  partner  of  the  Navy  II
partnership  is  Caithness  Navy II Group,  LLC,  a Delaware  limited  liability
company.

     Each managing partner is a limited  liability  company managed by a manager
who is appointed by Caithness Acquisition Company, LLC (CAC), the sole member of
each  managing  partner.  The manager is  responsible  for the  ordinary  course
management and operations by its Coso  partnership.  CAC has appointed itself as
the manager of each managing partner. CAC has also appointed Mr. Ferrucci as the
independent manager of each managing partner. (In addition, each of the managing
members  of  the  non-managing  partners  has  appointed  Mr.  Ferrucci  as  the
independent  manager  of  that  non-managing   partner.)  The  approval  of  the
independent manager is required before the managing partner (or the non-managing
partner,  as the case may be) may take  certain  actions that do not involve the
ordinary course  management and operations by the Coso  partnerships of the Coso
projects,  including,  among others, (1) commencing any bankruptcy or insolvency
proceeding involving the managing partner, (2) incurring any debt in the name of
the managing partner for which it would be liable, (3) dissolving,  liquidating,
consolidating or merging,  or selling all or substantially all of the assets of,
its  respective  Coso  partnership,  or (4) engaging in any business or activity
other than acting as the managing  partner of its respective  Coso  partnership.
Each managing  partner also has its  officers,  who are also officers of Funding
Corp. , who act on behalf of the managing partners of the Coso partnerships.

                                       29

     CAC, a limited liability company, is the manager and sole member of each of
the managing  partners.  Caithness Energy, LLC (Caithness Energy) as the manager
and sole owner of CAC, has delegated its role as manager of CAC to the CAC board
of directors,  including  the power to manage the managing  partners of the Coso
partnerships.  Each  managing  partner's  officers are also the officers of CAC.
None of the  persons  acting  on behalf of the Coso  partnerships  receives  any
compensation  from the Coso  partnerships  for his or her services,  except that
nominal compensation is paid in consideration for Mr. Ferrucci's services.

     Caithness  Energy  is  governed  by a  board  of  directors  and not by its
members. The directors of Funding Corp., other than Mr. Ferrucci, also currently
serve as  members  of the board of  directors  of  Caithness  Energy.  Under the
limited liability company agreement of Caithness Energy,  Caithness  Corporation
is  entitled  to  appoint  a number of  members  to the  Board of  Directors  of
Caithness  Energy who hold,  in the  aggregate,  a majority  of the votes of all
members of such board of directors.  Caithness  Corporation's present appointees
are Messrs. Bishop, Sr., and Bishop, Jr. In addition,  Messrs. Gelber, Carpenter
and  McCallion  serve as voting  members of the board of  directors of Caithness
Energy  pursuant to their  individual  executive  compensation  agreements  with
Caithness Energy. These five individuals,  together with Mr. Ferrucci,  serve as
the CAC board of directors.


Management Committees

     Under  the  amended  and  restated  partnership   agreement  of  each  Coso
partnership,  the managing  partner is subject to the directives of a management
committee which oversees the business  operations of the Coso  partnership.  The
managing  partner of a Coso  partnership may not take certain  specific  actions
without  the  consent  of the  management  committee  of that Coso  partnership.
However,  the  management  committee may not direct the managing  partner of the
Coso  partnership  to take any action  over which the  independent  manager  has
exclusive  authority without the requisite approval of the independent  manager.
The management  committee of each Coso  partnership  consists of four delegates,
two of  which  are  appointed  by the  managing  partner  and two of  which  are
appointed by the non-managing partner. Each partner may substitute or change its
delegates.

     Under  the  amended  and  restated  partnership   agreements  of  the  Coso
partnerships,  each partner may appoint one delegate  with multiple  votes.  The
names of the  delegates  appointed  by  affiliates  of  Caithness  Energy to the
management committees of the Coso partnerships are set forth below.

     As of December  31,  2002,  the  following  persons were the members of the
management  committee of each Coso partnership,  as applicable.  Each person has
two votes on each management committee on which he serves:
<TABLE>
<CAPTION>
      Name                      Age                           Partnership(s)
      ----                      ---                           --------------
<S>                              <C>    <C>
James D. Bishop, Jr.             42     Navy I partnership, BLM partnership, Navy II partnership

Christopher T. McCallion         41     Navy I partnership, BLM partnership, Navy II partnership
</TABLE>

     Certain  information  regarding  Messrs.  Bishop and  McCallion is provided
above.

                                       30

Management Committee Fees

     The members of the  management  committees  are not  entitled to any direct
compensation  from Funding Corp. or the Coso  partnerships.  However,  each Coso
partnership   previously  paid  its  two  general  partner's  annual  management
committee fees for their participation on the management  committee of that Coso
partnership.  The following  table sets forth,  for the years ended December 31,
2002, 2001,  2000, and 1999, the total amount of management  committee fees paid
or payable by each of the Coso partnerships to its partners:
<TABLE>
<CAPTION>
                                                             Year Ended December 31
                                                             ----------------------
                                             2002             2001             2000              1999
                                             ----             ----             ----              ----
<S>                                      <C>              <C>              <C>               <C>
Navy I Partnership
   New CLOC....................          $    --          $    --          $    --           $    --
   Predecessor of New CLOC                    --               --               --              25,000
   ESCA........................            241,000          237,000          234,000           258,000
                                           -------          -------          -------           -------
                                         $ 241,000        $ 237,000        $ 234,000         $ 283,000
                                           =======          =======          =======           =======
BLM Partnership
   New CHIP....................          $    --          $    --          $    --           $    --
   Predecessor of New CHIP                    --               --               --              25,000
   CCH.........................            241,000          237,000          234,000           259,000
                                           -------          -------          -------           -------
                                         $ 241,000        $ 237,000        $ 234,000         $ 284,000
                                           =======          =======          =======           =======
Navy II Partnership.............
   New CTC.....................          $    --          $    --          $    --           $    --
   Predecessor of New CTC......               --               --               --              25,000
   Navy II Group...............            241,000          237,000          234,000           259,000
                                           -------          -------          -------           -------
                                         $ 241,000        $ 237,000        $ 234,000         $ 284,000
                                           =======          =======          =======           =======
</TABLE>

     The Coso  partnerships  no longer pay  management  committee  fees to their
managing partners.


Funding Corp.

     As of June  30,  1999,  the  authorized  capital  stock  of  Funding  Corp.
consisted of 1,000 shares of common stock,  par value 1 cent per share, of which
300 shares were  outstanding.  The outstanding  common stock is owned equally by
the Coso partnerships.


Coso Partnerships

     The  directors and  executive  officers  also act in similar  capacities on
behalf of the  managing  partner of each Coso  partnership  and,  except for Mr.
Ferrucci, on behalf of CAC and Caithness Energy.  Several of these directors and
executive officers beneficially own the securities of Caithness Corporation, who
beneficially owns the majority of membership interests of Caithness Energy.


                                     Part IV

Item 14. Exhibits, Financial Statements Schedules, and Reports on Form 8-K.

(a)  Documents filed as part of this report:

         Financial Statements and Schedules

                                       31

(b)  Current reports on Form 8-K:

     The Coso Partnerships filed current reports on Form 8-K dated September 23,
     2002  reporting the settlement  agreement  between Edison and the CPUC, the
     Court of  Appeal  decision  on line loss  factors,  and the Court of Appeal
     decision on the retroactive application of "short run avoided cost" rates.

(c)  Exhibits:

     The exhibits listed on the accompanying Index to Exhibits are filed as part
     of this Annual Report.


                                INDEX TO EXHIBITS

Exhibit
Number                             Description of Exhibit
------                             ----------------------

3.1       Certificate of Incorporation of Caithness Coso Funding Corp.*

3.2       Bylaws of Caithness Coso Funding Corp.*

3.3       Third  Amended and  Restated  Partnership  Agreement  of Coso  Finance
          Partners, dated as of May 28, 1999.*

3.4       Third  Amended  and  Restated  Partnership  Agreement  of Coso  Energy
          Developers, dated as of May 28, 1999.*

3.5       Third  Amended  and  Restated  Partnership  Agreement  of  Coso  Power
          Developers, dated as of May 28, 1999.*

3.6       Amendment  Agreement,  dated as of May 28,  1999,  by and  among  Coso
          Finance  Partners,   Caithness  Acquisition  Company,  LLC,  New  CLOC
          Company, LLC, ESCA, LLC and Coso Operating Company LLC.*

3.7       Amendment  Agreement,  dated as of May 28,  1999,  by and  among  Coso
          Energy  Developers,  Caithness  Acquisition  Company,  LLC,  New  CHIP
          Company, LLC, Caithness Coso Holdings,  LLC and Coso Operating Company
          LLC.*

3.8       Amendment Agreement, dated as of May 28, 1999, by and among Coso Power
          Developers,  Caithness Acquisition Company, LLC, New CTC Company, LLC,
          Caithness Navy II Group, LLC and Coso Operating Company LLC.*

4.1       Indenture,  dated as of May 28,  1999,  among  Caithness  Coso Funding
          Corp.,  Coso  Finance  Partners,  Coso Energy  Developers,  Coso Power
          Developers, and U.S. Bank Trust National Association as trustee and as
          collateral agent.*

4.3       Notation  of  Guarantee,  dated as of May 28,  1999,  of Coso  Finance
          Partners.*

4.4       Notation  of  Guarantee,  dated  as of May 28,  1999,  of Coso  Energy
          Developers.*

4.5       Notation  of  Guarantee,  dated  as of May 28,  1999,  of  Coso  Power
          Developers.*

4.6       Registration Rights Agreement,  dated as of May 28, 1999, by and among
          Caithness  Coso  Funding  Corp.,  Coso Finance  Partners,  Coso Energy
          Developers,  Coso Power Developers,  and Donaldson,  Lufkin & Jenrette
          Securities Corporation.*

                                       32

10.1      Deposit and  Disbursement  Agreement,  dated as of May 28, 1999, among
          Caithness  Coso  Funding  Corp.,  Coso Finance  Partners,  Coso Energy
          Developers,  Coso  Power  Developers,  and U.S.  Bank  Trust  National
          Association, as collateral agent, as trustee, and as depositary.*

10.2      Credit  Agreement,  dated as of May 28, 1999,  between  Caithness Coso
          Funding Corp. and Coso Finance Partners.*

10.3      Promissory  Note  due  2001 of  Coso  Finance  Partners  in  favor  of
          Caithness Coso Funding Corp.*

10.4      Promissory  Note  due  2009 of  Coso  Finance  Partners  in  favor  of
          Caithness Coso Funding Corp.*

10.5      Credit  Agreement,  dated as of May 28, 1999,  between  Caithness Coso
          Funding Corp. and Coso Energy Developers.*

10.6      Promissory  Note  due  2001 of Coso  Energy  Developers  in  favor  of
          Caithness Coso Funding Corp.*

10.7      Promissory  Note  due  2009 of Coso  Energy  Developers  in  favor  of
          Caithness Coso Funding Corp.*

10.8      Credit  Agreement,  dated as of May 28, 1999,  between  Caithness Coso
          Funding Corp. and Coso Power Developers.*

10.9      Promissory  Note  due  2001 of  Coso  Power  Developers  in  favor  of
          Caithness Coso Funding Corp.*

10.10     Promissory  Note  due  2009 of  Coso  Power  Developers  in  favor  of
          Caithness Coso Funding Corp.*

10.11     Purchase  Agreement,  dated as of May 21, 1999, by and among Caithness
          Coso Funding  Corp.,  as Issuer,  Coso Finance  Partners,  Coso Energy
          Developers and Coso Power  Developers,  as guarantors,  and Donaldson,
          Lufkin & Jenrette Securities Corporation, as initial purchaser.*

10.12     Security  Agreement,  dated as of May 28, 1999,  executed by and among
          Caithness  Coso Funding  Corp.  in favor of U.S.  Bank Trust  National
          Association, as collateral agent.*

10.13     Security  Agreement,  dated as of May 28, 1999,  executed by and among
          Coso  Finance   Partners  in  Favor  of  U.S.   Bank  Trust   National
          Association, as collateral agent.*

10.14     Security Agreement,  dated as of May 28, 1999, executed by Coso Energy
          Developers  in favor  of U.S.  Bank  Trust  National  Association,  as
          collateral agent.*

10.15     Security  Agreement,  dated as of May 28, 1999, executed by Coso Power
          Developers  in favor  of U.S.  Bank  Trust  National  Association,  as
          collateral agent.*

10.18     Security  Agreement  (Navy I  project  permits),  dated  as of May 28,
          1999,  executed by Coso  Operating  Company LLC in favor of U.S.  Bank
          Trust National Association, as collateral agent.*

10.19     Security  Agreement (BLM project  permits),  dated as of May 28, 1999,
          executed by Coso  Operating  Company  LLC in favor of U.S.  Bank Trust
          National Association, as collateral agent.*

10.20     Security  Agreement  (Navy II  project  permits),  dated as of May 28,
          1999,  executed by Coso  Operating  Company LLC in favor of U.S.  Bank
          Trust National Association, as collateral agent.*

10.24     Deed of  Trust,  Assignment  of Rents,  Fixture  Filing  and  Security
          Agreement, dated as of May 28, 1999, executed by Coso Finance Partners
          in favor of U.S. Bank Trust National  Association,  as trustee, and as
          beneficiary.*

10.25     Deed of  Trust,  Assignment  of Rents,  Fixture  Filing  and  Security
          Agreement,  dated  as  of  May  28,  1999,  executed  by  Coso  Energy
          Developers  in favor  of U.S.  Bank  Trust  National  Association,  as
          trustee, and as beneficiary.*

                                       33

10.26     Deed of  Trust,  Assignment  of Rents,  Fixture  Filing  and  Security
          Agreement, dated as of May 28, 1999, executed by Coso Power Developers
          in favor of U.S. Bank Trust National  Association,  as trustee, and as
          beneficiary.*

10.27     Deed of  Trust,  Assignment  of Rents,  Fixture  Filing  and  Security
          Agreement,  dated as of May 28,  1999,  executed by Coso  Transmission
          Line Partners in favor of U.S.  Bank Trust  National  Association,  as
          trustee, and as beneficiary.*

10.28     Deed of  Trust,  Assignment  of Rents,  Fixture  Filing  and  Security
          Agreement,  dated as of May 28,  1999,  executed  by China  Lake Joint
          Venture in favor of U.S. Bank Trust National Association,  as trustee,
          and as beneficiary.*

10.29     Deed of  Trust,  Assignment  of Rents,  Fixture  Filing  and  Security
          Agreement,  dated as of May 28, 1999, executed by Coso Land Company in
          favor of U.S.  Bank Trust  National  Association,  as trustee,  and as
          beneficiary.*

10.30     Stock  Pledge  Agreement,  dated as of May 28,  1999,  by Coso Finance
          Partners, Coso Energy Developers and Coso Power Developers in favor of
          U.S. Bank Trust National Association, as Collateral agent.*

10.31     Partnership  Interest  Pledge  Agreement (Navy I), dated as of May 28,
          1999, by ESCA,  LLC and New CLOC  Company,  LLC, in favor of U.S. Bank
          Trust National Association, as collateral agent.*

10.32     Partnership  Interest  Pledge  Agreement  (BLM),  dated  as of May 28,
          1999, by Caithness  Coso Holdings,  LLC and New CHIP Company,  LLC, in
          favor of U.S. Bank Trust National Association, as Collateral agent.*

10.33     Partnership  Interest Pledge  Agreement (Navy II), dated as of May 28,
          1999,  by Caithness  Navy II Group,  LLC and New CTC Company,  LLC, in
          favor of U.S. Bank Trust National Association, as collateral agent.*

10.34     Partnership  Interest  Pledge  Agreement  (CTLP),  dated as of May 28,
          1999, by Coso Energy Developers and Coso Power Developers, in favor of
          U.S. Bank Trust National Association, as Collateral agent.*

10.35     Partnership  Interest  Pledge  Agreement  (CLJV),  dated as of May 28,
          1999, by Caithness  Acquisition  Company, LLC and Caithness Geothermal
          1980 Ltd.,  LP, in favor of U.S. Bank Trust National  Association,  as
          collateral agent.*

10.36     Partnership  Interest  Pledge  Agreement  (CLC),  dated  as of May 28,
          1999, by Caithness  Acquisition  Company, LLC and Caithness Geothermal
          1980 Ltd.,  LP, in favor of U.S. Bank Trust National  Association,  as
          collateral agent.*

10.37     Promissory  Notes  Security  Agreement,  dated as of May 28, 1999,  by
          Caithness  Coso Funding  Corp.,  in favor of U.S. Bank Trust  National
          Association, as collateral agent.*

10.38     Original  Service Contract  N62474-79-C-5382,  dated December 6, 1979,
          between U.S. Naval Weapons Center and California Energy Company, Inc.,
          Contractor (the "Navy Contract "), including all Amendments thereto.*

10.39     Escrow  Agreement,  dated December 16, 1992, as amended,  by and among
          Coso Finance Partners, Bank of America and the Navy.*

                                       34

10.40     Offer to Lease and Lease for Geothermal  Resources,  Serial No. 11402,
          dated April 29, 1985 but Effective May 1, 1985, from the United States
          of  America,  acting  through  the  Bureau  of  Land  Management,   to
          California Energy Company,  Inc.; as assigned by Assignment  Affecting
          Record Title to Geothermal  Resources Lease,  dated June 24, 1985, but
          effective July 1, 1985 from California  Energy  Company,  Inc. to Coso
          Land Company;  as assigned by Assignment of Record Title Interest in a
          Lease for Oil and Gas or Geothermal  Resources,  dated April 20, 1988,
          but  effective  May 1, 1988 from Coso Land Company to Coso  Geothermal
          Company; as assigned by Assignment of Record Title Interest in a Lease
          for Oil and Gas or  Geothermal  Resources  dated  April  20,  1988 but
          effective  May 1, 1988 from Coso  Geothermal  Company  to Coso  Energy
          Developers.*

10.41     Geothermal  Resources Lease,  Serial No. CA-11383,  by and between the
          United  States  of  America,   acting   through  the  Bureau  of  Land
          Management,  and the  LADWP,  effective  as of  January  1,  1988;  as
          assigned by Lease  Assignment  Agreement by and between LADWP and Coso
          Land Company,  dated  September 10, 1997; as assigned by Assignment of
          Record  Title  Interest  in  Lease  for  Oil  and  Gas  or  Geothermal
          Resources, by and between the United States of America, acting through
          the  Bureau  of Land  Management,  and Coso  Land  Company,  effective
          January 1, 1998;  and as  extended  by  Extension  of primary  term of
          CACA-11383 to September 23, 2004.*

10.42     Geothermal  Resources Lease,  Serial No. CA-11384,  by and between the
          United  States  of  America,   acting   through  the  Bureau  of  Land
          Management,  and the LADWP,  effective  as of  February  1,  1982;  as
          assigned by Lease  Assignment  Agreement by and between LADWP and Coso
          Land Company,  dated  September 10, 1997; as assigned by Assignment of
          Record  Title  Interest  in a Lease  for  Oil  and  Gas or  Geothermal
          Resources  (CACA-11384),  by and between the United States of America,
          acting through the Bureau of Land  Management,  and Coso Land Company,
          effective  as of January 1, 1998;  and as  extended  by  extension  of
          primary term of CACA-11385 to December 24, 2002.*

10.43     Geothermal  Resources Lease,  Serial No. CA-11385,  by and between the
          United  States  of  America,   acting   through  the  Bureau  of  Land
          Management,  and the LADWP,  effective  as of  February  1,  1982;  as
          assigned by Lease  Assignment  Agreement by and between LADWP and Coso
          Land Company,  dated  September 10, 1997; as assigned by Assignment of
          Record  Title  Interest  in a Lease  for  Oil  and  Gas or  Geothermal
          Resources  (CACA-11385)  by and between the United  States of America,
          acting Through the Bureau of Land  Management,  and Coso Land Company,
          effective  as of January 1, 1998;  and as  extended  by  extension  of
          primary term of CACA-11385 to December 24, 2002.*

10.44     License for Electric Power Plant Site Utilizing  Geothermal  Resources
          between the United States of America,  Licensor, through the Bureau of
          Land Management, and Coso Energy Developers, Licensee, Serial No. CACA
          22512, dated March 8, 1989 (expires 3/8/19).*

10.45     License for Electric Power Plant Site Utilizing  Geothermal  Resources
          between  the United  States of America,  acting  through the Bureau of
          Land  Management,  and Coso Energy  Developers,  Licensee,  Serial No.
          25690, dated 12/29/1989 (expires 12/28/19).*

10.46     Right of Way  CA-18885 by and  between  the United  States of America,
          acting through the Bureau of Land  Management,  and California  Energy
          Company, Inc., dated May 7, 1986 (telephone cable)(expires 5/7/16).*

10.47     Right of Way  CA-13510 by and  between  the United  States of America,
          acting through the Bureau of Land  Management,  and California  Energy
          Company,  Inc.,  dated  April  12,  1984  (Coso  office  site)(expires
          4/12/14).*

10.48     Agreement  of Transfer  and  Assignment  (Navy I  Transmission  Line),
          dated July 14, 1987,  among China Lake Joint  Venture and Coso Finance
          Partners.*

10.49     Agreement  of Transfer and  Assignment  (Navy II  Transmission  Line),
          dated July 31, 1989, among Coso Power Developers and Coso Transmission
          Line Partners.*

                                       35

10.50     Agreement of Transfer and Assignment (BLM  Transmission  Line),  dated
          July 31, 1989, among Coso Energy Developers and Coso Transmission Line
          Partners.*

10.51     Agreement  Regarding  Overriding  Royalty (CLC Royalty),  dated May 5,
          1988, between Coso Energy Developers and Coso Land Company.*

10.52     Coso  Geothermal  Exchange  Agreement,  dated January 11, 1994, by and
          among  Coso  Finance  Partners,  Coso  Energy  Developers,  Coso Power
          Developers, and California Energy Company, Inc.*

10.53     Amendment  to Coso  Geothermal  Exchange  Agreement,  dated  April 12,
          1995, by and among Coso Finance Partners, Coso Energy Developers, Coso
          Power Developers, and California Energy Company, Inc.*

10.55     Operation and Maintenance  Agreement  (Navy I Project),  dated May 28,
          1999,  by and among  FPL  Energy  Operating  Services,  Inc.  and Coso
          Operating Company, LLC and New CLOC Company, LLC.*

10.56     Operation  and  Maintenance  Agreement  (BLM  Project),  dated May 28,
          1999,  by and among  FPL  Energy  Operating  Services,  Inc.  and Coso
          Operating Company, LLC and New CHIP Company, LLC.*

10.57     Operation and Maintenance  Agreement (Navy II Project),  dated May 28,
          1999,  by and among  FPL  Energy  Operating  Services,  Inc.  and Coso
          Operating Company, LLC and New CTC Company, LLC.*

10.58     Field  Operation and  Maintenance  Agreement  (Navy I), dated February
          25, 1999,  between Coso Operating  Company,  LLC and New CLOC Company,
          LLC.*

10.59     Field  Operations and Maintenance  Agreement (Navy II), dated February
          25, 1999,  between Coso  Operating  Company,  LLC and New CTC Company,
          LLC.*

10.60     Field Operations and Maintenance  Agreement (BLM),  dated February 25,
          1999, between Coso Operating Company, LLC and New CHIP Company, LLC.*

10.61     Purchase  Agreement,  dated  as of  January  16,  1999,  by and  among
          Caithness Energy,  L.L.C.,  Caithness  Acquisition  Company,  LLC, and
          California Energy Company, Inc.*

10.62     Agreement Concerning Consideration,  dated as of February 25, 1999, by
          and among Caithness Energy,  L.L.C.,  Caithness  Acquisition  Company,
          L.L.C., New CLOC Company, LLC, New CHIP Company, LLC, New CTC Company,
          LLC, and CalEnergy Company, Inc.*

10.63     Future  Revenue  Agreement,  dated  February 25, 1999,  by and between
          Caithness Energy, L.L.C.,  Caithness Acquisition Company, LLC, New CTC
          Company,  LLC, New CLOC  Company,  LLC,  NewCHIP  Company,  LLC,  Coso
          Finance Partners, Coso Energy Developers,  Coso Power Developers,  and
          California Energy Company, Inc.*

10.64     Acknowledgment  and   Agreement--Release,   dated  January  16,  1999,
          executed  by  Caithness  Resources,   Inc.,   Caithness   Corporation,
          Caithness  Power,   L.L.C.,   James  Bishop  Sr.,  and  Caithness  CEA
          Geothermal, LP (appended to Exhibit 10.61).*

10.65     Acknowledgment and Agreement--Indemnity,  dated May 28, 1999, executed
          by Coso Finance  Partners,  New CLOC  Company,  LLC,  ESCA,  LLC, Coso
          Energy  Developers,  New CHIP Company,  LLC,  Caithness Coso Holdings,
          LLC, Coso Power Developers,  New CTC Company,  LLC, and Caithness Navy
          II Group, LLC.*

                                       36

10.66     Acknowledgment and  Agreement--Release,  dated May 28, 1999,  executed
          by Coso Finance  Partners,  New CLOC  Company,  LLC,  ESCA,  LLC, Coso
          Energy  Developers,  New CHIP Company,  LLC,  Caithness Coso Holdings,
          LLC, Coso Power Developers,  New CTC Company,  LLC, and Caithness Navy
          II Group, LLC.*

10.67     Acknowledgment  and  Agreement--Indemnity,  dated  January  16,  1999,
          executed  by  Caithness  Resources,   Inc.,   Caithness   Corporation,
          Caithness Power, L.L.C., China Lake Operating Company, Coso Technology
          Corporation  and Coso  Hotsprings  Intermountain  Power  (appended  to
          Exhibit 10.61).*

10.68     Power  Purchase  Agreement  (modified  Standard  Offer No.4) (Navy I),
          dated  as of  June  4,  1984,  as  Amended,  by and  between  Southern
          California  Edison  Company and Coso Finance  Partners (as assignee of
          China Lake Joint Venture).*

10.69     Power Purchase  Agreement  (modified Standard Offer No.4) (BLM), dated
          as of February  1, 1985,  by and between  Southern  California  Edison
          Company and Coso Energy  Developers  (as  assignee of China Lake Joint
          Venture).*

10.70     Power  Purchase  Agreement  (modified  Standard Offer No.4) (Navy II),
          dated as of  February  1, 1985,  by and  between  Southern  California
          Edison  Company and Coso Power  Developers  (as assignee of China Lake
          Joint Venture).*

10.72     Interconnection  and Integration  Facilities  Agreement (BLM project),
          dated December 15, 1988,  Between Southern  California  Edison Company
          and Coso Energy Developers (as assignee of China Lake Joint Venture).*

10.73     Interconnection   and  Integration   Facilities   Agreement  (Navy  II
          project),  dated December 15, 1988, Between Southern California Edison
          Company  and Coso Power  Developers  (as  assignee of China Lake Joint
          Venture).*

10.77     Operating Fee  Subordination  Agreement  (Navy I), dated as of May 28,
          1999, by and among Coso  Operating  Company,  LLC, and U.S. Bank Trust
          National Association, as collateral agent.*

10.78     Operating  Fee  Subordination  Agreement  (BLM),  dated  as of May 28,
          1999, by and among Coso  Operating  Company,  LLC, and U.S. Bank Trust
          National Association, as collateral agent.*

10.79     Operating Fee  Subordination  Agreement (Navy II), dated as of May 28,
          1999, by and among Coso  Operating  Company,  LLC, and U.S. Bank Trust
          National Association, as collateral agent.*

10.80     Management Fee  Subordination  Agreement (Navy I), dated as of May 28,
          1999,  by and among ESCA,  LLC, New CLOC  Company,  LLC,  Coso Finance
          Partners,  and U.S.  Bank Trust  National  Association,  as collateral
          agent.*

10.81     Management  Fee  Subordination  Agreement  (BLM),  dated as of May 28,
          1999, by and among  Caithness  Coso  Holdings,  LLC, New CHIP Company,
          LLC, Coso Energy Developers, and U.S. Bank Trust National Association,
          as collateral agent.*

10.82     Management Fee Subordination  Agreement (Navy II), dated as of May 28,
          1999, by and among Caithness Navy II Group, LLC, New CTC Company, LLC,
          Coso Power Developers,  and U.S. Bank Trust National  Association,  as
          collateral agent.*

10.83     Cotenancy  Agreement,  dated as of May 28,  1999,  by and  among  Coso
          Finance Partners, Coso Energy Developers, and Coso Power Developers.*

10.84     Acquisition  Agreement,  dated as of May 28,  1999,  among  Coso  Land
          Company,  Coso Finance Partners,  Coso Energy  Developers,  Coso Power
          Developers, and Coso Operating Company, LLC.*

                                       37

10.85     Assignment and Assumption Agreement,  dated as of May 28, 1999, by and
          among MidAmerican Energy Holdings Company as  successor-in-interest to
          Cal  Energy  Company,   Inc.,  Coso  Energy  Developers,   Coso  Power
          Developers and Coso Finance Partners.*

21.1      Subsidiaries of Caithness Coso Funding Corp.,  Coso Finance  Partners,
          Coso Energy Developers, and Coso Power Developers.*

23.3      Consent of Sandwell Engineering Inc.*

23.4      Consent of Henwood Energy Services, Inc.*

23.5      Consent of GeothermEx, Inc.*

23.6      Consent  of  Riordan  &  McKinzie,   A  Professional  Law  Corporation
          (included in Exhibit 5.1).*

23.7      Consent of Reed Smith Shaw & McClay LLP (included in Exhibit 5.2).*

24.1      Powers of Attorney (included on pages II-9, II-11, II-13 and II-15).*

25.1      Form T-1 Statement of Eligibility and Qualification of U.S. Bank Trust
          National Association as Trustee.*

27.1      Financial Data Schedule--Form SX--Caithness Coso Funding Corp.

27.2      Financial Data Schedule--Form SX--Coso Finance Partners.

27.3      Financial Data Schedule--Form SX--Coso Energy Developers.

27.4      Financial Data Schedule--Form SX--Coso Power Developers.

99.1      Certification of Chief Executive Officer.

99.2      Certification of Chief Financial Officer.

99.3      Sale Agreement by and between Caithness  Acquisition Company, LLC, and
          ESI Geothermal, Inc. dated as of October 6, 1999.**

99.4      Assignment,  Assumption and Novation Agreement (Coso Finance Partners)
          by and between FPL Energy Operating Services,  Inc. and Coso Operating
          Company, LLC dated October 18, 1999.**

99.5      Assignment, Assumption and Novation Agreement (Coso Energy Developers)
          by and between FPL Energy Operating Services,  Inc. and Coso Operating
          Company, LLC dated October 18, 1999.**

99.6      Assignment,  Assumption and Novation Agreement (Coso Power Developers)
          by and between FPL Energy Operating Services,  Inc. and Coso Operating
          Company, LLC dated October 18, 1999.**

 *        Incorporated  herein by reference from the  Registration  Statement on
          Form S-4,  Registration  No.  333-83815  filed with the Securities and
          Exchange  Commission  (the SEC) by Coso  Funding  Corp.  on October 7,
          1999, as amended.

 **       Incorporated  herein by  reference  from the Form 8-K on report  dated
          October 18, 1999 for Coso Funding Corp., filed with the SEC.

                                       38
<PAGE>
                                  EXHIBIT 27.1

                                    Form S-X
                       Commercial and Industrial Companies


Financial Data Schedule Worksheet for:      CAITHNESS COSO FUNDING CORP.
                                            ----------------------------
Review the following  list of tags for Article 5 and fill in the correct data in
the  column(s)  provided.  Generally,  only one  column of  information  will be
required,  however,  two columns are provided if required in the Financial  Data
Schedule.

Unless otherwise  noted, all tags are required.  A response is required for each
item within the schedule. Use the value "0" (zero) if information is immaterial,
inapplicable or unknown. Decimals may not be used to state financial data except
as indicated.  Values not provided will be entered as "0" (zero).  Missing dates
will be entered as "TO COME".  Please be sure to verify all  information  in the
EDGARized exhibit.

To  include  a  footnote,  place a number in  parentheses  next to the value and
provide  the text of each  corresponding  footnote  at the end of the  worksheet
form.

Do you wish to include a LEGEND?       This schedule  contains summary financial
  Yes  X No                            information extracted from *_____________
---   ---                              and is equalified in its entirety by
                                       reference to such financial statements.
                                       *Identify the financial statement(s) to
                                       be referenced in the legend:


RESTATED

Are your financials being "restated"          (NO VALUE REQUIRED)
from a previously file period?
                      Yes  X No
                   ---    ---
CIK                                       Use this section only for coregistrant
Does this data apply to a coregistrant    filings.
                      Yes  X No
                   ---    ---             COREGISTRANT CIK:

NAME                                      Use this section only for coregistrant
Does this data apply to a coregistrant    filings.
                      Yes  X No
                   ---    ---             COREGISTRANT NAME:

MULTIPLIER
Do the financials require a multiplier        X 1,000       1,000,000,000
                                             ---         ----
other than 1 (one)?
                    X Yes    No                 1,000,000    1,000,000,000,000
                   ---    ---                ---         ----

CURRENCY                                       CURRENCY OF FINANCIAL DATA:
Is the currency used other than US
Dollars? Use in conjunction with
EXCHANGE RATE tag.
                      Yes  X No
                   ---    ---
PERIOD TYPE                                     - MOS          - MOS
                                         -- ----         -- ----
                                               X YEAR        X  YEAR
                                              ---           ---
                                            (for annual report filings)
                                              OTHER           OTHER
                                          ----           ----
FISCAL YEAR END
(example: DEC-31-1997)                      Dec - 31 - 2001      DEC - 31 - 2002
                                            ---------------      ---------------
                                            mmm - dd - yyyy      mmm - dd - yyyy

PERIOD START
(example: JAN-01-1997)                      Jan - 01 - 2001      JAN - 01 - 2002
                                            ---------------      ---------------
                                            mmm - dd - yyyy      mmm - dd - yyyy

PERIOD END
(example: SEP-30-1997)                      Dec - 31 - 2001      DEC - 31 - 2002
                                            ---------------      ---------------
                                            mmm - dd - yyyy      mmm - dd - yyyy

EXCHANGE RATE                               EXCHANGE RATE:       EXCHANGE RATE:

Is the exchange rate other than 1
(one)? Value may contain up to 5
decimal places) Use in conjunction
with CURRENCY tag.
                      Yes  X No
                   ---    ---
<PAGE>

<TABLE>
<CAPTION>
                                         PERIOD TYPE Year            PERIOD TYPE Year
                                                     ----                        ----
<S>                                                     <C>                       <C>
CASH                                                         0                           0
SECURITIES                                                   0                           0
RECEIVABLES                                            304,225                     282,361
ALLOWANCES                                                   0                           0
INVENTORY                                                    0                           0
CURRENT ASSETDS                                          1,225                       1,130
PP&E                                                         0                           0
DEPRECIATION                                                 0                           0
TOTAL ASSETS                                           304,225                     282,361
CURRENT LIABILITIES                                      1,225                       1,130
BONDS                                                  303,000                     281,231
PREFERRED MANDATORY                                          0                           0
PREFERRED                                                    0                           0
COMMON                                                       0                           0
OTHER SE                                                     0                           0
TOTAL LIABILITY AND EQUITY                             304,225                     282,361
SALES                                                        0                           0
TOTAL REVENUES                                          28,820                      26,931
CGS                                                          0                           0
TOTAL COSTS                                                  0                           0
OTHER EXPENSES                                               0                           0
LOSS PROVISION                                               0                           0
INTEREST EXPENSES                                       28,820                      26,931
INCOME PRETAX                                                0                           0
INCOME TAX                                                   0                           0
INCOME CONTINUING                                            0                           0
DISCONTINUED                                                 0                           0
EXTRAORDINARY                                                0                           0
CHANGES                                                      0                           0
NET INCOME                                                   0                           0
EPS BASIC                                                    0                           0
(Value may contain up to 3 decimal places)
EPS DILUTED                                                  0                           0
(Value may contain up to 3 decimal places)

                    Footnote Text: (Note: Each footnote cannot exceed 256 characters, including spaces)
</TABLE>


<PAGE>
                                  EXHIBIT 27.2

                                    Form S-X
                       Commercial and Industrial Companies


Financial Data Schedule Worksheet for:      COSO FINANCE PARTNERS
                                            ---------------------
Review the following  list of tags for Article 5 and fill in the correct data in
the  column(s)  provided.  Generally,  only one  column of  information  will be
required,  however,  two columns are provided if required in the Financial  Data
Schedule.

Unless otherwise  noted, all tags are required.  A response is required for each
item within the schedule. Use the value "0" (zero) if information is immaterial,
inapplicable or unknown. Decimals may not be used to state financial data except
as indicated.  Values not provided will be entered as "0" (zero).  Missing dates
will be entered as "TO COME".  Please be sure to verify all  information  in the
EDGARized exhibit.

To  include  a  footnote,  place a number in  parentheses  next to the value and
provide  the text of each  corresponding  footnote  at the end of the  worksheet
form.

Do you wish to include a LEGEND?       This schedule  contains summary financial
  Yes  X No                            information extracted from *_____________
---   ---                              and is equalified in its entirety by
                                       reference to such financial statements.
                                       *Identify the financial statement(s) to
                                       be referenced in the legend:


RESTATED

Are your financials being "restated"          (NO VALUE REQUIRED)
from a previously file period?
                      Yes  X No
                   ---    ---
CIK                                       Use this section only for coregistrant
Does this data apply to a coregistrant    filings.
                      Yes  X No
                   ---    ---             COREGISTRANT CIK:

NAME                                      Use this section only for coregistrant
Does this data apply to a coregistrant    filings.
                      Yes  X No
                   ---    ---             COREGISTRANT NAME:

MULTIPLIER
Do the financials require a multiplier        X 1,000        1,000,000,000
                                             ---         ----
other than 1 (one)?
                    X Yes    No                 1,000,000    1,000,000,000,000
                   ---    ---                ---         ----

CURRENCY                                       CURRENCY OF FINANCIAL DATA:
Is the currency used other than US
Dollars? Use in conjunction with
EXCHANGE RATE tag.
                      Yes  X No
                   ---    ---
PERIOD TYPE                                     - MOS          - MOS
                                         -- ----         -- ----
                                               X YEAR        X  YEAR
                                              ---           ---
                                            (for annual report filings)
                                              OTHER           OTHER
                                          ----           ----
FISCAL YEAR END
(example: DEC-31-1997)                      Dec - 31 - 2001      DEC - 31 - 2002
                                            ---------------      ---------------
                                            mmm - dd - yyyy      mmm - dd - yyyy

PERIOD START
(example: JAN-01-1997)                      Jan - 01 - 2001      JAN - 01 - 2002
                                            ---------------      ---------------
                                            mmm - dd - yyyy      mmm - dd - yyyy

PERIOD END
(example: SEP-30-1997)                      Dec - 31 - 2001      DEC - 31 - 2002
                                            ---------------      ---------------
                                            mmm - dd - yyyy      mmm - dd - yyyy

EXCHANGE RATE                               EXCHANGE RATE:       EXCHANGE RATE:

Is the exchange rate other than 1
(one)? Value may contain up to 5
decimal places) Use in conjunction
with CURRENCY tag.
                      Yes  X No
                   ---    ---
<PAGE>

<TABLE>
<CAPTION>
                                         PERIOD TYPE Year            PERIOD TYPE Year
                                                     ----                        ----
<S>                                                     <C>                        <C>
CASH                                                       264                       4,215
SECURITIES                                              21,325                      28,692
RECEIVABLES                                             12,816                       8,621
ALLOWANCES                                                   0                           0
INVENTORY                                                    0                           0
CURRENT ASSETS                                          13,730                      13,904
PP&E                                                   229,084                     234,442
DEPRECIATION                                            88,647                      98,129
TOTAL ASSETS                                           193,114                     195,072
CURRENT LIABILITIES                                     18,139                      18,709
BONDS                                                  122,550                     110,955
PREFERRED MANDATORY                                          0                           0
PREFERRED                                                    0                           0
COMMON                                                       0                           0
OTHER SE                                                     0                           0
TOTAL LIABILITY AND EQUITY                             193,114                     195,072
SALES                                                   53,400                      92,065
TOTAL REVENUES                                          56,328                      93,639
CGS                                                          0                           0
TOTAL COSTS                                                  0                           0
OTHER EXPENSES                                          29,182                      33,376
LOSS PROVISION                                               0                           0
INTEREST EXPENSES                                       12,437                      11,151
INCOME PRETAX                                                0                           0
INCOME TAX                                                   0                           0
INCOME CONTINUING                                            0                           0
DISCONTINUED                                                 0                           0
EXTRAORDINARY                                                0                           0
CHANGES                                                      0                           0
NET INCOME                                              14,709                      49,112
EPS BASIC                                                    0                           0
(Value may contain up to 3 decimal places)
EPS DILUTED                                                  0                           0
(Value may contain up to 3 decimal places)

                    Footnote Text: (Note: Each footnote cannot exceed 256 characters, including spaces)
</TABLE>


<PAGE>

                                  EXHIBIT 27.3

                                    Form S-X
                       Commercial and Industrial Companies

Financial Data Schedule Worksheet for:      COSO ENERGY DEVELOPERS
                                            ----------------------
Review the following  list of tags for Article 5 and fill in the correct data in
the  column(s)  provided.  Generally,  only one  column of  information  will be
required,  however,  two columns are provided if required in the Financial  Data
Schedule.

Unless otherwise  noted, all tags are required.  A response is required for each
item within the schedule. Use the value "0" (zero) if information is immaterial,
inapplicable or unknown. Decimals may not be used to state financial data except
as indicated.  Values not provided will be entered as "0" (zero).  Missing dates
will be entered as "TO COME".  Please be sure to verify all  information  in the
EDGARized exhibit.

To  include  a  footnote,  place a number in  parentheses  next to the value and
provide  the text of each  corresponding  footnote  at the end of the  worksheet
form.

Do you wish to include a LEGEND?       This schedule  contains summary financial
  Yes  X No                            information extracted from *_____________
---   ---                              and is equalified in its entirety by
                                       reference to such financial statements.
                                       *Identify the financial statement(s) to
                                       be referenced in the legend:


RESTATED

Are your financials being "restated"          (NO VALUE REQUIRED)
from a previously file period?
                      Yes  X No
                   ---    ---
CIK                                       Use this section only for coregistrant
Does this data apply to a coregistrant    filings.
                      Yes  X No
                   ---    ---             COREGISTRANT CIK:

NAME                                      Use this section only for coregistrant
Does this data apply to a coregistrant    filings.
                      Yes  X No
                   ---    ---             COREGISTRANT NAME:

MULTIPLIER
Do the financials require a multiplier        X 1,000        1,000,000,000
                                             ---         ----
other than 1 (one)?
                    X Yes    No                 1,000,000    1,000,000,000,000
                   ---    ---                ---         ----

CURRENCY                                       CURRENCY OF FINANCIAL DATA:
Is the currency used other than US
Dollars? Use in conjunction with
EXCHANGE RATE tag.
                      Yes  X No
                   ---    ---
PERIOD TYPE                                     - MOS          - MOS
                                         -- ----         -- ----
                                               X YEAR        X  YEAR
                                              ---           ---
                                            (for annual report filings)
                                              OTHER           OTHER
                                          ----           ----
FISCAL YEAR END
(example: DEC-31-1997)                      Dec - 31 - 2001      DEC - 31 - 2002
                                            ---------------      ---------------
                                            mmm - dd - yyyy      mmm - dd - yyyy

PERIOD START
(example: JAN-01-1997)                      Jan - 01 - 2001      JAN - 01 - 2002
                                            ---------------      ---------------
                                            mmm - dd - yyyy      mmm - dd - yyyy

PERIOD END
(example: SEP-30-1997)                      Dec - 31 - 2001      DEC - 31 - 2002
                                            ---------------      ---------------
                                            mmm - dd - yyyy      mmm - dd - yyyy

EXCHANGE RATE                               EXCHANGE RATE:       EXCHANGE RATE:

Is the exchange rate other than 1
(one)? Value may contain up to 5
decimal places) Use in conjunction
with CURRENCY tag.
                      Yes  X No
                   ---    ---
<PAGE>

<TABLE>
<CAPTION>
                                         PERIOD TYPE Year            PERIOD TYPE Year
                                                     ----                        ----
<S>                                                     <C>                         <C>
CASH                                                         0                       1,423
SECURITIES                                               7,368                       6,646
RECEIVABLES                                              3,340                       7,102
ALLOWANCES                                                   0                           0
INVENTORY                                                    0                           0
CURRENT ASSETS                                           4,189                       9,895
PP&E                                                   247,203                     247,912
DEPRECIATION                                            98,786                     112,059
TOTAL ASSETS                                           183,978                     174,871
CURRENT LIABILITIES                                     34,966                      28,393
BONDS                                                   96,250                      89,875
PREFERRED MANDATORY                                          0                           0
PREFERRED                                                    0                           0
COMMON                                                       0                           0
OTHER SE                                                     0                           0
TOTAL LIABILITY AND EQUITY                             183,978                     174,871
SALES                                                   44,041                      81,252
TOTAL REVENUES                                          47,807                      82,707
CGS                                                          0                           0
TOTAL COSTS                                                  0                           0
OTHER EXPENSES                                          31,396                      28,526
LOSS PROVISION                                               0                           0
INTEREST EXPENSES                                        9,398                       8,822
INCOME PRETAX                                                0                           0
INCOME TAX                                                   0                           0
INCOME CONTINUING                                            0                           0
DISCONTINUED                                                 0                           0
EXTRAORDINARY                                                0                           0
CHANGES                                                      0                           0
NET INCOME                                               7,013                      45,359
EPS BASIC                                                    0                           0
(Value may contain up to 3 decimal places)
EPS DILUTED                                                  0                           0
(Value may contain up to 3 decimal places)

                    Footnote Text: (Note: Each footnote cannot exceed 256 characters, including spaces)
</TABLE>

<PAGE>
                                  EXHIBIT 27.4

                                    Form S-X
                       Commercial and Industrial Companies

Financial Data Schedule Worksheet for:      COSO POWER DEVELOPERS
                                            ---------------------
Review the following  list of tags for Article 5 and fill in the correct data in
the  column(s)  provided.  Generally,  only one  column of  information  will be
required,  however,  two columns are provided if required in the Financial  Data
Schedule.

Unless otherwise  noted, all tags are required.  A response is required for each
item within the schedule. Use the value "0" (zero) if information is immaterial,
inapplicable or unknown. Decimals may not be used to state financial data except
as indicated.  Values not provided will be entered as "0" (zero).  Missing dates
will be entered as "TO COME".  Please be sure to verify all  information  in the
EDGARized exhibit.

To  include  a  footnote,  place a number in  parentheses  next to the value and
provide  the text of each  corresponding  footnote  at the end of the  worksheet
form.

Do you wish to include a LEGEND?       This schedule  contains summary financial
  Yes  X No                            information extracted from *_____________
---   ---                              and is equalified in its entirety by
                                       reference to such financial statements.
                                       *Identify the financial statement(s) to
                                       be referenced in the legend:


RESTATED

Are your financials being "restated"          (NO VALUE REQUIRED)
from a previously file period?
                      Yes  X No
                   ---    ---
CIK                                       Use this section only for coregistrant
Does this data apply to a coregistrant    filings.
                      Yes  X No
                   ---    ---             COREGISTRANT CIK:

NAME                                      Use this section only for coregistrant
Does this data apply to a coregistrant    filings.
                      Yes  X No
                   ---    ---             COREGISTRANT NAME:

MULTIPLIER
Do the financials require a multiplier        X 1,000        1,000,000,000
                                             ---         ----
other than 1 (one)?
                    X Yes    No                 1,000,000    1,000,000,000,000
                   ---    ---                ---         ----

CURRENCY                                       CURRENCY OF FINANCIAL DATA:
Is the currency used other than US
Dollars? Use in conjunction with
EXCHANGE RATE tag.
                      Yes  X No
                   ---    ---
PERIOD TYPE                                     - MOS          - MOS
                                         -- ----         -- ----
                                               X YEAR        X  YEAR
                                              ---           ---
                                            (for annual report filings)
                                              OTHER           OTHER
                                          ----           ----
FISCAL YEAR END
(example: DEC-31-1997)                      Dec - 31 - 2001      DEC - 31 - 2002
                                            ---------------      ---------------
                                            mmm - dd - yyyy      mmm - dd - yyyy

PERIOD START
(example: JAN-01-1997)                      Jan - 01 - 2001      JAN - 01 - 2002
                                            ---------------      ---------------
                                            mmm - dd - yyyy      mmm - dd - yyyy

PERIOD END
(example: SEP-30-1997)                      Dec - 31 - 2001      DEC - 31 - 2002
                                            ---------------      ---------------
                                            mmm - dd - yyyy      mmm - dd - yyyy

EXCHANGE RATE                               EXCHANGE RATE:       EXCHANGE RATE:

Is the exchange rate other than 1
(one)? Value may contain up to 5
decimal places) Use in conjunction
with CURRENCY tag.
                      Yes  X No
                   ---    ---
<PAGE>

<TABLE>
<CAPTION>
                                         PERIOD TYPE Year            PERIOD TYPE Year
                                                     ----                        ----
<S>                                                     <C>                         <C>
CASH                                                         0                         824
SECURITIES                                               5,517                      10,855
RECEIVABLES                                              9,349                      13,136
ALLOWANCES                                                   0                           0
INVENTORY                                                    0                           0
CURRENT ASSETS                                          10,009                      15,071
PP&E                                                   209,652                     210,548
DEPRECIATION                                            84,987                      94,356
TOTAL ASSETS                                           170,058                     168,834
CURRENT LIABILITIES                                     23,638                       3,072
BONDS                                                   84,200                      80,401
PREFERRED MANDATORY                                          0                           0
PREFERRED                                                    0                           0
COMMON                                                       0                           0
OTHER SE                                                     0                           0
TOTAL LIABILITY AND EQUITY                             170,058                     168,834
SALES                                                   36,389                      79,592
TOTAL REVENUES                                          39,272                      80,486
CGS                                                          0                           0
TOTAL COSTS                                                  0                           0
OTHER EXPENSES                                          34,408                      29,428
LOSS PROVISION                                               0                           0
INTEREST EXPENSES                                        9,247                       7,755
INCOME PRETAX                                                0                           0
INCOME TAX                                                   0                           0
INCOME CONTINUING                                            0                           0
DISCONTINUED                                                 0                           0
EXTRAORDINARY                                                0                           0
CHANGES                                                      0                           0
NET INCOME                                              (4,383)                     43,303
EPS BASIC                                                    0                           0
(Value may contain up to 3 decimal places)
EPS DILUTED                                                  0                           0
(Value may contain up to 3 decimal places)

                    Footnote Text: (Note: Each footnote cannot exceed 256 characters, including spaces)
</TABLE>

<PAGE>

                                  Exhibit 99.1

                    CERTIFICATION OF CHIEF EXECUTIVE OFFICER
                       PURSUANT TO 18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In  connection  with the Annual  Report of  Caithness  Coso Funding  Corp.  (the
Company)  on Form 10-K for the year ended  December  31,  2002 as filed with the
Securities and Exchange  Commission on the date hereof (the "Report"),  I, James
D. Bishop, Sr., Chief Executive Officer of the Company,  certify, pursuant to 18
U.S.C.  Section 1350, as adopted  pursuant to Section 906 of the  Sarbanes-Oxley
Act of 2002, that:

     (1) The Report fully  complies  with the  requirements  of section 13(a) or
15(d) of the Securities Exchange Act of 1934; and

     (2)  The  information  contained  in the  Report  fairly  presents,  in all
material  respects,  the  financial  condition  and result of  operations of the
Company.



Date: March 17, 2003                    Caithness Coso Funding Corp.
                                        a Delaware Corporation

                                        By: /S/ JAMES D. BISHOP, SR.
                                            ------------------------
                                                James D. Bishop, Sr.
                                                Director, Chairman &
                                                Chief Executive Officer
<PAGE>

                    CERTIFICATION OF CHIEF EXECUTIVE OFFICER

I, James D. Bishop, Sr., certify that:

1.   I have reviewed  this annual report on Form 10-K of Caithness  Coso Funding
     Corp.;

2.   Based on my  knowledge,  this  annual  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 annual report;

3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information included in this annual 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 annual 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 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 annual 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 annual report (the "Evaluation Date"); and

     c)   presented   in  this   annual   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 the 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
     annual  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:  March 17, 2003                   Caithness Coso Funding Corp.
                                        a Delaware Corporation

                                        By: /S/ JAMES D. BISHOP, SR.
                                            ------------------------
                                                James D. Bishop, Sr.
                                                Director, Chairman &
                                                Chief Executive Officer
<PAGE>

                                  Exhibit 99.2

                    CERTIFICATION OF CHIEF FINANCIAL OFFICER
                       PURSUANT TO 18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


In  connection  with the Annual  Report of  Caithness  Coso Funding  Corp.  (the
Company)  on Form 10-K for the year ended  December  31,  2002 as filed with the
Securities  and  Exchange  Commission  on the date  hereof  (the  "Report"),  I,
Christopher  T.  McCallion,  Chief  Financial  Officer of the Company,  certify,
pursuant to 18 U.S.C.  Section 1350,  as adopted  pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, that:

     (1) The Report fully  complies  with the  requirements  of section 13(a) or
15(d) of the Securities Exchange Act of 1934; and

     (2)  The  information  contained  in the  Report  fairly  presents,  in all
material  respects,  the  financial  condition  and result of  operations of the
Company.



Date: March 17, 2003                    Caithness Coso Funding Corp.
                                        a Delware Corporation

                                        By: /S/ CHRISTOPHER T. MCCALLION
                                            ----------------------------
                                                Christopher T. McCallion
                                                Executive Vice President &
                                                Chief Financial Officer
                                                (Principal Financial &
                                                Accounting Officer)
<PAGE>


                    CERTIFICATION OF CHIEF FINANCIAL OFFICER

I, Christopher T. McCallion, certify that:

1.   I have reviewed  this annual report on Form 10-K of Caithness  Coso Funding
     Corp.;

2.   Based on my  knowledge,  this  annual  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 annual report;

3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information included in this annual 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 annual 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 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 annual 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 annual report (the "Evaluation Date"); and

     c)   presented   in  this   annual   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 the 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
     annual  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:  March 17, 2003                   Caithness Coso Funding Corp.
                                        a Delaware Corporation

                                        By: /S/ CHRISTOPHER T. MCCALLION
                                            ----------------------------
                                                Christopher T. McCallion
                                                Executive Vice President
                                                & Chief Financial Officer
                                                Principal Financial &
                                                Accounting Officer
<PAGE>


                                   SIGNATURES


Pursuant to the  requirements of Section 13 or 15(d) 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.


                               CAITHNESS COSO FUNDING CORP.,
                               a Delaware corporation

                               By: /S/ CHRISTOPHER T. MCCALLION
                                   ----------------------------
                                       Christopher T. McCallion
                                       Executive Vice President &
                                       Chief Financial Officer
                                       (Principal Financial and
                                       Accounting Officer)

                                       Date:  March 17, 2003


                                       COSO FINANCE PARTNERS
                                       a California general partnership

                                       By: New CLOC Company, LLC,
                                             its Managing General Partner

                                       By: /S/ CHRISTOPHER T. MCCALLION
                                           ----------------------------
                                               Christopher T. McCallion
                                               Executive Vice President &
                                               Chief Financial Officer
                                               (Principal Financial and
                                               Accounting Officer)

                                               Date: March 17, 2003


                                        COSO ENERGY DEVELOPERS
                                        a California general partnership

                                        By: New CHIP Company, LLC,
                                              its Managing General Partner

                                        By: /S/ CHRISTOPHER T. MCCALLION
                                            ----------------------------
                                                Christopher T. McCallion
                                                Executive Vice President &
                                                Chief Financial Officer
                                                (Principal Financial and
                                                Accounting Officer)

                                                Date:  March 17, 2003



                                         COSO POWER DEVELOPERS
                                         a California general partnership

                                         By: New CTC Company, LLC,
                                               its Managing General Partner

                                         By: /S/ CHRISTOPHER T. MCCALLION
                                             ----------------------------
                                                 Christopher T. McCallion
                                                 Executive Vice President &
                                                 Chief Financial Officer
                                                 (Principal Financial and
                                                 Accounting Officer)

                                                 Date:  March 17, 2003
<PAGE>

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following  persons on behalf of the  registrant and
in the capacities and on the dates indicated.



                            By: /S/ JAMES D. BISHOP, SR.
                                ------------------------
                                    James D. Bishop, Sr.
                                    Director, Chairman and Chief
                                    Executive Officer
                                    (Principal Executive Officer

                                    Date:  March 17, 2003


                            By: /S/ CHRISTOPHER T. MCCALLION
                                ----------------------------
                                    Christopher T. McCallion
                                    Director, Executive Vice President
                                    & Chief Financial Officer
                                    (Principal Accounting Officer)

                                    Date: March 17, 2003


                            By: /S/ LESLIE J. GELBER
                                --------------------
                                    Leslie J. Gelber
                                    Director, President and
                                    Chief Operating Officer

                                    Date:  March 17, 2003


                            By: /S/ JAMES D. BISHOP, JR.
                                ------------------------
                                    James D. Bishop, Jr.
                                    Director, Vice Chairman

                                    Date:  March 17, 2003


                            By: /S/ MARK A. FERRUCCI
                                --------------------
                                    Mark A. Ferrucci
                                    Director

                                    Date:  March 17, 2003